Prime costs versus conversion costs. The following items (in millions) pertain to the Chan Corporation:

 

Chan’s manufacturing cost system uses a three-part classification of manufacturing costs. There are two prime costs and one conversion cost: direct materials, direct manufacturing labor, and indirect manufacturing costs.

Required

1. Identify the prime costs. Identify the conversion costs.

2. Prepare a statement of comprehensive income and a supporting schedule of the cost of goods manufactured.

Transcribed Image Text:

For Specific Date For Year 2019 Work in process, January 1, 2019 $12.00 Plant utilities $6.00 Dire ct materials, December 31,2019 6.00 Indirect manufacturing labour 24.00 Finished goods, December 31, :2019 14.40 Depreciation-plant, building, and equipment 10.80 Accounts payable, December 31,2019 24.00 Revenues 420.00 Accounts receivable, January 1, 2019 60.00 Mis cellaneous manufacturing overhead 12.00 Work in process, December 31, 2019 2.40 Marketing, distribution, and 108.00 customer-service costs Finished goods, January 1, 2019 48.00 Purchases of direct matorials 96.00 Accounts receivable, December 31, 2019 36.00 Direct manufacturing labour 48.00 Accounts payable, January 1, 2019 48.00 Plant supplies used 7.20 Direct materials, January 1, 2019 36.00 Property taxes on plant 1.20 For Specific Date For Year 2019 Work in process, January 1, 2019 $12.00 Plant utilities $6.00 Dire ct materials, December 31,2019 6.00 Indirect manufacturing labour 24.00 Finished goods, December 31, :2019 14.40 Depreciation-plant, building, and equipment 10.80 Accounts payable, December 31,2019 24.00 Revenues 420.00 Accounts receivable, January 1, 2019 60.00 Mis cellaneous manufacturing overhead 12.00 Work in process, December 31, 2019 2.40 Marketing, distribution, and 108.00 customer-service costs Finished goods, January 1, 2019 48.00 Purchases of direct matorials 96.00 Accounts receivable, December 31, 2019 36.00 Direct manufacturing labour 48.00 Accounts payable, January 1, 2019 48.00 Plant supplies used 7.20 Direct materials, January 1, 2019 36.00 Property taxes on plant 1.20

Answer rating: 100% (QA)

1 Prime Costs purchases of DM 9600 DML 4800 14400 Conversion Costs prime co... View the full answer