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Answer :
Final answer:
The total overhead applied to the 400 utility trailers is $117,000. The cost to manufacture each trailer is $1,200, and the total gross profit from manufacturing these trailers at a selling price of $2,100 apiece is $360,000.
Explanation:
To compute the total amount of overhead cost applied to the 400 utility trailers, first find 150% of the labor costs ($30,000) which equals $45,000. Then, add the product of $120 per machine hour and the total machine hours (600), which equals $72,000. The total overhead, therefore, is $117,000 ($45,000+$72,000).
To find the per-unit cost of manufacturing each trailer, sum up the direct labor cost, direct materials cost, and overhead, which equals $480,000 ($30,000+$333,000+$117,000). Divide this sum by the total number of units produced (400) to find the per-unit cost, which is $1,200.
The gross profit for each trailer is calculated by subtracting the production cost of each trailer from the selling price, i.e., $2,100-$1,200 = $900. To compute the total gross profit, multiply the gross profit per trailer ($900) by the number of trailers (400), which equals $360,000.
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Final answer:
The total overhead cost for the utility trailers is $117,000, the per-unit manufacturing cost is $1,200, and the total gross profit from the sales is $360,000 at a selling price of $2,100 each.
Explanation:
To calculate the total overhead cost for Safe-Haul's manufacturing of 400 utility trailers we use the provided formula:
- Overhead = 150% of Direct Labor Cost + ($120 × Machine Hours)
- Overhead = 150% × $30,000 + ($120 × 600)
- Overhead = $45,000 + $72,000
- Overhead = $117,000
Total overhead cost for manufacturing the 400 utility trailers is $117,000.
To compute the per-unit cost of manufacturing each trailer, add together the direct labor cost, direct materials cost, and applied overhead and then divide by the number of trailers:
- Total cost = Direct Labor Cost + Direct Materials Cost + Overhead
- Total cost = $30,000 + $333,000 + $117,000
- Total cost = $480,000
- Per-unit cost = Total cost ÷ Number of units
- Per-unit cost = $480,000 ÷ 400
- Per-unit cost = $1,200
The per-unit cost to manufacture one trailer is $1,200.
To determine the total gross profit from this job, we calculate the revenue from selling all the trailers at the given price and then subtract the total production cost:
- Total revenue = Selling price per unit × Number of units
- Total revenue = $2,100 × 400
- Total revenue = $840,000
- Gross profit = Total revenue - Total cost
- Gross profit = $840,000 - $480,000
- Gross profit = $360,000
The gross profit for manufacturing and selling the trailers is $360,000.
