Question

Star Repairs Co. does all the repair work for a medium-sized manufacturer of handheld computer games. The games are sent directly to Star, and after the games are repaired, Star bills the game manufacturer for cost plus a 20 percent markup. In the month of February, purchases of parts (replacement parts) by Star amounted to $97,000, the beginning inventory of parts was $38,500, and the ending inventory of parts was $15,250. Payments to repair technicians during the month of February totaled $52,500. Overhead incurred was $121,000.

a. What was the cost of materials used for repair work during the month of February?

b. What was the prime cost for February?

c. What was the conversion cost for February?

d. What was the total repair cost for February?

Answer 1

Answer- a)- The cost of materials used for repair work during the month of February= Beginning inventory + Inventory purchased- Ending inventory

= $38500+$97000-$15250

= $120250

b)- The prime costs for February was = Direct materials costs+ Payments to repair technicians

= $120250+$52500

= $172750

c)- The conversion costs for February was = Payments to repair technicians+ Overhead costs

= $52500+$121000

= $173500

d)- The repair costs for February was = Cost of materials+ Payments to repair technicians+ overhead

= $120250+$52500+$121000

= $293750