Question

Quail Company builds snowboards. Quail Company has reported the following costs for the previous year. Assume...

Quail Company builds snowboards. Quail Company has reported the following costs for the previous year. Assume no production inventories.

Cost of fiberglass (raw material) $ 98,000
Factory rent $ 55,000
Advertising $ 121,000
Utilities for factory $ 25,000
Wages of assembly workers $ 98,000
Production supervisor salary $ 45,000
Sales manager salary $ 41,000
Factory property taxes $ 28,000
Depreciation on production equipment $ 26,000
Cost of bindings (raw material) $ 31,000
Screws $ 1,700
Wages of snowboard painters $ 84,000
Wages for maintenance workers $ 47,000


a. Compute the direct material costs.



b. Compute the direct labor cost.



c. Compute the manufacturing overhead.



d. Compute the total manufacturing cost.



e. Compute the prime cost.



f. Compute the conversion cost.



g. Compute the total period cost.

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Answer #1

Direct material cost = cost of fiberglass + cost of bindings = 98000 + 31000 = 129000

Direct labor cost = wages of snowboard painters + wages of assembly workers = 84000 + 98000 = 182000

Manufacturing overhead = Factory rent + utilities + production supervisor salary + factory taxes+ depreciation on production equipment + screws + maintenance wages = 55000 + 25000 + 45000 + 28000 + 26000 + 1700 + 47000

= 227700

Total manufacturing cost = Direct material + direct labor + Manufacturing overhead = 129000 + 182000 + 227700 = 538700

Prime cost = Direct material + direct labor = 129000 +182000 = 311000

Conversion cost = Direct labor + manufacturing overhead = 182000 + 227700 = 409700

Period cost = Advertising + sales manager salary = 121000 + 41000 = 162000

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