Question

The Mango Production manufactures pens and customizes them for retail sales on the premises. The shop sold 5000 pens last month. Costs incurred during the last month include the following: Cost of ink used in pens 560.000 Wages of pen filles 5.000 Wages of pen designers 4.000 Wages of sales personnel 1.000 Wages of designers who experiment with new ink and designs 3.000 Wages of the employee who repair the shop's display 2.000 Salary of the owner's assistant 1.200 Cost of the new sign displayed in front of the retail shop 400 Cost of clectricity used in the cutting department Depreciation on cutting and filling machines 10,000 800 1.400 Cost of advertisements in local media Cost of hiring a plane and a pilot to fly along the beach pulling a banner advertising the shop Cost of insurance for the production employees Rent for the Building 2.000 6,000 Apportion the rent into different categories based on the following facts. Half of the building's first floor is used for administrative offices. The other half of it is used for retail sales shop. The second floor is used for making pens and storage of raw material. Required: Classify the above costs into one of the following categories: Direct Materials Costs Direct Labor Costs Indirect manufacturing Costs Distribution costs Selling costs Marketing costs Research and development costs, general and administrative costs. What is the total cost for each category?

Answer 1

Direct Material costs
Cost of ink used in pens	60000
Total cost	6000
Direct Labor costs
Wages of pen filers	5000
Wages of pen designers	4000
Total cost	9000
Indirect manufacturing costs
Cost of electricity used in the cutting department	200
Depreciation on cutting and filing machines	10000
Cost of insurance for production employees	2000
Rent [6000/2]	3000
Total cost	15200
Distribution costs	0
Selling costs
Wages of sales personnel	1000
Wages of the employee who repairs the shop display	2000
Cost of the new sign displayed in front of the retail shop	400
Rent of the building [6000 /2 * 1/2]	1500
Total costs	4900
Marketing costs
Costs of advertisements in local media	800
Cost of hiring plane	1400
Total costs	2200
Research and development costs, general and administrative costs
Wages of designers who experiment with new ink and designs	3000
Salary of the owners assistant	1200
Rent of the building [6000 /2 * 1/2]	1500
Total costs	5700