Conversion Costs:- Expenses incurred when turning raw materials into a product.
[ Direct Labour + Fixed Manufacturing Overhead + Variable Manufacturing Overhead ]
[$1500 + $5000 +$1000= $7500 Conversion cost]
Prime Costs:- Expenditures directly related to creating finished products.
[ Direct Materials + Direct Labour ]
[$3500 + $1500 = $5000 Prime Costs]
(Note: Salary of CEO is Office or Administrative Overheads so it will not include)
Problem 1: Calculate the conversion costs and prime costs from the following information: Fixed manufacturing overhead...
1. Based on the following cost summary, calculate prime costs, conversion costs: selling expense 2,000; factory depreciation expense 5,000; direct labor 3,000; indirect labor 5,000; direct materials used 2,500; admin expenses 1,500. a. 5,500 & 13,000 b. 10,000 & 15,000 c. 8,000 & 12,000 d. 9,000 & 14,000 2. Calculate the overhead costs for Owl Mouse Traps based on the following cost summary: advertising expense 1,500; factory supervisor salaries 2,500; sales salaries 1,500; direct materials used 1,000; 300 indirect materials...
Exercise 4 (Classification of costs, prime and conversion costs) Tanaka Metal Products reports the following components in its manufacturing costs for April 20X1 (in thousands): Direct costs: P430 Direct materials Direct manufacturing labor salaries Subcontracting 110 120 P 660 Manufacturing overhead: Fringe benefits on direct manufacturing labor Production setup Other manufacturing overhead 40 60 340 P1,000 240 Subcontracting costs are treated as a direct-cost item separate from direct materials. Required 1. Compute (a) the prime costs and (b) the conversion...
2. Direct Labor Costs + Manufacturing Overhead: a. Conversion Cost b. Prime Cost c. Manufacturing Overhead d. Work in Process
Silicon Inc. has provided the following information for the year ended December 31, Year 1. Master Budget Actual Costs 5,000 units 4,500 units Direct materials $ 35,000 $ 32,500 Direct labor 15,000 12,500 Variable manufacturing overhead 8,000 7,800 Fixed manufacturing overhead 16,000 17,500 Total manufacturing cost $ 74,000 $ 70,300 Knowledge Check 01 What is the direct materials spending variance? $1,000 favorable $1,000 unfavorable $3,500 favorable $3,500 unfavorable Knowledge Check 02 What is the direct labor volume variance? $2,500 favorable...
2.Which of the following costs is both a prime cost and a conversion cost? direct materials direct labor manufacturing overhead administrative costs
QUESTION 15 Advertising Costs are an example of: O 1. Fixed Manufacturing Cost O 2. Prime Cost O 3. Variable Product Cost O 4. Fixed Selling Cost QUESTION 5 Wood used in the manufacture of furniture is an example of O 1. Variable and direct cost O 2. Fixed and direct Cost O 3. Variable and indirect cost O 4. Fixed and indirect cost QUESTION3 The following costs are budgeted for Ghana Corporation for next year: Total variable co Total...
Woodcarving Co. incurred the following costs during May: Conversion costs $ 460,000 Prime costs $ 390,000 Manufacturing overhead $ 315,000 What was the amount of direct materials and direct labor used in May? Direct materials Direct labor A. $ 100,000 $ 295,000 B. $ 105,000 $ 215,000 C. $ 245,000 $ 145,000 D. $ 70,000 $ 75,000
Pinnacle Manufacturing manufactures custom wheel covers. Identify each of the preceding costs as either a prime cost period cost or conversion cost. If the cost is a prime cost, decide whether it is for direct materials (DM), direct labor (DL), or manufacturing overhead (MOH). (Select "Both Prime and Conversion Costs" if both of the categories apply for a particular item.) Product Costs Prime/Conversion/Period cost MOH DM MOH MOH Period Cost Conversion Cost Prime Cost Conversion Cost Conversion Cost Administrative Salaries...
GIVEN THE FOLLOWING FOR A COMPLETED JOB TOTAL PRIME COSTS TOTAL CONVERSION COSTS OVERHEAD IS 200% OF DIRECT LABOR $40,000 $30,000 COMPUTE DIRECT MATERIAL COST DIRECT LABOR COST OVERHEAD COST TOTAL MANUFACTURING COSTS #2 GIVEN THE FOLLOWING DIRCT MATERIAL= $400,000 DIRECT LABOR = $200,000 OVERHEAD =$100,000 TOTAL MANUFACTURING COST ASSUME ALL WIP WAS COMPLETED AND TRANSFERRED TO FINISHED GOODS MAKE THE ENTRY COST OF GOODS MANUFACTURED ASSUME ALL FINISHED GOODS WERE SOLD MAKE THE ENTRY FOR COST OF GOODS SOLD
Is Indirect Labor part of Fixed Overhead Costs? I have to calculate the Overhead Allocation Rate based on the budgeted quantity of cost drivers. From my problem: Overhead is allocated on the basis of direct labor hours. Variable overhead costs include materials and supplies at $4.50 per direct labor hour. Fixed overhead costs include depreciation on equipment and vehicles of $25,000 and miscellaneous other job-related expenses of $10,000. There is also indirect labor of $6,500. My answer: Variable OH Cost...