An airline manufacturer incurred the following costs last month in
An airline manufacturer incurred the following costs last month (in thousands of dollars):
a. Airplane seats ...................................................................................... $ 250
b. Depreciation on administrative offices................................................. 60
c. Assembly workers’ wages .................................................................... 600
d. Plant utilities........................................................................................ 120
e. Production supervisors’ salaries........................................................... 100
f. Jet engines............................................................................................ 1,000
g. Machine lubricants.............................................................................. 15
h. Depreciation on forklifts...................................................................... 50
i. Property tax on corporate marketing office ......................................... 25
j. Cost of warranty repairs...................................................................... 225
k. Factory janitors’ wages........................................................................ 30
l. Cost of designing new plant layout...................................................... 175
m. Machine operators’ health insurance ................................................... 40
TOTAL................................................................................................ $2,690
Requirements
1. If the cost object is an airplane, classify each cost as one of the following: direct material
(DM), direct labour (DL), indirect labour (IL), indirect materials (IM), other manufacturing overhead (other MOH), or period cost. What is the total for each type of cost?
2. Calculate total manufacturing overhead costs.
3. Calculate total inventoriable product costs.
4. Calculate total prime costs.
5. Calculate total conversion costs.
6. Calculate total period costs.
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