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.

Depreciation on factory equipment $ 890
Depreciation on CEO's company car 130
Speakers used in the keyboard 1,140
Production supervisor's salary 2,320
Glue and screws used in the keyboards 260
Wages of persons who install the speakers 2,970
Cost to run an ad on local radio stations 615
Utilities for the factory 1,270
Personnel manager's salary 2,640
Wages of person who attaches legs to keyboards 2,060

Required:
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

Total Product Cost = $10,910

The prime cost for Noteworthy = $6170

Total manufacturing overhead = $4740

The direct labor $5030

Conversion cost $9770

Total Variable Cost $7,700

Total Fixed Cost $6,595

Explanation:

a) Total Product Cost is includes the sum of :

Depreciation on factory equipment $ 890

Speakers used in the keyboard $1,140

Production supervisor's salary $2,320

Glue and screws used in the keyboards $260

Wages of persons who install the speakers $2,970

Utilities for the factory $1,270

Wages of person who attaches legs to keyboards $2,060

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Total Product Cost = $10,910

b) The prime cost includes the sum of :

Speakers used in the keyboard $1,140

Wages of persons who install the speakers $2,970

Wages of person who attaches legs to keyboards $2,060

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The prime cost for Noteworthy = $6170

c) The manufacturing overhead

Depreciation on factory equipment $ 890

Production supervisor's salary $2,320

Glue and screws used in the keyboards $260

Utilities for the factory $1,270

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Total manufacturing overhead = $4740

d) The direct labor

Wages of persons who install the speakers $2,970

Wages of person who attaches legs to keyboards $2,060

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The direct labor $5030

e) Conversion cost

Direct Labor $5030

Manufacturing overhead $4740

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Conversion cost $9770

f) Total Variable Cost

Speakers used in the keyboard $1,140

Glue and screws used in the keyboards $260

Wages of persons who install the speakers $2,970

Wages of person who attaches legs to keyboards $2,060

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Total Variable Cost $7,700

g) Total Fixed Cost

Depreciation on factory equipment $ 890

Depreciation on CEO's company car $130

Production supervisor's salary $2,320

Cost to run an ad on local radio stations $615

Personnel manager's salary $2,640

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Total Fixed Cost $6,595