Question

Randy Inc. produces and sells tablets. The company incurred the following costs for the May: Advertising cost for monthly television ads Attachable keyboard Insurance for delivery truck Factory supervisor's salary Marketing manager's salary Assembly worker wages Miscellaneous soldering material used to seal case Hourly wages for factory security guard CEO's salary Speakers $ 6,600 20,600 660 3,750 3,450 28,000 1,250 2,400 7,800 5,400 Required: Determine each of the following: 1. Direct material 2. Direct labor 3. Manufacturing overhead 4. Total manufacturing cost 5. Total period cost 6. Total variable cost 7. Total fixed cost

Answer 1

Answer:

1. Direct material 2. Direct labour 3. Manufacturing overhead 4. Total manufacturing cost 5. Total period cost 6. Total variable cost 7. Total fixed cost $26,000 $28,000 $7,400 $61,400 $18,510 $55,250 $24,660

Explanation:

1. Direct materials are those with form main parts of the product. In this case, direct materials include, attachable keyboards and speakers.
Therefore, direct materials cost will be Attachable keyboards + Speakers, $20,600 + $5,400 = $26,000

2. Direct labor include the labor charges directly related to the production activities. In this case, direct labor includes assembly worker wages.
Therefore, direct labor cost will be Assembly worker wages, $28,000.

3. Manufacturing overhead include those overhead which are indirectly related with the manufacturing of a product. It include indirect materials, indirect labor and other factory expenses. In this case, Manufacturing overhead include Factory supervisor's salary (indirect labor), Miscellaneous soldering material used to seal case (indirect material) and Hourly wages for factory security guard (indirect labor).

Therefore, Manufacturing overhead = Factory supervisor's salary + Miscellaneous soldering material used to seal case + Hourly wages for factory security guard = $3,750 + $1,250 + $2,400 = $7,400

4. Total manufacturing cost includes the total cost associated with the manufacturing of a product. It includes, direct materials cost, direct labor cost and manufacturing overhead cost.

Therefore, Total manufacturing cost = Direct materials + Direct labor + Manufacturing overhead cost = $26,000 + $28,000 + $7,400 = $61,400

5. Period costs are such costs other than product cost. It mainly includes, selling and administrative expenses.

Therefore, Total period cost = Advertising cost for monthly television ads + Insurance for delivery truck + Marketing manager's salary + CEO's salary
= $6,600 + $660 + $3,450 + $7,800 = $18,510

6. Variable costs are such costs which varies in accordance with change in the volume of output. In this case variable costs include, Attachable keyboard, Speakers, Assembly worker wages and Miscellaneous soldering material used to seal case.

Therefore, Total variable cost = Attachable keyboard + Speakers + Assembly worker wages + Miscellaneous soldering material used to seal case = $20,600 + $28,000 + $1,250 + $5,400 = $55,250

7. Fixed costs are those costs which remain unchanged irrespective of the change in the volume of output. It will always remain fixed. In this case, fixed cost includes, Factory supervisor's salary, Hourly wages for factory security guard, Advertising cost for monthly television ads, Insurance for delivery truck, Marketing manager's salary and CEO's salary.

Total fixed cost = Factory supervisor's salary + Hourly wages for factory security guard + Advertising cost for monthly television ads + Insurance for delivery truck + Marketing manager's salary + CEO's salary
= $3,750 + $2,400 + $6,600 + $660 + $3,450 + $7,800 = $24,660