Question

The following product costs are available for Kellee Company on the production of eyeglass frames: direct materials, $32,125; direct labor, $23.50; manufacturing overhead, applied at 225% of direct labor cost; selling expenses, $22,225; and administrative expenses, $31,125. The direct labor hours worked for the month are 3,200 hours. A. What are the prime costs? B. What are the conversion costs? C. What is the total product cost? D. What is the total period cost?

E. If 6,425 equivalent units are produced, what is the equivalent material cost per unit?

F. What is the equivalent conversion cost per unit?

(only answer E and F)

Answer 1

	Cost Details	Per unit cost	Qty/Labor Hrs	Total Cost
a	Direct Materials			$                 32,125
b	Direct Labor	$                   23.50	3,200	$                 75,200
c	Manufacturing Overhead @225% of Direct Labor cost=75200*225%=			$               169,200
d	Selling expenses			$                 22,225
e	Administrative Expense			$                 31,125

Ans A.
Prime cost =Direct Materials+Direct Labor cost=a+b=	$         107,325.00
Ans B.
Conversion Cost=Direct Labor cost+Manufacturing Overhead cost=b+c	$         244,400.00
Ans C.
Total Product Cost =Direct Material+Direct Labor +
Manufacturing Overhead cost =a+b+c	$         276,525.00
Ans D.
Total period cost =Selling cost +Admin Expenses =d+e=	$            53,350.00
Ans E.
Total Direct Material cost	$                 32,125
No of Equivalent Units Produced =	6,425
Equivalent Material cost per unit=32125/6425=	$                     5.00
Ans F
Total Conversion cost =	$         244,400.00
No of Equivalent Units Produced =	6,425
Equivalent Conversion cost per unit=	$                   38.04