The following cost data for the year just ended pertain to Sentiments, Inc., a greeting card manufacturer:
The following cost data for the year just ended pertain to Sentiments, Inc., a greeting card manufacturer:
| Direct material | $ | 2,300,000 | |
| Advertising expense | 99,000 | ||
| Depreciation on factory building | 116,000 | ||
| Direct labor: wages | 470,000 | ||
| Cost of finished goods inventory at year-end | 115,000 | ||
| Indirect labor: wages | 141,000 | ||
| Production supervisor’s salary | 45,000 | ||
| Service department costs* | 100,000 | ||
| Direct labor: fringe benefits | 114,000 | ||
| Indirect labor: fringe benefits | 30,000 | ||
| 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 | 5,000 | ||
| Product promotion costs | 10,000 | ||
*All services are provided to manufacturing departments.
§Cost of idle time is an overhead item; it is not included in the direct-labor wages given above.
†The rental of sales space was made necessary when the sales offices were converted to storage space for raw material.
Required:
1. Compute each of the following costs for the year just ended:
2. One of the costs listed below is an opportunity cost. Identify this cost.
Multiple Choice:
Total prime costs Total manufacturing overhead costs а. b. Total conversion costs C. Total product costs Total period costs d. е.
| Direct material | $ 23,00,000.00 |
| Direct labor: wages | $ 4,70,000.00 |
| Direct labor: fringe benefits | $ 1,14,000.00 |
| Total prime costs | $ 28,84,000.00 |
| Total manufacturing overhead | |
| Depreciation on factory building | $ 1,16,000.00 |
| Indirect labor: wages | $ 1,41,000.00 |
| Production supervisor’s salary | $ 45,000.00 |
| Service department costs* | $ 1,00,000.00 |
| Indirect labor: fringe benefits | $ 30,000.00 |
| Fringe benefits for production supervisor | $ 10,000.00 |
| Total overtime premiums paid | $ 55,000.00 |
| Cost of idle time: production employees§ | $ 40,000.00 |
| Total manufacturing overhead | $ 5,37,000.00 |
| Total Coversion cost | |
| Direct labor: wages | $ 4,70,000.00 |
| Direct labor: fringe benefits | $ 1,14,000.00 |
| Total manufacturing overhead | $ 5,37,000.00 |
| Total Coversion cost | $ 11,21,000.00 |
| Total Product cost | |
| Total prime costs | $ 28,84,000.00 |
| Total manufacturing overhead | $ 5,37,000.00 |
| Total Product cost | $ 34,21,000.00 |
| total period cost | |
| Advertising expense | $ 99,000.00 |
| Administrative costs | $ 1,50,000.00 |
| Rental of office space for sales personnel† | $ 15,000.00 |
| Sales commissions | $ 5,000.00 |
| Product promotion costs | $ 10,000.00 |
| total period cost | $ 2,79,000.00 |
| Direct material | $ 23,00,000.00 |
| Direct labor: wages | $ 4,70,000.00 |
| Direct labor: fringe benefits | $ 1,14,000.00 |
| Total prime costs | $ 28,84,000.00 |
| Total manufacturing overhead | |
| Depreciation on factory building | $ 1,16,000.00 |
| Indirect labor: wages | $ 1,41,000.00 |
| Production supervisor’s salary | $ 45,000.00 |
| Service department costs* | $ 1,00,000.00 |
| Indirect labor: fringe benefits | $ 30,000.00 |
| Fringe benefits for production supervisor | $ 10,000.00 |
| Total overtime premiums paid | $ 55,000.00 |
| Cost of idle time: production employees§ | $ 40,000.00 |
| Total manufacturing overhead | $ 5,37,000.00 |
| Total Coversion cost | |
| Direct labor: wages | $ 4,70,000.00 |
| Direct labor: fringe benefits | $ 1,14,000.00 |
| Total manufacturing overhead | $ 5,37,000.00 |
| Total Coversion cost | $ 11,21,000.00 |
| Total Product cost | |
| Total prime costs | $ 28,84,000.00 |
| Total manufacturing overhead | $ 5,37,000.00 |
| Total Product cost | $ 34,21,000.00 |
| total period cost | |
| Advertising expense | $ 99,000.00 |
| Administrative costs | $ 1,50,000.00 |
| Rental of office space for sales personnel† | $ 15,000.00 |
| Sales commissions | $ 5,000.00 |
| Product promotion costs | $ 10,000.00 |
| total period cost | $ 2,79,000.00 |
2 Part
Rental of office space for sales personnel is an opportunity cost because has to sacrifice the previous office space for sale personal so that office space can be used for storing raw-material
1 compute each of the following costs for the year just ended
one of the costs listed below is an opportunity cost identify this cost
one of the costs listed below is an opportunity cost identify this cost
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