The following cost data for the year just ended pertain to heartstrings, inc., a greeting card manufacturer: service department costs* $ 100,000 direct labor: wages 485,000 direct labor: fringe benefits 96,000 indirect labor: fringe benefits 31,000 fringe benefits for production supervisor 10,000 total overtime premiums paid 55,000 cost of idle time: production employees§ 40,000 administrative costs 150,000 rental of office space for sales personnel† 15,000 sales commissions 6,000 product promotion costs 10,000 direct material used 2,100,000 advertising expense 97,000 depreciation on factory building 116,000 cost of finished-goods inventory at year-end 115,000 indirect labor: wages 141,000 production supervisor’s salary $ 46,000 compute each of the following: 1)total prime costs2)total manufactorin overhead costs3)total conversion costs4)total product costs5)total period costs

Explanation:

Giving the following information:

Service department costs= $ 100,000: Period

Direct labor: wages 485,000: Product - DL

Direct labor: fringe benefits 96,000: Product - DL

Indirect labor: fringe benefits 31,000: Product - MOH

Fringe benefits for production supervisor 10,000: Product - MOH

Total overtime premiums paid 55,000: Product - DL

Cost of idle time: production employees 40,000: Product - DL

Administrative costs 150,000: Period

Rental of office space for sales personnel 15,000: Period

Sales commissions 6,000: Period

Product promotion costs 10,000: Period

Direct material used 2,100,000: Product - DM

Advertising expense 97,000: Period

Depreciation on factory building 116,000: Product - MOH

Cost of finished-goods inventory at year-end 115,000

Indirect labor: wages 141,000: Product - MOH

Production supervisor’s salary $ 46,000: Product - MOH

First, we will classify each cost as product/ period, and Direct Material (DM), Direct Labor (DL) and manufacturing overhead (MOH).

A) Prime costs= direct material + direct labor

Prime costs= 2,100,000 + (485,000 + 96,000 + 55,000 + 40,000)

Prime costs= 2,100,00 + 676000= 2,776,000

B) Manufacturing overhead= 31000 + 10000 + 116000 + 141000 + 46000= $344,000

C) conversion cost= direct labor + manufacturing overhead

CC= 676000 + 344000= 1,020,000

D) Product costs= DM + DL + MOH= 2100000+676000+344000= $3,120,000

E) Period cost= 100000 + 150000 + 15000 + 6000 + 10000 + 97000= $378,000