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.

epreciation on factory equipment	$	800
Depreciation on CEO's company car		100
Speakers used in the keyboard		1,100
Production supervisor's salary		2,800
Glue and screws used in the keyboards		370
Wages of persons who install the speakers		3,000
Cost to run an ad on local radio stations		600
Utilities for the factory		1,200
Personnel manager's salary		2,500
Wages of person who attaches legs to keyboards		1,950

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

Solution

Noteworthy Inc

1. Calculation of total product cost:

Total product cost:
Depreciation on factory equipment	$800
Speakers used in the keyboard	$1,100
Production supervisor's salary	$2,800
Glue and screws in the keyboards	$370
Wages of persons who installs the keyboards	$3,000
Factory Utilities	$1,200
Wages of persons who attaches legs to keyboards	$1,950
Total product cost	$11,220

2. Prime cost:

Prime Cost:
Speakers used in the keyboards	$1,100
Wages of persons who installs the speakers	$3,000
Wages of persons who attaches legs to keyboards	$1,950
Prime Cost	$6,050

3. Manufacturing overhead:

Manufacturing Overhead:
Depreciation on factory equipment	$800
Production supervisor's salary	$2,800
Glue and screws used	$370
Utilities for factory	$1,200
total manufacturing overhead	$5,170

4. Direct labor cost:

Direct labor cost:
Wages of persons who installs the speakers	$3,000
Wages of persons who attaches legs to keyboards	$1,950
total direct labor cost	$4,950

5. Conversion Cost:

Conversion Cost:
Depreciation on factory equipment	$800
Production supervisor's salary	$2,800
Glue and screws in the keyboards	$370
Wages of persons who installs the keyboards	$3,000
Factory Utilities	$1,200
Wages of persons who attaches legs to keyboards	$1,950
Total product cost	$10,120

6. Calculation of total variable cost:

Total Variable Cost:
Speakers used in keyboard	$1,100
Glues and screws	$370
Wages of persons who installs the keyboards	$3,000
Wages of persons who attaches legs to keyboards	$1,950
Utilities	$1,200
Total variable cost	$7,620

7. Calculation of total fixed cost:

Total fixed cost:
Depreciation on factory equipment	$800
Depreciation on CEO's company car	$100
Production supervisor's salary	$2,800
Advertising cost	$600
Personnel manager's salary	$2,500
total fixed cost	$6,800