a) State the difference between direct material and indirect material b) State t
ID: 2558443 • Letter: A
Question
a) State the difference between direct material and indirect material b) State the difference between direct labor and indirect labor c) What is manufacturing overhead d) Sate the difference between period and product cost e) Carmen Company reports the following costs and expenses in March, 2018 Factory ublities Depreciation on factory equipment s 1.205 Depreciabon on delivery trucs Indirect factory labor Indirect materials Direct materials used Factory manager's salary Direct labor Sales salaries Property taxes on factory building Repairs to office equipment Factory repairs 48,900 80,800 137,600 13,000 98,100 2,000 18,000 5,370 Office supplies used Requirements: From the above information, determine the total amount of L Manufacturing overhead L Product costs i. Period costs f) Following information relates to Precision Tools Manufacturing Company for the year 2017 Inventories January 1 5280,000$340,000 470,000 480,000470,000 500,000 Work in process Finished goods $235,000 35,000 Depreciation expenses -office equipment Depreciation expenses-factory equipment Direct labor Heating, light and power-factory Indirect labor Materials purchased 4,000 560,000 580,000 190,000Explanation / Answer
Direct material are materials which are easily identified and directly charged to cost of production. Indirect materials are those which cannot be identified and allocated on the basis of cost Centre. Examples of direct material will be the raw material and indirect materials are the production consumables.
Direct labor are the labor directly working for producing the products like operators on the machine. Indirect labor on the other hand are those which support the production process like accounts, admin.
Manufacturing overhead are those expenses which are related to production like power, utilities, depreciation on factory equipment
Period costs are costs incurred over a period, not necessary production cost like marketing and advertisement. Product costs are costs used to create the product like direct material, direct labor.
Manufacturing overhead = Factory utilities (18600) + Dep on factory equipment (14445) + Factory manager (13000) + Indirect factory labor (48900) + Indirect materials (80800) + Property taxes (2500) + Factory repairs (2000) + Office supplies (5370) = 185,615
Product costs = Direct materials (137600) + Direct labor (98100) + Mfg overheads (185615) = 421,315
Period costs = Dep on delivery trucks (9600) + Sales salaries (46400) + Rep to office equip (2300) + Advertising (18000) = 76,300
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