Your friend, Suzie Whitson, has designed a new type of outdoor toy that helps ch

Question

Your friend, Suzie Whitson, has designed a new type of outdoor toy that helps children learn basic concepts such as colors, numbers, and shapes. Suzie’s product will target two groups: day care centers in warm climates and home school programs. Her company is Jiffy Jet and costs for last month follow:

Required:
1. Identify each of the preceding costs as either a product or a period cost. If the cost is a product cost, decide whether it is for direct materials (DM), direct labor (DL), or manufacturing overhead (MOH). (Select "NA" wherever necessary.)     



2. Determine the total cost for each of the following:

a. Direct Materials

b. Direct Labor

c. Manufacturing Overhead

d. Prime Cost

e. Conversion Cost

f. Total Product Cost $55,915

Factory rent $ 3,030 Company advertising 1,030 Wages paid to assembly workers 31,800 Depreciation for salespersons’ vehicles 2,060 Screws 505 Utilities for factory 805 Assembly supervisor’s salary 3,530 Sandpaper 115 President’s salary 5,050 Plastic tubing 4,130 Paint 230 Sales commissions 1,250 Factory insurance 1,130 Depreciation on cutting machines 2,140 Wages paid to painters 8,500

Explanation / Answer

1.

2. a) Direct materials

b) Direct labour

c) Manufacturing overhead

d) Prime cost

Prime cost = direct material + direct labour

= 850+40300

= 41,150

e) Conversion cost = labour cost + manufacturing overhead

= 40300 + 14765

= $55,065

F. Total product cost = prime cost + manufacturing cost

= 41150 + 14765

= $55,915

Particulars Amount Type of cost Factory rent                               3,030 Product cost/MOH Company advertising                               1,030 Period cost Wages paid to assembly workers                            31,800 Product cost/DL Depreciation for salesperson vehicle                               2,060 Period cost screws                                  505 Product cost/DM utilities for factory                                  805 Product cost/MOH Assembly supervisors salary                               3,530 Product cost/MOH Sandpaper                                  115 Product cost/DM Presidents salary                               5,050 Period cost Palstic tubing                               4,130 Product cost/MOH paint                                  230 Product cost/DM Sales commission                               1,250 Period cost Factory insurance                               1,130 Product cost/MOH Depreciation on cutting machine                               2,140 Product cost/MOH Wages paid to painters                               8,500 Product cost/DL

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