Question

Your cousin, Mary, produces an educational toy. The toy is made primarily of wood and plastic and it is manufactured, assembled and painted at the factory. Her company, Play & Learn, has incurred the following costs during the month:

Depreciation on the cutting machine	$	3,000
Depreciation on salespersons' vehicles	$	2,500
Factory insurance	$	4,000
Utilities for Factory	$	1,000
Rent for Factory	$	5,000
Advertising	$	1,500
Sales Commissions	$	2,000
Wages paid to painters	$	10,000
Wages paid to assembly workers	$	25,000
Assembly Supervisor's salary	$	3,500
Company President's salary	$	5,000
Wood	$	2,000
Plastic	$	1,000
Screws	$	650
Sandpaper	$	200
Paint	$	500

a) The total cost of Direct Materials is $ 4350

b) The total cost for Direct Labor is $ 35000

c) The total cost for Manufacturing Overhead is $ 13500

d) The total Prime Cost is $ 39350

e) The total Conversion Cost is $

f) The total Product Cost is $

g) The total Period Cost is $

Answer 1

Total Cost for Direct Material will be as follow:
Wood Cost: $2,000

Plastic Cost: $1,000

Screws: $650

Sandpaper: $200

Paint: $500

Total Direct Material Cost: $4,350

Total Cost for Direct Labour will be as follow:
Wages paid to Painters: $10,000

Wages paid to assembly workers: $25,000

Total Direct Labour Cost: $35,000

Total Cost for Manufacturing Overheads:
Factory Insurance: $4,000

Utilities for Factory: $1,000

Rent for Factory: $5,000

Assembly Supervisor's Salary: $3,500

Total Manufacturing Overheads Cost: $13,500

Total Prime Cost: (Direct Material Cost + Direct Labour Cost + Direct Expenses)
Direct Material Cost: $4,350

Direct Labour Cost: $35,000

Direct Expenses: Nil

Total Prime Cost: $39,350