Bikes Manufacturing produces and sells children’s bikes at an average price of $

Question

Bikes Manufacturing produces and sells children’s bikes at an average price of $60. Its costs are as follows: direct materials, $14; direct labour, $6; variable overhead, $4; sales commission, 5% of price. Its fixed monthly costs are $49,000.

Required:
1.
Using the above cost data, set up a monthly cost equation.

Bikes Manufacturing produces and sells children's bikes at an average price of $60. Its costs are as follows direct materials, $14, direct labour, $6; variable overhead, $4; sales commission, 5% of price. Its fixed monthly costs are $49,000 Required: 1. Using the above cost data, set up a monthly cost equation 2. What is the company's contibution marin percentage? (Round your answer to 2 decinal places 2. What is the company's contribution margin p Contribution margin References eBook & Resources Worksheet Learning Objective 06-02 Analyze and estimate costs Learning Objective: 06-01 Understand cost behaviour Learning Objective 06-03 Compute

Explanation / Answer

total variable cost

Direct material

14

direct labor

6

variable overhead

4

sales commission

60*5%

3

total variable cost

27

fixed cost

49000

Y

49000

+

no of units*27

Y = 49000+ (no of units*27)

contribution margin percentage

33/60

55.00%

contribution margin

60-27

33

total variable cost

Direct material

14

direct labor

6

variable overhead

4

sales commission

60*5%

3

total variable cost

27

fixed cost

49000

Y

49000

+

no of units*27

Y = 49000+ (no of units*27)

contribution margin percentage

33/60

55.00%

contribution margin

60-27

33

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