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	$	970
Depreciation on CEO's company car		190
Speakers used in the keyboard		1,290
Production supervisor's salary		2,230
Glue and screws used in the keyboards		270
Wages of persons who install the speakers		2,930
Cost to run an ad on local radio stations		685
Utilities for the factory		1,350
Personnel manager's salary		2,540
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					970
	Speakers used in the Keyboard					1,290
	Production supervisor's salary					2,230
	Glue and Screws used in the keyboards					270
	Wages of persons who install the speakers					2,930
	Utilities for the factory					1,350
	Wages of person who attaches legs to keyboards					1,990
	total product cost					11030
2)	Prime cost
	Speakers used in the Keyboard					1,290
	Wages of persons who install the speakers					2,930
	Wages of person who attaches legs to keyboards					1,990
	Prime cost					6,210
3)	Manufacturing overhead
	Depreciation on Factory Equipment					970
	Production supervisor's salary					2,230
	Glue and Screws used in the keyboards					270
	Utilities for the factory					1,350
	total manufacturing overhead					4820
4)	Direct labor
	Wages of persons who install the speakers					2,930
	Wages of person who attaches legs to keyboards					1,990
	Total direct labor					4,920
5)	Conversion cost
	Direct labor					4,920
	total manufacturing overhead					4820
	Conversion cost					9,740
6)	Speakers used in the Keyboard					1,290
	Glue and Screws used in the keyboards					270
	Wages of persons who install the speakers					2,930
	Wages of person who attaches legs to keyboards					1,990
	utilities for the factory					1,350
	Total variable cost					7,830
7)	Total fixed cost
	Depreciation on Factory Equipment					970
	Production supervisor's salary					2,230
	depreciation on CEO's company car					190
	Personnel managers salary					2,540
	Cost of run an ad on local radio stations					685
	Total fixed cost					6615