The following cost data for the year just ended pertain to Heartstrings, Inc., a
ID: 2392663 • Letter: T
Question
The following cost data for the year just ended pertain to Heartstrings, Inc., a greeting card manufacturer: Service department costs Direct labor: wages Direct labor: fringe benefits Indirect labor: fringe benefits Fringe benefits for production supervisor Total overtime premiums paid Cost of idle time: production employees Administrative costs Rental of office space for sales personnel Sales commissions Product promotion costs Direct material used Advertising expense Depreciation on factory building Cost of finished-goods inventory at year-end Indirect labor: wages Production supervisor's salary $ 100,000 545,000 96,000 32,000 11,000 55,000 40,000 150,000 15,000 4,000 0,000 2,200,000 98,000 116,000 115,000 141,000 $46,000 All services are provided to manufacturing departments SCost of idle item is an overhead item; it is not included in direct-labor wages given above tThe rental of sales space was made necessary when the sales offices were converted to storage space for raw materialExplanation / Answer
a)
Total Prime Cost
Direct Material
2200000
Direct Labour
-Wages
545000
- Fringe Benefits
96000
2841000
b)
Total Manufacturing Overhead Costs
Indirect Wages
- Wages
141000
- Fringe Benefits
32000
Production Supervisor
- Salary
46000
- Fringe Benefits
11000
Depreciation on Factory Building
116000
Total Overtime Premium Paid
55000
Cost of Idle time: production employees
40000
Service department costs
100000
541000
c)
Total Conversion Costs
Direct Labour (545000 + 96000)
641000
Manufacturing Overhead
541000
1182000
d)
Total Product Costs
Prime Cost
2841000
Manufacturing Overhead
541000
3382000
e)
Total Period Costs
Administrative Costs
150000
Rental of Office Space for sales personnel
15000
Sales Commission
4000
Product promotion costs
10000
Advertising Expenses
98000
277000
a)
Total Prime Cost
Direct Material
2200000
Direct Labour
-Wages
545000
- Fringe Benefits
96000
2841000
b)
Total Manufacturing Overhead Costs
Indirect Wages
- Wages
141000
- Fringe Benefits
32000
Production Supervisor
- Salary
46000
- Fringe Benefits
11000
Depreciation on Factory Building
116000
Total Overtime Premium Paid
55000
Cost of Idle time: production employees
40000
Service department costs
100000
541000
c)
Total Conversion Costs
Direct Labour (545000 + 96000)
641000
Manufacturing Overhead
541000
1182000
d)
Total Product Costs
Prime Cost
2841000
Manufacturing Overhead
541000
3382000
e)
Total Period Costs
Administrative Costs
150000
Rental of Office Space for sales personnel
15000
Sales Commission
4000
Product promotion costs
10000
Advertising Expenses
98000
277000
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