Question

Refer to the data in Exercise 14-8. For each company, compute the total (1) prime costs, and (2) conversion costs.

Short answer

The net prime cost for Garcon Company is $53,950 and for Pepper company is $88,800. The net conversion costs for Garcon Company is $69,230 and for Pepper company is $82,110

Step-by-step solution

Computation of prime costs

	Garcon ($)	Pepper ($)
Direct material
Beginning raw material inventory	7,250	9,000
Raw Materials purchases	33,000	52,000
Raw Material available for use	40,250	61,000
Less: Ending Raw material Inventory	-5,300	-7,200
Direct material Used	34,950	53,800
Direct labor	19,000	35,000
Net Prime costs	53,950	88,800

Computation of conversion costs

	Garcon ($)	Pepper ($)
Factory Overhead
Rental cost on factory equipment	27,000	22,750
Factory utilities	9,000	12,000
Factory supplies used	8,200	3,200
Indirect labor	1,250	7,660
Repair- Factory equipment	4,780	1,500
Total factory overhead	50,230	47,110
Direct labor	19,000	35,000
Net Conversion costs	69,230	82,110