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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Use the following information for Brief Exercises 2-19 and 2-20:

Slapshot Company makes ice hockey sticks. Last week, direct materials (wood, paint, Kevlar, and resin) costing $32,000 were put into production. Direct labor of $28,000 (10 workers × 200 hours × $14 per hour) was incurred. Manufacturing overhead equaled $60,000. By the end of the week, the company had manufactured 500 hockey sticks.

Brief Exercise 2-20 Prime Cost and Conversion Cost

Refer to the information for Slapshot Company on the previous page.

Required:

  1. 1. Calculate the total prime cost for last week.
  2. 2. Calculate the per-unit prime cost.
  3. 3. Calculate the total conversion cost for last week.
  4. 4. Calculate the per-unit conversion cost.

1.

To determine

Calculate the amount of total prime cost.

Explanation

Prime Cost:

Prime cost can be defined as the summation of direct labor cost and direct material cost. The amount of indirect cost is not included while computing prime cost.

Use the following formula to calculate the total prime cost:

Total prime cost=Direct material+Direct labor

Substitute $32,000 for direct material and $28,000 for direct labor in the above formula

2.

To determine

Calculate the amount of per unit prime cost.

3.

To determine

Calculate the amount of total conversion cost.

4.

To determine

Calculate the amount of per unit conversion cost.

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