Question

D-Management of Farah Corporation has asked your help as an intern in preparing some key reports for April. Direct materials cost was $30,000, manufacturing overhead costs for the month was $54,000, and direct labor was 60% of conversion cost. Required: Calculate direct labor cost and prime cost. (5 marks) E- The two main sets of accounting standards followed by businesses are GAAP and IFRS. Briefly explain how the balance sheet is formatted under each set. (You can search the internet and/or university e-library to answer this question) (5 marks)

Answer 1

Conversion Cost :
Manufacturing Overheads	54000
Less: Direct material	30000
	Conversion Cost :	24000

Direct Labor Cost	60% of Conversion cost
	= 60% of 24000
	14400

Prime Cost
Direct Labor	14400
Direct Material	30000
Prime Cost	44400