How do you find the net benefit in this? show the methodRelevant CostAmountSales Revenue (12000 x $31.50)$378,000Less: Direct Material (12000 x ($16.40-$4.20))$146,400Direct Labor (12000 x $4.50)$54,000Variable Manufacturing Overhead (12000 x $7.50) (Notes)$90,000Additional setup costs$8400Special equipment cost$5800 Net benefit$73,400 Notes:Total manufacturing overhead rate$40 per hourLess: Fixed manufacturing overhead (1500000/60000)$25 per hourVariable manufacturing overhead $15 per hourRequired machine hour for one unit is half-hour i.e. $7.5 per unit

An income statement is a financial report that indicates the revenue and expenses of a business. It…

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Chapter2: Basic Cost Management Concepts

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Problem 21E: Ellerson Company provided the following information for the last calendar year: During the year,...

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How do you find the net benefit in this? show the method

Relevant Cost	Amount
Sales Revenue (12000 x $31.50)	$378,000
Less:
Direct Material (12000 x ($16.40-$4.20))	$146,400
Direct Labor (12000 x $4.50)	$54,000
Variable Manufacturing Overhead (12000 x $7.50) (Notes)	$90,000
Additional setup costs	$8400
Special equipment cost	$5800
Net benefit	$73,400

Notes:

Total manufacturing overhead rate	$40 per hour
Less: Fixed manufacturing overhead (1500000/60000)	$25 per hour
Variable manufacturing overhead	$15 per hour
Required machine hour for one unit is half-hour i.e.	$7.5 per unit