Assume that Suzie Whitson has decided to begin production of
Assume that Suzie Whitson has decided to begin production of her outdoor children’s toy. Her company is Jiffy Jet and costs for last month follow.
Factory rent ................ $ 3,200
Company advertising ............. 1,000
Wages paid to assembly workers ........ 30,000
Depreciation for salespersons’ vehicles ....... 2,000
Screws ................... 500
Utilities for factory ............... 900
Assembly supervisor’s salary .......... 3,500
Sandpaper .................. 150
President’s salary .............. 6,000
Plastic tubing ................. 4,200
Paint ..................... 250
Sales commissions .............. 1,200
Factory insurance ............... 1,000
Depreciation on cutting machines ....... 2,000
Wages paid to painters ............ 7,500

Required:
1. Identify each of the preceding costs as either a product or a period cost. If the cost is a product cost, decide whether it is for direct materials (DM), direct labor (DL), or manufacturing overhead (MOH).
2. Determine the total cost for each of the following:
a. Direct materials.
b. Direct labor.
c. Manufacturing overhead.
d. Prime cost.
e. Conversion cost.
f. Total product cost.
3. Suppose all period costs were incorrectly identified as product costs. What impact could that have on Jiffy Jet’s financial statements? Be specific.

Membership TRY NOW
  • Access to 800,000+ Textbook Solutions
  • Ask any question from 24/7 available
    Tutors
  • Live Video Consultation with Tutors
  • 50,000+ Answers by Tutors
OR
Relevant Tutors available to help