Classify each as direct material, direct labor, indirect labor, indirect labor, other manufacturing overhead or period cost, and then answer the 5 questions below:
| An airline manufacturer incurred the following costs last month (in thousands of dollars): | |
| a. Depreciation on forklifts ………………………………………………………………… | $60 |
| b. Property tax on corporate marketing office ……………………………………… | $30 |
| c. Cost of warranty repairs …………………………………………………………………. | $220 |
| d. Factory janitors’ wages ………………………………………………………………….. | $10 |
| e. Cost of designing new plant layout …………………………………………………. | $190 |
| f. Machine operators’ health insurance ………………………………………………. | $40 |
| g. Airplane seats ………………………………………………………………………………. | $270 |
| h. Depreciation on administrative offices …………………………………………….. | $70 |
| i. Assembly workers’ wages ………………………………………………………………. | $670 |
| j. Plant utilities ………………………………………………………………………………… | $110 |
| k. Production supervisors’ salaries ………………………………………………………. | $160 |
| l. Jet engines …………………………………………………………………………………… | $1,100 |
| m. Machine lubricants ………………………………………………………………………… | $20 |
| Then, answer the below questions: |
| 4b. How much are total manufacturing overhead costs? (5 points) |
| 4c. How much are total inventoriable product costs? (5 points) |
| 4d. How much are total prime costs? (5 points) |
| 4e. How much are total conversion costs? (5 points) |
Darshita Changed status to publish July 25, 2020
Answer:
| An airline manufacturer incurred the following costs last month (in thousands of dollars): | Direct Material | Direct Labor | Indirect Material | Indirect Labor | Other Manufacturing Overhead | Period Cost | |
| a. Depreciation on forklifts ………………………………………………………………… | $60 | $60 | |||||
| b. Property tax on corporate marketing office ……………………………………… | $30 | $30 | |||||
| c. Cost of warranty repairs …………………………………………………………………. | $220 | $220 | |||||
| d. Factory janitors’ wages ………………………………………………………………….. | $10 | $10 | |||||
| e. Cost of designing new plant layout …………………………………………………. | $190 | $190 | |||||
| f. Machine operators’ health insurance ………………………………………………. | $40 | $40 | |||||
| g. Airplane seats ………………………………………………………………………………. | $270 | $270 | |||||
| h. Depreciation on administrative offices …………………………………………….. | $70 | $70 | |||||
| i. Assembly workers’ wages ………………………………………………………………. | $670 | $670 | |||||
| j. Plant utilities ………………………………………………………………………………… | $110 | $110 | |||||
| k. Production supervisors’ salaries ………………………………………………………. | $160 | $160 | |||||
| l. Jet engines …………………………………………………………………………………… | $1,100 | $1,100 | |||||
| m. Machine lubricants ………………………………………………………………………… | $20 | $20 |
b
| b. total manufacturing overhead costs | IM + IL + OMO = 20+170+170 = $360 | ||||
| C total inventoriable product costs | DM + DL + MOH = 1,370 + 710 + 360 = $2,440 | ||||
| d. total prime costs | DM + DL = 1,370 + 710 = $2,080 | ||||
| e total conversion costs | DL + MOH = 710 + 360 = $1,070 | ||||
Darshita Changed status to publish July 25, 2020
