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Chapter 16: Q2TI_1 (page 869)

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

Calculating cost of goods sold for merchandising and manufacturing companies

Below are data for two companies:

Company 1 Company 2

Beginning balances:

Merchandise Inventory \( 11,600

Finished Goods Inventory \) 15,400

Ending balances:

Merchandise Inventory 12,400

Finished Goods Inventory 11,300

Net Purchases 152,500

Cost of Goods Manufactured 214,500

Requirements

1. Define the three business types: service, merchandising, and manufacturing.

2. Based on the data given for the two companies, determine the business type of each one.

3. Calculate the cost of goods sold for each company

The Institute of Management Accountants’ Statement of Ethical Professional Practice requires managerial accountants to meet standards regarding competence, confidentiality, integrity, and credibility. Consider the following situations. Which standard(s) is(are) violated in each situation?

e. You do not provide top management with the detailed job descriptions they requested because you fear they may use this information to cut a position in your department.

Determining the flow of costs through a manufacturer’s inventory accounts

True Fit Shoe Company makes loafers. During the most recent year, True Fit incurred total manufacturing costs of \(21,900,000. Of this amount, \)2,600,000 was direct materials used and \(14,800,000 was direct labor. Beginning balances for the year were Direct Materials, \)700,000; Work-in-Process Inventory, \(1,500,000; and Finished Goods Inventory, \)1,100,000. At the end of the year, balances were Direct Materials, \(800,000; Work-in-Process Inventory, \)2,000,000; and Finished Goods Inventory, $1,080,000.

Requirements Analyze the inventory accounts to determine:

1. Cost of direct materials purchased during the year.

2. Cost of goods manufactured for the year.

3. Cost of goods sold for the year.

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

c. Cost of electricity at the paper mill

Question:Determining flow of costs through a manufacturer’s inventory accounts

Root Shoe Company makes loafers. During the most recent year, Root incurred total manufacturing costs of \(26,300,000. Of this amount, \)2,000,000 was direct materials used and \(19,800,000 was direct labor. Beginning balances for the year were Direct Materials, \)700,000; Work-in-Process Inventory, \(1,500,000; and Finished Goods Inventory, \)400,000. At the end of the year, balances were Direct Materials, \(800,000; Work-in-Process Inventory, \)1,200,000; and Finished Goods Inventory, $600,000.

Requirements Analyze the inventory accounts to determine:

1. Cost of direct materials purchased during the year.

2. Cost of goods manufactured for the year.

3. Cost of goods sold for the year.
See all solutions

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