Question

The following cost data for the year just ended pertain to Sentiments, Inc., a greeting card manufacturer:

Direct material	$	2,300,000
Advertising expense		97,000
Depreciation on factory building		115,000
Direct labor: wages		470,000
Cost of finished goods inventory at year-end		115,000
Indirect labor: wages		141,000
Production supervisor’s salary		46,000
Service department costs*		100,000
Direct labor: fringe benefits		105,000
Indirect labor: fringe benefits		32,000
Fringe benefits for production supervisor		10,000
Total overtime premiums paid		55,000
Cost of idle time: production employees§		40,000
Administrative costs		150,000
Rental of office space for sales personnel†		15,000
Sales commissions		6,000
Product promotion costs		10,000

*All services are provided to manufacturing departments.

§Cost of idle time is an overhead item; it is not included in the direct-labor wages given above.

†The rental of sales space was made necessary when the sales offices were converted to storage space for raw material.

Required:
1. Compute each of the following costs for the year just ended:

A) Total Prime Cost:

B) Total Manufacturing Cost:

C) Total Conversion Costs

D) Total Production Cost

E) Total Period Costs

Answer 1

A) Total prime cost
direct material			2300000
direct labor			470000
fringe benefit of direct labor			105000
Total prime cost			2875000
B) total manufacturing cost
Depreciation on factory building			115000
indirect labor : wages			141000
production supervision salaries			46000
service department cost			100000
fringe benefit of indirect labor			32000
fringe benefit of supervisor			10000
overtime premium			55000
cost of idle time			40000
Total manufacturing cost			539000
C) Total conversion cost
Direct labor (470000+105000)			575000
manufacturing cost			539000
tOtal conversion cost			1114000
D) Total production cost
Direct material			2300000
direct labor			575000
manufacturing overhead			539000
total production cost			3414000
E) period cost
advertising expenses			97000
administrative cost			150000
rental of office space for sale			15000
sale commission			6000
product promotion cost			10000
Total period cost			278000