Job 31 has a direct materials cost of $300 and a total manufacturing cost of $900. Overhead is applied to jobs at a rate of 200 percent of direct labor cost.
Use the relationships among total manufacturing costs, conversion cost, and prime cost to determine the following costs for job 31:
1. Conversion Cost?
2. Direct Labor Cost?
3. Manufacturing overhead cost?
4. Prime cost?
600
To determine the costs for job 31, we can use the relationships among total manufacturing costs, conversion cost, and prime cost.
1. Conversion Cost:
Conversion cost refers to the cost of converting raw materials into finished goods and includes direct labor cost and manufacturing overhead cost. Since the total manufacturing cost for job 31 is $900, and direct materials cost is $300, we can calculate the conversion cost as follows:
Conversion Cost = Total Manufacturing Cost - Direct Materials Cost
Conversion Cost = $900 - $300
Conversion Cost = $600
2. Direct Labor Cost:
Direct labor cost refers to the cost of labor directly involved in the production of goods. We can calculate the direct labor cost by applying the overhead rate to the direct labor cost:
Direct Labor Cost = Conversion Cost / (1 + Overhead Rate)
Overhead Rate = 200%
Direct Labor Cost = $600 / (1 + 200%)
Direct Labor Cost = $600 / 3
Direct Labor Cost = $200
3. Manufacturing Overhead Cost:
Manufacturing overhead cost is the indirect cost associated with the production process. We can calculate the manufacturing overhead cost by subtracting the direct labor cost from the conversion cost:
Manufacturing Overhead Cost = Conversion Cost - Direct Labor Cost
Manufacturing Overhead Cost = $600 - $200
Manufacturing Overhead Cost = $400
4. Prime Cost:
Prime cost refers to the cost of direct materials and direct labor. We can calculate the prime cost by adding the direct materials cost and direct labor cost:
Prime Cost = Direct Materials Cost + Direct Labor Cost
Prime Cost = $300 + $200
Prime Cost = $500
Therefore, for job 31, the costs are as follows:
1. Conversion Cost = $600
2. Direct Labor Cost = $200
3. Manufacturing Overhead Cost = $400
4. Prime Cost = $500
To determine the costs for Job 31, we need to understand the relationships among total manufacturing costs, conversion cost, and prime cost.
1. Conversion Cost:
Conversion cost is the sum of direct labor cost and manufacturing overhead cost. It represents the cost of converting raw materials into finished goods. In this case, the total manufacturing cost is given as $900, and we can use this to determine the conversion cost.
Conversion Cost = Total Manufacturing Cost - Direct Materials Cost
Conversion Cost = $900 - $300
Conversion Cost = $600
2. Direct Labor Cost:
Direct labor cost is the cost of labor directly involved in the production of goods. To determine the direct labor cost, we need to know the rate of overhead applied to direct labor cost. In this case, overhead is applied at a rate of 200 percent of direct labor cost. Let's assume the direct labor cost is x:
Overhead Cost = 200% of Direct Labor Cost
Overhead Cost = 2 * Direct Labor Cost
$600 = 2x
Direct Labor Cost = $600 / 2
Direct Labor Cost = $300
3. Manufacturing Overhead Cost:
Manufacturing overhead cost is the indirect cost incurred in the production process. We already determined the conversion cost, so we can calculate the manufacturing overhead cost by subtracting the direct labor cost from the conversion cost.
Manufacturing Overhead Cost = Conversion Cost - Direct Labor Cost
Manufacturing Overhead Cost = $600 - $300
Manufacturing Overhead Cost = $300
4. Prime Cost:
Prime cost is the sum of direct materials cost and direct labor cost. We already know the direct materials cost and direct labor cost.
Prime Cost = Direct Materials Cost + Direct Labor Cost
Prime Cost = $300 + $300
Prime Cost = $600
Therefore, the costs for Job 31 are as follows:
1. Conversion Cost: $600
2. Direct Labor Cost: $300
3. Manufacturing Overhead Cost: $300
4. Prime Cost: $600