Question

Your cousin, Mary, produces an educational toy. The toy is made primarily of wood and plastic...

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 $

Homework Answers

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

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