The following cost data for the year just ended pertain to Sentiments, Inc., a g

Question

The following cost data for the year just ended pertain to Sentiments, Inc., a greeting card manufacturer:

*All services are provided to manufacturing departments.

§Cost of idle time is an overhead item; it is not included in the direct-labor wages given above.

The rental of sales space was made necessary when the sales offices were converted to storage space for raw material.

Compute each of the following costs for the year just ended

a.Total prime cost

Total manufacturing overhead costs

Total conversion costs

Total product costs

Total period costs

Direct material $ 2,200,000 Advertising expense 98,000 Depreciation on factory building 115,000 Direct labor: wages 535,000 Cost of finished goods inventory at year-end 115,000 Indirect labor: wages 142,000 Production supervisor’s salary 47,000 Service department costs* 100,000 Direct labor: fringe benefits 99,000 Indirect labor: fringe benefits 30,000 Fringe benefits for production supervisor 11,000 Total overtime premiums paid 55,000 Cost of idle time: production employees§ 40,000 Administrative costs 150,000 Rental of office space for sales personnel† 15,000 Sales commissions 6,000 Product promotion costs 10,000

Explanation / Answer

a) Total Primecost:

Direct materials : $ 2200000

Direct Labour:

Wages $535000

Fringe benifits $ 99000 634000

$ 2854000   

Total Manufacturing Overheads:

Depreciation on Factory building $ 115000

Indirect labour :

Wages : $ 142000

Fringe benifits : $ 30000 $172000

Production Supervisor Salary $ 47000

Frinde benifits for production supervisor $11000

Cost of Idle time $40000

Cost of Overtime time paid $55000

Service department costs $100000

$ 540000

Total Conversion Costs :

Total Conversion costs = Direct labourcosts + Manufacturing overheads

= $ 634000 + 540000

= $ 1174000

Total product cost:

Total product cost = Primecost + Manufacturing overhead cost

= $2854000 + $ 540000

= $ 3394000

Total period costs:

Administrative Costs $ 155000

Sales commision $ 6000

Product promotion $10000

Advertisement expenses $98000

Rental of office space $15000

$284000

Notes :

1) it is assumed that fringe benifites provided to the directlabour are part of directlabour cost and indirect labour and benifits provided to them are treated as Overhead cost

2) Conversional costs are those that are incured for converting raw material into finished goods.As a result conversion costs include labour and Manufacturiong overheads

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.