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E1-13 (Algo) Classifying and Calculating Cost [LO 1-4] Noteworthy, Inc
E1-13 (Algo) Classifying and Calculating Cost [LO 1-4] Noteworthy, Inc., produces and sells small electronic keyboards. Assume that you have the following information about Noteworthy's costs for the most recent month. Depreciation on factory equipment Depreciation on CEO's company car Speakers used in the keyboard Production supervisor's salary Glue and screws used in the keyboards Wages of persons who install the speakers Cost to run an ad on local radio stations Utilities for the factory Personnel manager's salary Wages of person who attaches legs to keyboards $ 800 250 1,260 2,360 260 2,890 630 1,330 2,610 2,060 Required: 1. Calculate the total product cost for Noteworthy. 2. Calculate the prime cost for Noteworthy. 3. Calculate the manufacturing overhead for Noteworthy. 4. Calculate the direct labor for Noteworthy. 5. Calculate the conversion cost for Noteworthy. 6. Calculate the total variable cost (with number of units produced as the activity) for Noteworthy. 7. Calculate the total fixed cost (with number of units produced as the activity) for Noteworthy. 1. Total Product Cost 2. Prime Cost 3. Manufacturing Overhead 4. Direct Labor Cost 5. Conversion Cost 6. Total Variable Cost 7. Total Fixed Cost
Expert Solution
1).
Total product cost = Depreciation on factory equipment + Speaker used in the keyboard + Production supervisor’s salary + Glue and screws use in the keyboards + Wages of person who installs the speaker + Utilities for the factory + Wages of person who attaches legs to keyboards
= $800 + $1,260 + $2,360 + $260 + $2,890 + $1,330 + $2,060
= $10,960
2).
Total prime cost = Speaker used in the keyboard + Wages of person who installs the speaker + Wages of person who attaches legs to keyboards
= $1,260 + $2,890 + $2,060
= $6,210
3).
Manufacturing overhead = Depreciation on factory equipment + Production supervisor’s salary + Glue and screws use in the keyboards + Utilities for the factory
= $800 + $2,360 + $260 + $1,330
= $4,750
4).
Direct labor = Wages of person who installs the speaker + Wages of person who attaches legs to keyboards
= $2,890 + $2,060
= $4,950
5).
Conversion cost = Wages of person who installs the speaker + Wages of person who attaches legs to keyboards + Depreciation on factory equipment + Production supervisor’s salary + Glue and screws use in the keyboards + Utilities for the factory
= $2,890 + $2,060 + $800 + $2,360 + $260 + $1,330
= $9,700
6).
Total Variable Cost = Speakers used in the keyboard + Glue and screws used in the keyboards + Wages of persons who install the speakers + Utilities for the factory + Wages of person who attaches legs to keyboards
= $1,260 + $260 + $2,890 + $1,330 + $2,060
= $7,800
7).
Total fixed cost = Depreciation on factory equipment + Depreciation on CEO’s company car + Production supervisor’s salary + Cost to run an ad on local radio stations + Personnel manager’s salary
= $800 + $250 + $2,360 + $630 + $2,610
= $6,650
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