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me File Edit View History Bookmarks People Window Help Check Your Work .mheducation.com/hm.tpx Cotton White, Inc., makes specialty clothing for chefs. The company reported the following costs for 2015: 37,600 24,600 76,000 30,400 1,130 23,500 30,700 75,800 40,400 775 18,200 7,400 50,500 Factory rent Company advertising Wages paid to seamstresses Depreciation on salespersons\' vehicles Thread Utilities for factory Cutting room supervisors salary President\'s salary Premium quality cotton material Buttons Factory insurance Depreciation on sewing machines es paid to cutters Required 1. Compute the cost of direct materials for Cotton White. Answer is complete and correct. s 40,400 2. Compute the cost of direct labor for Cotton White. 3 Answer is complete but not entirely correct. s 50.500 3. Compute the cost of manufacturing overhead for Cotton White Answer is complete and correct. 20 F7 FS F3 FI F2 8

Solution

1.

Direct material = Cost of cotton material = $ 40,400

2.

Direct labor cost = Wages paid to seamstresses + Wages paid to cutters

                         = $ 76,000 + $ 50,500 = $ 126,500

3.

Manufacturing overhead

= Thread + Buttons + Factory rent + Utilities + Cutting room supervisor salary + Factory insurance + depreciation on sewing machine   

= $ 1,130 + $ 775 + $ 37,600 + $ 23,500+ $ 30,700 + $ 18,200+ $ 7,400

= $ 119,305

4.

Total manufacturing cost = Direct material + Direct labor + Manufacturing overhead

                                         = $ 40,400+ $ 126,500 +$ 119,305

                                        = $ 286,205

5.

Prime cost = Direct material cost + direct labor cost

                 = $ 40,400 + $ 126,500

                 = $ 166,900

6.

Conversion cost = Direct labor cost + manufacturing overhead cost

                         = $ 126,500 +$ 119,305

                         = $ 245,805

7.

Period cost = Advertisement cost + depreciation on sales persons vehicle + president’s salary

                   = $ 24,600 +$ 30,400 + $ 75,800

                   = $ 130,800