The costs per unit and period for Milligan Exploration for all relevant ranges of activity is...

3.6 Ratings (341 Votes)

1	Calculate total amount of direct manufacturing cost
		Number of units	cost per period	Amount
	Direct materials	4200	5	21000
	Direct labor	4200	2.9	12180
	variable manufacturing overhead	4200	1.25	5250
	Fixed manufacturing overhead			21000
	Total amount of direct manufacturing cost			59430

2	Indirect manufacturing overhead cost (given)		21000
	Indirect manufacturing overhead cost includes depreciation, repairs and maintenance,electricity, supervisor salaries , quality cost and other factory cost associated with manufacturing and it is period cost , will not change according to change in the production, even if 5000 units are produced, manufacturing cost remains same.

3	Calculate contribution margin per unit sold for milliganExploration
		cost per unit
	Sales	14.25
	Direct materials	-5
	Direct labor	-2.9
	variable manufacturing overhead	-1.25
		5.1
	less: variable selling and administrative expenses
	sales commission	-1
	varaible admin expenses	-0.55
	Contribution margin	3.55

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