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The Sharma Company provides you with the following miscellaneous data regarding operations in 20X9: Gross profit...

The Sharma Company provides you with the following miscellaneous data regarding operations in 20X9:

  • Gross profit $40,000
  • Net profit 15,000
  • Sales 120,000
  • Direct material used 35,000
  • Direct labor 25,000
  • Fixed manufacturing overhead 15,000
  • Fixed selling and administrative expenses 12,000

There are no beginning or ending inventories.

Compute

(a) variable selling and administrative expenses

(b) contribution margin in dollars

(c) variable manufacturing overhead

(d) break-even point in sales dollars

(e) manufacturing cost of goods sold.

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Answer #1

Calculation of Fixed Manufacturing Overheads Sales Less: Direct Material Less: Direct Labour Less: Fixed Manufacturing Overhead Less: Gross Profit Variable Manufacturing Overhead 120000 35000 25000 15000 40000 5000 Calculation of Contribution Margin Sales Less: Direct Material Less: Direct Labour Less: Variable Manufacturing Overheads Less: Variable Selling and Administrative Overheads Contribution Margin 120000 35000 25000 5000 13000 42000 Calculation of Variable Selling Administrative Expenses Gross Profit Less: Fixed Selling and Administrative Expenses Less: Variable Selling and Administrative Expenses Net Profit 40000 12000 13000 15000Calculation of Break Even Point in Sales We know that Profit Contribution Fixed Cost At Break Even Point, Profit 0 and Fixed Cost remains constant at al levels of production Thus, O Contribution 27000 Thus, Contribution Even Sales 27,000 at Break As calculated above, at Sales- 120000, Contribution 42000 % of Contribution to Sales- (42000/120000-35% We know that, % of Contribution to Sales remains constant at all levels of sales Thus Break even sales- Contribution/% of Contribution to Sales -27000/.35 77,142.86 USD Calculation of Manufacturing Cost of Goods Sold Direct Material Add: Direct Labour Add: Fixed Manufacturing Overhead Add: Variable Manufacturing Overhead Manufacturing Cost of Goods Sold 35000 25000 15000 5000 80000. Thank you

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