Kumar Products Limited manufactures an industrial grade floor polish which it sells in 5kg tubs.Each tub sells for £26.50.Direct materials per tub cost £3.20 and direct labour costs £2.90. Factory production overhead is recovered on the basis of direct labour hours.Each tub of product requires 20 minutes of direct labour input, and the recovery rate per labour hour is £31.74.
What is the contribution per tub of polish?

Question

Quizplus · Accepted Answer

The contribution per tub is calculated as selling price minus variable costs (direct materials, direct labour, and variable overhead). The direct labour cost is £2.90, direct materials cost is £3.20, and the overhead cost per tub is (20/60) hours * £31.74 = £10.58. Therefore, the contribution per tub is £26.50 - (£3.20 + £2.90 + £10.58) = £9.82.

Kumar Products Limited Manufactures an Industrial Grade Floor Polish Which