E1-6 Calculating Costs [LO 1-4] Cotton White, Inc., makes specialty clothing for

Question

E1-6 Calculating Costs [LO 1-4] Cotton White, Inc., makes specialty clothing for chefs. The company reported the following costs for 2015: Factory rent $ 37,500 25,400 76,500 31,000 1,170 23,500 31,300 76,700 40,400 810 19,300 6,200 51,500 Company advertising Wages paid to seamstresses Depreciation on salespersons' vehicles Thread Utilities for factory Cutting room supervisor's salary President's salary Premium quality cotton material Buttons Factory insurance Depreciation on sewing machines Wages paid to cuttens Required 1. Compute the cost of direct materials for Cotton White. 2. Compute the cost of direct labor for Cotton White. Labor Cost 3. Compute the cost of manufacturing overhead for Cotton White. 4. Compute the total manufacturing cost for Cotton White.

Explanation / Answer

(1) Direct Material Cost :-

Premium quality cotton material is Direct Material i.e. $40400

(2) Direct Labour Cost :-

Wages paid to seamstresses + wages paid to cutters

76500 + 51500 = $128000

(3) Manufacturing Overhead :-

Factory Rent + Utilities for factory + Cutting room supervisor's salary + Factory insurance + Depreciation on sewing machines +Thread + Buttons

37500 + 23500 + 31300 + 19300 + 6200 + 1170 + 810 = $119780

(4) Total Manufacturing cost :-

Direct Material Cost + Direct Labour Cost + Manufacturing Overhead

40400 + 128000 + 119780 = $288180

(5) Prime Cost :-

Direct Material cost + Direct Labour cost

40400 + 128000 = $168400

(6) Conversion Cost :-

Direct Labour Cost + Manufacturing Overhead

128000 + 119780 = $247780

(7) Period Cost :-

Company Advertising + Depreciation on salesperson vehicle + President salary

25400 + 31000 + 76700 = $133100

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