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Chapter 16: Q2TI_1 (page 869)

Identify each cost as a period cost or a product cost. If it is a product cost, further indicate if the cost is direct materials, direct labor, or manufacturing overhead. Then determine if the product cost is a prime cost and/or a conversion cost.

6. Wages of assembly line workers for a factory

Short Answer

Expert verified

It is product cost, direct labor, prime cost as well as conversion cost.

Step by step solution

01

Definition of wages

The wages are defined as the remuneration paid by the business to their employees and workers for the work performed by them.

02

Step 2:Identification of costs

The wages of assembly line workers are considered as the product cost, the product cost is the cost of making a product or purchasing a product.

It is the direct labor as it is the cost incurred on labor that is directly associated with the production of goods.

It is a prime cost as well as the conversion cost.

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Most popular questions from this chapter

Computing direct materials used

Tuscany, Inc. has compiled the following data:

Purchases of Direct Materials $ 6,300

Freight In 400

Property Taxes 800

Ending Direct Materials 1,300

Beginning Direct Materials 4,100

Compute the amount of direct materials used.

Question:Preparing an income statement and calculating unit cost for a service company

The Windshield Doctors repair chips in car windshields. The company incurred the following operating costs for the month of March 2018:

Salaries and wages \( 12,000

Windshield repair materials 4,600

Depreciation on truck 300

Depreciation on building and equipment 1,200

Supplies used 300

Utilities 460

The Windshield Doctors earned \)23,000 in service revenues for the month of March by repairing 500 windshields. All costs shown are considered to be directly related to the repair service.

Requirements

1. Prepare an income statement for the month of March.

2. Compute the cost per unit of repairing one windshield.

3. The manager of Windshield Doctors must keep unit operating cost below $50 per windshield in order to get his bonus. Did he meet the goal?

Computing cost of goods manufactured and cost of goods sold

Use the following information for a manufacturer to compute cost of goods manufactured and cost of goods sold:

Balances: Beginning Ending

Direct Materials \( 27,000 \) 28,000

Work-in-Process Inventory 40,000 32,000

Finished Goods Inventory 18,000 25,000

Other information:

Purchases of direct materials $ 73,000

Direct labor 88,000

Manufacturing overhead 43,000

Identify each cost as a period cost or a product cost. If it is a product cost, further indicate if the cost is direct materials, direct labor, or manufacturing overhead. Then determine if the product cost is a prime cost and/or a conversion cost.

11.Salary of the sales manager

Distinguishing between direct and indirect costs Granger Cards is a manufacturer of greeting cards. Classify its costs by matching the costs to the terms.

  1. Direct materials
  2. Direct labor
  3. Indirect materials
  4. Indirect labor
  5. Other manufacturing overhead

a. Artists’ wages

b. Wages of materials warehouse workers

c. Paper

d. Depreciation on manufacturing equipment

e. Manufacturing plant manager’s salary

f. Property taxes on manufacturing plant

g. Glue for envelopes
See all solutions

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