Question

Assume the following information pertaining to Cub Company:

Prime costs
$195,000
Conversion costs
221,000
Direct materials used
85,000
Beginning work in process
98,000
Ending work in process
81,000
Total manufacturing cost is calculated to be:
A. $306,000.
B. $26,000.
C. $110,000.
D. $331,000.
E. $111,000.

Answer 1

The total manufacturing cost is $696,000.

Step-by-step explanation:

The total manufacturing cost can be calculated by adding the prime costs and conversion costs together. Prime costs are the direct costs of materials used in the production process and the direct labor costs involved. Conversion costs include direct labor costs and indirect costs such as factory overhead. To calculate the total manufacturing cost:

• Prime Cost = Direct Materials Used + Direct Labor = $85,000 + $195,000 = $280,000
• Conversion Cost = Direct Labor + Factory Overhead = $195,000 + $221,000 = $416,000
• Total Manufacturing Cost = Prime Cost + Conversion Cost = $280,000 + $416,000 = $696,000

So, the total manufacturing cost is $696,000.