Connect Access Card For Fundamental Accounting Principles
Connect Access Card For Fundamental Accounting Principles
24th Edition
ISBN: 9781260158526
Author: John J Wild
Publisher: McGraw-Hill Education
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Chapter 18, Problem 10E
To determine

Concept Introduction-Prime costs-

Prime costs are the costs which are directly connected with the production of product. Prime costs are direct material cost and direct labor costs which are used in the production.

Requirement-1:

To Compute:

To compute prime costs.

Expert Solution
Check Mark

Answer to Problem 10E

    Prime Costs
    ParticularsGarcon Company Pepper Company
    Direct material-


    Beginning raw materials inventory
    7,250
    9,000
    Add: Raw materials purchases
    33,000
    52,000
    Raw material available for use
    40,250
    61,000
    less: Ending raw materials inventory
    5,300
    7,200
    Direct material Used
    34,950
    53,800
    Direct labor
    19,000
    35,000
    Total prime costs53,95088,800

Explanation of Solution

Garcon company-

Given,

  • Beginning raw materials inventory = $7,250
  • Raw materials purchases = $33,000
  • Ending raw materials inventory = $5,300
  • Direct labor = $19,000
  •    Direct material Used= Beginning raw materials inventory+ Raw materials purchases  Ending raw materials inventoryDirect material Used=$7,250+$33,000$5,300Direct material Used=34,950

Total prime costs is calculated as follows-

  Total prime costs= Direct material Used+ Direct laborTotal prime costs=$34,950+$19,000Total prime costs=$53,950

Pepper company-

Given,

  • Beginning raw materials inventory = $9,000
  • Raw materials purchases = $52,000
  • Ending raw materials inventory = $7,200
  • Direct labor = $35,000
  •    Direct material Used= Beginning raw materials inventory+ Raw materials purchases  Ending raw materials inventoryDirect material Used=$9,000+$52,000$7,200Direct material Used=$53,800

Total prime costs is calculated as follows-

  Total prime costs= Direct material Used+ Direct laborTotal prime costs=$53,800+$35,000Total prime costs=$88,800

Conclusion:

Thus, the prime costs are computed.

To determine

Concept Introduction-Conversion costs-

Conversion costs are the cost which are required to convert raw materials into finished product. Conversion costs are the sum of direct labor cost and factory overhead costs.

Requirement-2:

To Compute:

To conversion costs.

Expert Solution
Check Mark

Answer to Problem 10E

    Conversion costs
    ParticularsGarcon Company Pepper Company
    Direct labor
    19,000
    35,000
    Factory overhead


    Rental cost on factory equipment
    27,000
    22,750
    Factory utilities
    9,000
    12,000
    Factory supplies used
    8,200
    3,200
    Indirect labor
    1,250
    7,660
    Repairs-Factory equipment
    4,780
    1,500
    Total factory overhead
    50,230
    47,110
    Total conversion cost69,23082,110

Explanation of Solution

Garcon Company

Given,

  • Direct labor = $19,000
  • Rental cost on factory equipment=$27,000
  • Factory utilities = $9,000
  • Factory supplies used=$8,200
  • Indirect labor=$1,250
  • Repairs-Factory equipment=$4,780
  •    Total factory overhead= Rental cost on factory equipment+ Factory utilities+  Factory supplies used+ Indirect labor+ RepairsFactory equipmentTotal factory overhead=$27,000+$9,000+$8,200+$1,250+$4,780Total factory overhead=$50,230

Total conversion cost is calculated as follows-

  Total conversion cost= Direct labor+ Total factory overheadTotal conversion cost=$19,000+$50,230Total conversion cost=$69,230

Pepper Company

Given,

  • Direct labor = $35,000
  • Rental cost on factory equipment=$22,750
  • Factory utilities = $12,000
  • Factory supplies used=$3,200
  • Indirect labor=$7,660
  • Repairs-Factory equipment=$1,500
  •    Total factory overhead= Rental cost on factory equipment+ Factory utilities+  Factory supplies used+ Indirect labor+ RepairsFactory equipmentTotal factory overhead=$22,750+$12,000+$3,200+$7,660+$1,500Total factory overhead=$47,110

Total conversion cost is calculated as follows-

  Total conversion cost= Direct labor+ Total factory overheadTotal conversion cost=$35,000+$47,110Total conversion cost=$82,110

Conclusion:

Thus, conversion costs are computed.

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Chapter 18 Solutions

Connect Access Card For Fundamental Accounting Principles

Ch. 18 - Prob. 11DQCh. 18 - Prob. 12DQCh. 18 - Prob. 13DQCh. 18 - Prob. 14DQCh. 18 - Prob. 15DQCh. 18 - Prob. 16DQCh. 18 - Prob. 17DQCh. 18 - Prob. 18DQCh. 18 - Prob. 19DQCh. 18 - List the four components of a schedule of cost of...Ch. 18 - Prepare a proper title for the annual schedule of...Ch. 18 - Prob. 22DQCh. 18 - Prob. 23DQCh. 18 - Prob. 24DQCh. 18 - Prob. 25DQCh. 18 - Prob. 1QSCh. 18 - Prob. 2QSCh. 18 - Fixed and variable costs C2 Listed below are...Ch. 18 - Prob. 4QSCh. 18 - Prob. 5QSCh. 18 - Prob. 6QSCh. 18 - Prob. 7QSCh. 18 - Prob. 8QSCh. 18 - Prob. 9QSCh. 18 - Prob. 10QSCh. 18 - Prob. 11QSCh. 18 - Prob. 12QSCh. 18 - Prob. 13QSCh. 18 - Prob. 14QSCh. 18 - Prob. 15QSCh. 18 - Prob. 16QSCh. 18 - Prob. 17QSCh. 18 - Prob. 1ECh. 18 - Prob. 2ECh. 18 - Prob. 3ECh. 18 - Prob. 4ECh. 18 - Prob. 5ECh. 18 - Prob. 6ECh. 18 - Prob. 7ECh. 18 - Prob. 8ECh. 18 - Prob. 9ECh. 18 - Prob. 10ECh. 18 - Prob. 11ECh. 18 - Exercise 18-12 Components of accounting reports P2...Ch. 18 - Prob. 13ECh. 18 - Prob. 14ECh. 18 - Prob. 15ECh. 18 - Prob. 16ECh. 18 - Prob. 17ECh. 18 - Prob. 18ECh. 18 - Prob. 19ECh. 18 - Prob. 1APSACh. 18 - Prob. 2APSACh. 18 - Prob. 3APSACh. 18 - Prob. 4APSACh. 18 - Problem 18-5A Inventory computation and reporting...Ch. 18 - Prob. 1BPSBCh. 18 - Prob. 2BPSBCh. 18 - Prob. 3BPSBCh. 18 - Prob. 4BPSBCh. 18 - Prob. 5BPSBCh. 18 - Prob. 18SPCh. 18 - Prob. 1AACh. 18 - Prob. 2AACh. 18 - Prob. 3AACh. 18 - Prob. 1BTNCh. 18 - Prob. 2BTNCh. 18 - Prob. 3BTNCh. 18 - Prob. 4BTNCh. 18 - Prob. 5BTNCh. 18 - Prob. 6BTN
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