Miller company’s total sales are $123,000. the company’s direct labor cost is $14,760, which represents 30% of its total conversion cost and 40% of its total prime cost. its total selling and administrative expense is $18,450 and its only variable selling and administrative expense is a sales commission of 5% of sales. the company maintains no beginning or ending inventories and its manufacturing overhead costs are entirely fixed costs. required: 1. what is the total manufacturing overhead cost? 2. what is the total direct materials cost? 3. what is the total manufacturing cost? 4. what is the total variable selling and administrative cost? 5. what is the total variable cost? 6. what is the total fixed cost? 7. what is the total contribution margin?

1.

Direct labor cost = $14760

This is 30% of total conversion cost so, conversion cost = 14760/30%

= $49200

Total conversion cost = Direct labor + Manufacturing overhead

Manufacturing overhead = Total conversion cost - Direct labor

=49200-14760 = $34440

Hence, The total manufacturing overhead cost= $34440

2.

Direct labor = $14760

This is 40% of prime cost. So total prime cost = 14760/40%

= $36900

Total prime cost = Direct material + Direct labor

Direct material = Total prime cost - Direct labor

= 36900 - 14760 = 22140

Hence, the total direct materials cost = $22140

3.

Total manufacturing cost = Direct materials + Direct labor + Manufacturing overhead

= 22140+14760+34440 = $71340

4.

Variable selling and administrative cost = 5% of 123000

=$ 6150

5.

Total variable cost = Direct materials + Direct labor + Sales commission

= 22140 + 14760 + 6150 =$43050

6.

Fixed selling and administrative expense = Total selling and administrative expense - Sales commission = 18450-6150 = $12300

Total fixed cost = Manufacturing overheads + Fixed selling and administrative expense

= 34440+12300 = $46740

7.

Total contribution margin = Sales - Total variable cost

= 123000 - 43050 = $79950

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