Noteworthy Inc produces and sells small electronic keyboards

Noteworthy, Inc., produces and sells small electronic keyboards. Assume that you have the following information about Noteworthy’s costs for the most recent month.

Depreciation on factory equipment	$	850
Depreciation on CEO\'s company car		190
Speakers used in the keyboard		1,170
Production supervisor\'s salary		2,270
Glue and screws used in the keyboards		260
Wages of persons who install the speakers		2,840
Cost to run an ad on local radio stations		625
Utilities for the factory		1,250
Personnel manager\'s salary		2,580
Wages of person who attaches legs to keyboards		2,130
1. Calculate the total product cost for Noteworthy. 2. Calculate the prime cost for Noteworthy. 3. Calculate the manufacturing overhead for Noteworthy. 4. Calculate the direct labor for Noteworthy. 5. Calculate the conversion cost for Noteworthy. 6. Calculate the total variable cost (with number of units produced as the activity) for Noteworthy. 7. Calculate the total fixed cost (with number of units produced as the activity) for Noteworthy.

Solution

1. Total Production cost 10770 2. Prime cost 6140 3.Manufacturing overhead 4630 4.Direct labor 4970 5.Conversion cost 9600 6.Total variable cost 7650 7.Total fixed cost 6515 Workings: Direct material Speakers used in keyboard 1170 Direct labor Wages of persons who instal speakers 2840 Wages of persons who attach legs to keyboard 2130 Total direct labor cost 4970 Manufacturing overhead Depreciation on factory equipment 850 Production supervisors salary 2270 Glue and screws used in keyboard 260 Utilities for the factory 1250 Total manufacturing overhead 4630 Total product cost for the company Direct material cost 1170 Direct labor cost 4970 Manufacturing overhead cost 4630 Total product cost 10770 Prime cost Direct material cost 1170 Direct labor cost 4970 Prime cost 6140 Conversion cost Direct labor cost 4970 Manufacturing overhead cost 4630 Conversion cost 9600 Total variable cost Direct material 1170 Direct labor 4970 Glue and screws used in keyboard 260 Utilities for the factory 1250 Total variable cost 7650 Total fixed cost Depreciation on factory equipment 850 Production supervisor salary 2270 Depreciation on CEO\'s company car 190 Cost to run ad on local radio station 625 Personnel manager\'s salary 2580 Total fixed cost 6515