3 Company A is incurring $2.500 as overheads in manufacturing 500 units. The ove

Question

3 Company A is incurring $2.500 as overheads in manufacturing 500 units. The overheads are allocated on the basis of machine hours which is 250 hours. How much overheads will be incurred when the company is manufacturing 700 units and taking 300 hours? 3000 O 3500 O 2500 O 4000 4. The manager of Wong's Food Express estimates operating costs for the year will total $300,000 for fixed costs. 28. Find the sales dollars required with a contribution margin ratio of 40 percent to generate a profit of $100,000. O 750000 O 1200000 O 1000000 O 400000 Variable Costing is also called as O Absorption Costing O Contribution Costing O Fixed Costing O Marginal Costing 5.

Explanation / Answer

Q3-Answer

to calculate the overhead for the company manufacturing 700units for 300hours on machine

Overhead incurred for 500 units = $2,500

number of machine hours = 250

since the overhead allocation is based on machine hours,

Overhead rate = $10/hours i.e. 2500/250

This overhead rate can be considered as standard rate for calculating overhead for 700units

the machine hours used for production of 700units = 300hours

to calculate the actual overhead for this production,

macbine hours for production multiply by overhead rate i.e. 300*10 = $3000

therefore the overhead for production of 700 units will be $3000

Q4-answer

for the calculation of sales, following needs to be done

Calculate contribution

contribution - fixed cost = profit

or, contribution = profit + fixed cost

contribution = 100000+300000

i.e. contribution = $400000

contribution rate is 40%, which means contribution is 40% of sales

40% sales = contribution

or, sales = contribution/40%

sales = (400,000/40)*100

Therefore, sales = $1000,000

Q5-Answer

Variable costing is also called as Marginal Costing as variable cost is the sum of mariginal cost over all the units.

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