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Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285866307

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BuyFindarrow_forward

Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285866307
Chapter 16, Problem 16.3APE
Textbook Problem
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Prime and conversion costs

Identify the following costs as a prime cost (P), conversion cost (C), or both (B) for an automobile manufacturer:

  1. a. Wages of employees that operate painting equipment
  2. b. Wages of the plant manager
  3. c. Steel
  4. d. Oil used for assembly line machinery

To determine

Prime cost:

Prime cost refers to a cost which is directly involved in the process of manufacturing an item. Prime cost includes direct materials, direct labor and other direct overheads.

Conversion cost:

A conversion cost refers to the cost of converting the raw materials into a finished product. Conversion cost includes direct labor as well as the manufacturing overhead costs.

To identify: The prime cost and the conversion cost of the given items of an automobile manufacturer.

Explanation of Solution

The prime cost and the conversion cost of each items of an automobile manufacturer are identified as follows:

Sl. No Particulars Prime cost (P) / Conversion cost (C) / Both (B)
a Wages of employees that operate painting equipment. Both (b)
b Wages of the plant manager. Conversion cost (C)
c Steel Prime cost (P)
d Oil used for  assembly line machinery Conversion cost (C)

Table...

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Chapter 16 Solutions

Financial & Managerial Accounting
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Ch. 16 - Management process Three phases of the management...Ch. 16 - Management process Three phases of the management...Ch. 16 - Direct materials, direct labor, and factory...Ch. 16 - Direct materials, direct labor, and factory...Ch. 16 - Prime and conversion costs Identify the following...Ch. 16 - Prime and conversion costs Identify the following...Ch. 16 - Product and period costs Identify the following...Ch. 16 - Product and period costs Identify the following...Ch. 16 - Cost of goods sold, cost of goods manufactured...Ch. 16 - Cost of goods sold, cost of goods manufactured...Ch. 16 - Classifying costs as materials, labor, or factory...Ch. 16 - Classifying costs as materials, labor, or factory...Ch. 16 - Classifying costs as factory overhead Which of the...Ch. 16 - Classifying costs as product or period costs For...Ch. 16 - Concepts and terminology From the choices...Ch. 16 - Concepts and terminology From the choices...Ch. 16 - Classifying costs in a service company A partial...Ch. 16 - Classifying costs The following report was...Ch. 16 - Financial statements of a manufacturing firm The...Ch. 16 - Manufacturing company balance sheet Partial...Ch. 16 - Cost of direct materials used in production for a...Ch. 16 - Cost of goods manufactured for a manufacturing...Ch. 16 - Cost of goods manufactured for a manufacturing...Ch. 16 - Income statement for a manufacturing company Two...Ch. 16 - Statement of cost of goods manufactured for a...Ch. 16 - Cost of goods sold, profit margin, and net income...Ch. 16 - Cost flow relationships The following information...Ch. 16 - Uses of managerial accounting in a service company...Ch. 16 - Classifying costs The following is a list of costs...Ch. 16 - Classifying costs The following is a list of costs...Ch. 16 - Cost classifications for a service company A...Ch. 16 - Manufacturing income statement, statement of cost...Ch. 16 - Statement of cost of goods manufactured and income...Ch. 16 - Classifying costs The following is a list of costs...Ch. 16 - Classifying costs The following is a list of costs...Ch. 16 - Cost classifications for a service company A...Ch. 16 - Manufacturing income statement, statement of cost...Ch. 16 - Statement of cost of goods manufactured and income...Ch. 16 - Ethics and professional conduct in business H....Ch. 16 - Financial versus managerial accounting The...Ch. 16 - Managerial accounting in the management process...Ch. 16 - Classifying costs Geek Chic Company provides...Ch. 16 - Using managerial accounting information The...

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