Question

Nike is looking at the value of their running shorts. If they sell the following pair of shorts for $29.75, what is their marginal contribution per pair ($ XXX)? (Enter the value without dollar sign Nike Shorts - Bill of Materials Materials/1 shorts Black Exterior Nylon Dark Blue Stripe Light Blue Stripe Blue Edge Piping Elastic Waist band Draw String Interior Lining Nike Logo Thread Amount Units 480 Sq inches 20 Inches 15 Sq inches so inches 30 inches 50 inches 420 Sq inches 20 Inches Data from Cost Accounting Department Material Cost $ Per Amount Black Exterior Nylon $0.0075 Sq inches Dark Blue Stripe $0.0095 Sq inches Light Blue Stripe $0.0122 Sq inches Blue Edge Piping $0.0030 Inches Elastic Waist band $0.0060 Inches Draw String $0.0020 inches Interior Lining $0.0088 Sq Inches Nike Logo Thread $0.0002 Inches Labor Cost Rate $12.00 per Hour Labor Required per 100 pairs 15 Hours Cutting 20 Hours Sewing 5 Hours Packaging Factory Direct Overhead Costs in a factory making 400,000 shorts/year Management/Supervision $ 250,000 Utilities $ 120,000 Maintenance $ 133,000 Quality Assurance $ 82,000

must use excel. please show your work/equations

Answer 1

$29.75 Selling price per pair of shorts Less: Direct material cost Direct labor cost Factory Direct Variable Overhead Costs Marginal Contribution per pair of shorts $16.21 4.80 2.925 $23.94 $5.82

A C F F G H 1 J к 1 Amount 960 2 3 40 4 30 D E Cost $ Per Amount Material Cost $ $0.0075 $7.20 0.0095 $0.38 0.0122 $0.37 0.003 $0.30 0.006 $0.36 0.002 $0.20 0.0088 $7.39 0.0002 $0.01 100 B Materials / pair Black Exterior Nylon Dark Blue Stripe Light Blue Stripe Blue Edge Piping Elastic Waist band Draw String Interior Lining Nike Logo Thread TOTAL MATERIAL COST per 1 pair 5 6 60 7 100 840 8 9 40 $16.21 10 11 Labor Required per 100 Labor Required per 1 pairs pair 15 Hours (15/100) = 0.15 Hours 20 Hours (20/100) = 0.20 Hours 5 Hours (5/100) = 0.05 Hours Factory Direct Overhead Costs per 200,000 pairs Management / Supervision $250,000 Utilities $120,000 Maintenance $133,000 12 13 Cutting 14 Sewing 15 Packaging TOTAL LABOR 16 HOURS per pair 17 Labor Cost Rate TOTAL LABOR COST 18 per 1 pair 19 0.40 Hours Quality Assurance $82,000 $12.00 per Hour $4.80 It is assumed that all the factory direct overhead costs are variable costs. Factory Direct Variable Overhead 250,000 + 120,000 + 133,000 + 82,000 = $585,000 Costs per 200,000 pairs Factory Direct Variable Overhead 585,000 / 200,000 = $2.925 Costs per 1 pair 20

A B C С Amount D Cost $ Per Amount 1 2 3 4 Materials / pair Black Exterior Nylon Dark Blue Stripe Light Blue Stripe Blue Edge Piping Elastic Waist band Draw String Interior Lining Nike Logo Thread 5 6 =480*2 =20*2 =15$ =50*2 =30*2 =50*2 -420*2 =20*2 E Material Cost $ =C2#D2 =C3ⓇD3 =C4D4 =C5%D5 =C6*D6 =C7*D7 =C8%D8 =C9*D9 0.0075 0.0095 0.0122 0.003 0.006 0.002 0.0088 0.0002 7 8 9 TOTAL MATERIAL COST per 1 pair 10 =SUM(E2:E9) 11 Labor Required per 100 pairs Labor Required per 1 pair 12 13 14 Cutting Sewing Packaging 15 Hours 20 Hours 5 Hours (15/100) = 0.15 Hours (20/100) = 0.20 Hours (5/100) = 0.05 Hours 15 TOTAL LABOR HOURS per pair 0.40 Hours 16 17 Labor Cost Rate $12.00 per Hour 18 TOTAL LABOR COST per 1 pair =0.4*12 19