Question

The following information is available for Wonderway, Inc., for 2015:

Factory rent $ 29,300
Company advertising 20,800
Wages paid to laborers 85,000
Depreciation for president's vehicle 8,150
Indirect production labor 2,000
Utilities for factory 30,000
Production supervisor's salary 31,300
President's salary 61,800
Direct materials used 35,800
Sales commissions 7,500
Factory insurance 14,000
Depreciation on factory equipment 27,800

Required:
1. Calculate the direct labor cost for Wonderway.



2. Calculate the manufacturing overhead cost for Wonderway.



3. Calculate the prime cost for Wonderway.



4. Calculate the conversion cost for Wonderway.



5. Calculate the total manufacturing cost for Wonderway.



6. Calculate the period expenses for Wonderway.

Answer 1

1) Direct labor cost = $85,000

2) Manufacturing overhead cost = $134,400

3) Prime cost for Wonderway = $120,800

4) Conversion cost = $219,400

5) Total manufacturing cost = $255,200

6) Period expenses = $98,250

Explanation:

1) Direct labor cost will include:

Wages paid to laborers = $85,000

Therefore,

Direct labor cost = $85,000

2) The manufacturing overhead cost for Wonderway will include the sum of

Factory rent $29,300

Indirect production labor $2,000

Utilities for factory $30,000

Production supervisor's salary $31,300

Factory insurance $14,000

Depreciation on factory equipment $27,800

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Manufacturing overhead cost $134,400

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3) The prime cost for Wonderway will include

Wages paid to laborers $85,000

Direct materials used $35,800

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Prime cost for Wonderway $120,800

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4) The conversion cost for Wonderway will include

Wages paid to laborers $85,000

Manufacturing overhead cost $134,400

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Conversion cost $219,400

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5) The total manufacturing cost for Wonderway will include

Prime cost for Wonderway $120,800

Manufacturing overhead cost $134,400

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Total manufacturing cost $255,200

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6) The period expenses for Wonderway will include

Company advertising $20,800

Depreciation for president's vehicle $8,150

President's salary $61,800

Sales commissions $7,500

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Period expenses $98,250

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