Question

3,640 Your friend, Suzie Whitson, has designed a new type of outdoor toy that helps children learn basic concepts such as colors, numbers, and shapes. Suzie's product will target two groups: day care centers in warm climates and home school programs. Her company is Jiffy Jet and costs for last month follow: Factory rent $ 3,100 Company advertising 1,170 Wages paid to assembly workers 31,900 Depreciation for salespersons' vehicles 2,180 Screws 590 Utilities for factory 399 835 035 Assembly supervisor's salary Sandpaper 165 President's salary 5,200 Plastic tubing DO 4,140 Paint 205 Sales commissions 1,370 Factory insurance 1,190 Depreciation on cutting machines 2,160 Wages paid to painters 8,000 Assume that Suzie Whitson has decided to begin production of her outdoor children's toy. Required: 1 and 2. Identify each of the preceding costs as either a product or a period cost. If the cost is a product cost, decide whether it is for direct materials (DM), direct labor (DL), or manufacturing overhead (MOH) and also identify each of the preceding costs as variable or fixed cost. 3. Determine the total cost for each of the following:

Answer 1

Costs	Type of Cost	Cost Head	Cost Classification
Factory rent	Product	MOH	Fixed
Company advertising	Period	NA	Fixed
Wages paid to assembly workers	Product	DL	Variable
Depreciation for salespersons' vehicles	Period	NA	Fixed
Screws	Product	MOH	Variable
Utilities for factory	Product	MOH	Variable
Assembly supervisor's salary	Product	MOH	Fixed
Sandpaper	Product	MOH	Variable
President's salary	Period	NA	Fixed
Plastic tubing	Product	DM	Variable
Paint	Product	MOH	Variable
Sales commissions	Period	NA	Variable
Factory insurance	Product	MOH	Fixed
Depreciation on cutting machines	Product	MOH	Fixed
Wages paid to painters	Product	DL	Variable

a)	Direct Materials
	Plastic tubing	$ 4,140
	Direct Materials	$ 4,140
b)	Direct labor
	Wages paid to assembly workers	$ 31,900
	Wages paid to painters	$ 8,000
	Direct labor	$ 39,900
c)	Manufacturing overhead
	Factory rent	$ 3,100
	Screws	$ 590
	Utilities for factory	$ 835
	Assembly supervisors salary	$ 3,640
	Sandpaper	$ 165
	Paint	$ 205
	Factory insurance	$ 1,190
	Depreciation on cutting machines	$ 2,160
	Manufacturing overhead	$ 11,885
d)	Prime cost ( $ 4,140 + $ 39,900 )	$ 44,040
e)	Conversion cost ( $ 39,900 + $ 11,885 )	$ 51,785
f)	Total product cost ($ 4,140 + $ 39,900 + $ 11,885 )	$ 55,925
g)	Total period cost
	Company advertising	$ 1,170
	Depreciation for salespersons vechicles	$ 2,180
	President's salary	$ 5,200
	Sales commission	$ 1,370
	Total Period cost	$ 9,920
h)	Total variable cost
	Company advertising	$ 1,170
	Wages paid to assembly workers	$ 31,900
	Screws	$ 590
	Utilities for factory	$ 835
	Sandpaper	$ 165
	Plastic tubing	$ 4,140
	Paint	$ 205
	Sales commission	$ 1,370
	Wages paid to painters	$ 8,000
	Total variable cost	$ 48,375
i)	Total Fixed cost
	Factory rent	$ 3,100
	Depreciation for salespersons vechicles	$ 2,180
	Assembly supervisors salary	$ 3,640
	President's salary	$ 5,200
	Factory insurance	$ 1,190
	Depreciation on cutting machines	$ 2,160
	Total fixed cost	$ 17,470