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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 2-27 and 2-28:

Morning Smiles Coffee Company manufactures Stoneware French Press coffee makers for use in dorm rooms, apartments, homes, and travel situations where customers desire high-quality coffee in small amounts. Last week, direct materials (stoneware, paint, enamel, and steel) costing $100,000 were put into production. Direct labor of $18,000 (10 workers × 100 hours × $18 per hour) was incurred. Manufacturing overhead equaled $50,000. By the end of the week, Morning Smiles had manufactured 2,000 Stoneware French Press coffee makers.

2-28 Prime Cost and Conversion Cost

Refer to the information for Morning Smiles Coffee 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

Compute the amount of total prime cost for previous week.

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 evaluating the prime cost.

Use the following formula to calculate total prime cost:

Total prime cost=Direct material+Direct labor

Substitute $100,000 for direct material and $18,000 for direct labor in the above formula

2.

To determine

Compute the amount of per unit prime cost for previous week.

3.

To determine

Compute the amount of total conversion cost for previous week.

4.

To determine

Compute the amount of per unit conversion cost for previous week.

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