Question

Noteworthy, Inc., produces and sells small electronic keyboards. Assume that you have the following information about Noteworthy’s costs for the most recent month.

Depreciation on factory equipment	$	890
Depreciation on CEO's company car		170
Speakers used in the keyboard		1,140
Production supervisor's salary		2,240
Glue and screws used in the keyboards		250
Wages of persons who install the speakers		2,920
Cost to run an ad on local radio stations		610
Utilities for the factory		1,290
Personnel manager's salary		2,610
Wages of person who attaches legs to keyboards		1,990

Required:

1. Calculate the total product cost for Noteworthy.

2. Calculate the prime cost for Noteworthy.

3. Calculate the manufacturing overhead for Noteworthy.

4. Calculate the direct labor for Noteworthy.

5. Calculate the conversion cost for Noteworthy.

6. Calculate the total variable cost (with number of units produced as the activity) for Noteworthy.

7. Calculate the total fixed cost (with number of units produced as the activity) for Noteworthy.

Answer 1

1)	Total Product Cost
	Depreciation on Factory Equipment					890
	Speakers used in the Keyboard					1,140
	Production supervisor's salary					2,240
	Glue and Screws used in the keyboards					250
	Wages of persons who install the speakers					2,920
	Utilities for the factory					1,290
	Wages of person who attaches legs to keyboards					1,990
	total product cost					10720
2)	Prime cost
	Speakers used in the Keyboard					1,140
	Wages of persons who install the speakers					2,920
	Wages of person who attaches legs to keyboards					1,990
	Prime cost					6,050
3)	Manufacturing overhead
	Depreciation on Factory Equipment					890
	Production supervisor's salary					2,240
	Glue and Screws used in the keyboards					250
	Utilities for the factory					1,290
	total manufacturing overhead					4670
4)	Direct labor
	Wages of persons who install the speakers					2,920
	Wages of person who attaches legs to keyboards					1,990
	Total direct labor					4,910
5)	Conversion cost
	Direct labor					4,910
	total manufacturing overhead					4670
	Conversion cost					9,580
6)	Speakers used in the Keyboard					1,140
	Glue and Screws used in the keyboards					250
	Wages of persons who install the speakers					2,920
	Wages of person who attaches legs to keyboards					1,990
	utilities for the factory					1,290
	Total variable cost					7,590
7)	Total fixed cost
	Depreciation on Factory Equipment					890
	Production supervisor's salary					2,240
	depreciation on CEO's company car					170
	Personnel managers salary					2,610
	Cost of run an ad on local radio stations					610
	Total fixed cost					6520