Hi!

Can you please show me the calculation for engineering? All exhibits are provided. The answer is $78,000

Exhibit 1 Sippican Corporation: Operating Results (March 2006) Exhibit 2 Product Profitability Analysis (March 2006) Valves Pumps Flow Controllers Sales $1,847,500 100% Direct Labor Expense 351,000 Direct labor costa $12.35 $16.25 $13.00 Direct Materials Expense 458,000 Direct material cost 16.00 20.00 22.00 Contribution Margin $1,038,500 56% Manufacturing overhead (@185%) 22.85 30.06 24.05 Manufacturing Overhead Standard unit costs $51.20 $66.31 $59.05 Target selling price $78.77 $102.02 $90.85 Planned gross margin (%) 35% 35% 35% Machine-related expenses $334,800 Actual selling price $79.00 $70.00 $95.00 Setup labor 117,000 Actual gross margin $27.80 $3.69 $35.95 Receiving and production control 15,600 Actual gross margin (%) 35% 5% 38% Engineering 78,000 Packaging and shipping 109,200 Exhibit 3 Product Data Total Manufacturing Overhead 654,600 35% Gross Margin 383,900 21% General, Selling & Administrative Expenses 350,000 19% Product Lines Valves Pumps Flow Controllers Operating Income (pre-tax) $33,900 1.8% Materials per unit 4 components 5 components 10 components 2 @ $2 = $ 4 3 @ $2 = $ 6 4 @ $1 = $ 4 Source: Casewriter. 2 @ 6 = 12 2 @7 = 14 5 @ 2 = 10 1 @ 8 = 8 Exhibit 4 Monthly Production and Operating Statistics (March 2006) Materials cost per unit $16 $20 $22 Direct labor per unit 0.38 0.5 0.4 Machine hours per unit 0.5 0.5 0.3 Valves Pumps ow Controller Total Setup hours per run 5 6 12 Production (units) 7,500 12,500 4,000 24,000 Machine hours (run time) 3,750 6,250 1,200 11,200 The full compensation, including fringe benefits, for direct and indirect employees (other than engineers) was $3,900 per month. Employees worked an average of 20 days per month (holidays and vacations accounted for the remaining 2-3 business Production runs 20 100 225 345 days per month). Setup hours (labor and machines) 100 600 2,700 3,400 "Direct labor costs were charged at $32.50 per hour. The average daily compensation for days worked was $195 per day ($3,900 Number of shipments 40 100 200 340 per month divided by 20 working days per month). The hourly rate was calculated by dividing $195 by the six hours per day available for productive work. Hours of engineering work 60 240 600 900