Jen decided to start a company that created specialty computers for gaming. She

Question

Jen decided to start a company that created specialty computers for gaming. She had a budget for overhead and at the end of the month she had spent money on materials and labor as shown below. She completed and sold 10 computers the first month. Her company's fixed expenses were 4500.00 per month. Answer the following questions using this information.

Budgeted Manufacturing Overhead 2000.00

Direct Materials 6360.00

Direct Labor 5350.00

1. What is the Cost of Goods sold per unit?

2. How much overhead is attributed to each unit?

3. What does Jen sell a unit for when she marks up the product by 30%?

4. What is the contribution margin?

Explanation / Answer

1.Cost of goods sold per unit = Budgeted Manufacturing Overhead per unit + Direct Materials per unit + Direct Labor per unit

= 200+ 636+ 535

= $1371

2. overhead attributed to each unit = Budgeted Manufacturing Overheads/ No. of units produced

= 2000/ 10 = $200

3. Total Costs = 2000 + 6360 + 5350+ 4500 = $18210

add: Markup of 30% on 18210 = $910.5

Sales = $19120.5

Units sold = 10

Sale price per unit 19120.5/10 = $1912.05

4. Contribution margin = Sales - Total Variable overheads

= 19120.5- 13710

=$5410.5

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