The Butcher Company manufactures microwave ovens. Last year, the per unit produc

Question

The Butcher Company manufactures microwave ovens. Last year, the per unit product cost was $56, the per-unit prime cost was $34, and the per unit conversion cost was $42. Cost of Goods Sold for the year was 560,000 and the sale peice per unit was $100. In addition, direct labor costs of $200,000 and selling and administrative expenses of 240,000 were incurred.

A. Calculate how many units were sold last year

B. Compute the cost od direct materials used

C. Compute the cost of overhead

D. Compute the Gross Margin for the year

E. Calculate operating income

Explanation / Answer

Prime Cost=Direct Material+Direct Labour $34 Conversion Cost= Direct Labour+manufcturing Overhead 42 Product Cost= Total manufactiuring Cost 56 Sale price 100 Cost of Good Sold 560000 Direct Labour Cost 200000 Selling & Administrative Expenses 240000 Ans 1 in $ COGS 560000 Product Cost 56 No. of units sold 10000 b) Cost of Direct material Prime Cost=Direct Material+Direct Labour $34 34*10000=x+200000 140000 Ans c) Conversion Cost= Direct Labour+manufcturing Overhead 42 Cost of overhead 42*10000=200000+y 220000 d) Gross Margin=10000*(100-56) 440000 e) Gross Margin-Selling & Administration expense 200000 440000-240000

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