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 Depreciation on CEO's company car Speakers used in the keyboard Production supervisor's salary Glue and screws used in the keyboards Wages of persons who install the speakers Cost to run an ad on local radio stations Utilities for the factory Personnel manager's salary Wages of person who attaches legs to keyboards 840 130 1,200 2,400 260 2,880 670 1,300 2,620 1,980 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. 1. Total Product Cost 2. Prime Cost 3. Manufacturing Overhead 4. Direct Labor Cost 5. Conversion Cost 6. Total Variable Cost 7. Total Fixed Cost

Answer 1

	Answer
1	Computation of Total Product Cost
	Direct material
	Speakers used in keyboard	$       1,200
2	Direct labor
	Wages of persons who instal speakers	$       2,880
	Wages of persons who attach legs to keyboard	$       1,980
	Total direct labor cost	$       4,860
3	Manufacturing overhead
	Depreciation on factory equipment	$          840
	Production supervisors salary	$       2,400
	Glue and screws used in keyboard	$          260
	Utilities for the factory	$       1,300
	Total manufacturing overhead	$       4,800
	Total product cost for the company	$     10,860

4	Computation of Prime Cost
	Direct material cost	$       1,200
	Direct labor cost	$       4,860
	Prime cost	$       6,060
5	Computation of Conversion Cost
	Direct labor cost	$       4,860
	Manufacturing overhead cost	$       4,800
	Conversion cost	$       9,660
6	Computation of Total Variable   Cost
	Direct material	$       1,200
	Direct labor	$       4,860
	Glue and screws used in keyboard	$          260
	Utilities for the factory	$       1,300
	Total variable cost	$       7,620
7	Computation of Total Fixed Cost
	Depreciation on factory equipment	$          840
	Production supervisor salary	$       2,400
	Depreciation on CEO's company car	$          130
	Cost to run ad on local radio station	$          670
	Personnel manager's salary	$       2,620
	Total fixed cost	$       6,660