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Sauer Company sells folding chairs for $40.00 per unit. Variable cost is $15.00 per unit. Each...

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Accounting

  1. Sauer Company sells folding chairs for $40.00 per unit.Variable cost is $15.00 per unit. Each chair requires 4 directlabor hours and 2 machine hours to produce. Which of the followingis the correct contribution margin per machine hour?
    1. $12.50
    2. $0.08
    3. None of these
    4. $0.10
    5. e. $6.25
  2. Archer Company uses a job order cost system. During the monthof September, the company worked on Job B. The informationcontained on the cost sheet is as follows:

  3.                           Job B

    BegBalance       $1,500

    Direct Material 800

    DirectLabor       2,300

    The company applies overhead at 120%of direct labor cost. During September Job B was completed and soldin October. If Job B sold for $8,000, what was the amount of grossprofit for this job? (Ignore any consideration of over/underapplied overhead)

    1. a. $3,400
    2. b. $2,940
    3. c. $7,360
    4. d. $640

Answer & Explanation Solved by verified expert
4.5 Ratings (836 Votes)

--All working forms part of the answer

--Answer #1

A Sale price per chair $                   40.00
B Variable cost per chair $                   15.00
C = A - B Contribution margin per chair $                   25.00
D Machine hours used per chair 2
E = C/D Contribution margin per machine hour $                   12.50
Correct Answer Option 'a' $ 12.50

--Answer #2

A Beginning Bal $1,500.00
B Direct material $800.00
C Direct Labor $2,300.00
D = C x 120% Manufacturing Overheads applied $2,760.00
E = A+B+C+D Total Cost of the job $7,360.00
F Job Sold for $8,000.00
G = F - E Gross Profits $640.00
Correct Answer Option 'D' $ 640

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