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Identify each cost as a period cost or a product cost. If it is a product cost, further indicate if the cost is direct materials, direct labor, or manufacturing overhead. Then determine if the product cost is a prime cost and/or a conversion cost.

6. Wages of assembly line workers for a factory

Short Answer

Expert verified

It is product cost, direct labor, prime cost as well as conversion cost.

Step by step solution

01

Definition of wages

The wages are defined as the remuneration paid by the business to their employees and workers for the work performed by them.

02

Step 2:Identification of costs

The wages of assembly line workers are considered as the product cost, the product cost is the cost of making a product or purchasing a product.

It is the direct labor as it is the cost incurred on labor that is directly associated with the production of goods.

It is a prime cost as well as the conversion cost.

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Most popular questions from this chapter

Question:Preparing an income statement and calculating unit cost for a service company

The Windshield Doctors repair chips in car windshields. The company incurred the following operating costs for the month of March 2018:

Salaries and wages \( 12,000

Windshield repair materials 4,600

Depreciation on truck 300

Depreciation on building and equipment 1,200

Supplies used 300

Utilities 460

The Windshield Doctors earned \)23,000 in service revenues for the month of March by repairing 500 windshields. All costs shown are considered to be directly related to the repair service.

Requirements

1. Prepare an income statement for the month of March.

2. Compute the cost per unit of repairing one windshield.

3. The manager of Windshield Doctors must keep unit operating cost below $50 per windshield in order to get his bonus. Did he meet the goal?

Selected data for three companies are given below. All inventory amounts are ending balances and all amounts are in millions.

Company A Company B Company C

Cash \( 6 Wages Expense \) 12 Administrative Expenses $ 4

Net Sales Revenue 48 Equipment 32 Cash 25

Finished Goods Inventory 10 Accounts Receivable 8 Net Sales Revenue 75

Cost of Goods Sold 23 Service Revenue 65 Selling Expenses 8

Selling Expenses 4 Cash 34 Merchandise Inventory 12

Equipment 67 Rent Expense 12 Equipment 55

Work-in-Process Inventory 9 Accounts Receivable 19

Accounts Receivable 14 Cost of Goods Sold 25

Cost of Goods Manufactured 23

Administrative Expenses 7

Raw Materials Inventory 6

Identifying differences between service, merchandising, and manufacturing companies

Using the above data, determine the company type. Identify each company as a service company, merchandising company, or manufacturing company

Identifying product costs and period costs Classify each cost of a paper manufacturer as either a product cost or a period cost:

d. Salaries of the companyโ€™s top executives.

How does a merchandising company calculate unit cost per item?

Identify each cost as a period cost or a product cost. If it is a product cost, further indicate if the cost is direct materials, direct labor, or manufacturing overhead. Then determine if the product cost is a prime cost and/or a conversion cost.

7. Wages of the office receptionist in an administrative office

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