The following costs result from the production and sale of 4,350 drum sets manuf

Question

The following costs result from the production and sale of 4,350 drum sets manufactured by Tom Thompson Company for the year ended December 31, 2013. The drum sets sell for $285 each. The company has a 40% income tax rate. Variable production costs Plastic for casing $ 104,400 Wages of assembly workers 387,150 Drum stands 143,550 Variable selling costs Sales commissions 95,700 Fixed manufacturing costs Taxes on factory 13,500 Factory maintenance 27,000 Factory machinery depreciation 87,000 Fixed selling and administrative costs Lease of equipment for sales staff 27,000 Accounting staff salaries 77,000 Administrative management salaries 157,000

Explanation / Answer

Particulars Amount Sales ( 4350*285) 1239750 Less: Variable Costs Plastic for casing 104400 Wages for Assembly workers 387150 Drum Stands 143550 Variable Selling Costs 95700 Total Variable Costs 730800 Contribution Margin 508950 Less: Fixed Costs 388500 Net Profit 120450 Less: Taxes 48180 Profit after tax 72270

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