Top Shelf Company builds oak bookcases Assume that you have

Top Shelf Company builds oak bookcases. Assume that you have the following information about Top Shelif\'s costs for the most recent month Depreciation on factory equipment Depreciation on delivery trucks Wood used to build bookcases Production supervisor\'s salary Glue and screws used in the bookcases Wages of persons who assemble the bookcases Cost to run an ad on local radio stations Rent for the factory CEO\'s salary Wages of person who sands the wood after it is cut 1,800 800 1,500 2,800 250 2,500 600 3,500 3,000 1,600 Required Determine each of the following costs for Top Shelf 1. Direct Materials Used 2. Direct Labor 3. Manufacturing Overhead 4. Prime Cost 5. Conversion Cost 6. Total Manufacturing Cost 7. Total Nonmanufacturing (period) Cost

Solution

1. Direct material used = $1500 (woods used to build bookcases)

2. Direct labor = $4100 (wage of person assembling the bookcase $2500 + wage of person sanding the wood after cutting $1600)

3. Manufacturing overhead = $8350 (Depreciation on factory equipment 1800 + production supervisior\'s salary 2800 + Glues and screws 250 + factory rent 3500)

4. Prime cost = $5600 (Direct material used + Direct labor)

5. Conversion cost = $12450 (Direct labor + Manufacturing overhead)

6. Total manufacturing cost = $13950 (Direct material used + Direct labor + Manufacturing overhead)

7. Total non manufacturing cost (preiod cost) = $4400 (Depreciation on delivery trucks 800 + ads cost on radio 600 + CEO\'s salary 3000)