Information from the records of the Crystal Corporation for July 2014 was as fol
ID: 2419007 • Letter: I
Question
Information from the records of the Crystal Corporation for July 2014 was as follows:
Sales $1,230,000
Selling and administrative expenses 210,000
Direct materials used 264,000
Direct labor 300,000
Factory overhead * 405,000
*variable overhead is $205,000, fixed overhead is $200,000
Inventories July 1, 2014 July 31, 2014
Direct materials $36,000 $42,000
Work in process 75,000 84,000
Finished goods 69,000 57,000
a) The conversion cost is b) The prime costs are Be sure to show all work and label each answer clearly to receive full credit
Explanation / Answer
Conversion cost = Direct labor + Overhead cost
a)Direct labor $300,000
Factory overhead 405,000
total conversion cost $705,000
Prime cost = Direct materials + Direct labor
Direct material $264,000
Add:Direct labor 300,000
Total cost $564,000
a)Direct labor $300,000
Factory overhead 405,000
total conversion cost $705,000