The Red Wing Shoe Company manufactures work boots. The company has a philosophy

Question

The Red Wing Shoe Company manufactures work boots. The company has a philosophy that products should be repaired, not thrown away. After the 12-month warranty has expired on Red Wing boots, the company offers free oiling, free laces, low-cost replacement insoles, and low-cost hardware repairs. The cost of operating this shoe repair service would fall into which function in the value chain? Assuming the cost object is an airplane, classify each cost as one of the following: direct material (DM), direct labor (DL), indirect labor (IL), indirect materials (IM), other manufacturing overhead (other MOH), or period cost. What is the total for each type of cost? Calculate total manufacturing overhead costs. Calculate total inventoriable product costs. Calculate total prime costs. Calculate total conversion costs. Calculate total period costs.

Explanation / Answer

Sl NO Particulars Amount($) Nature of Expense a Production supervisor salary 140 DL b Factory jonitors wages 20 DL c Assembly workers wages 660 DL d Airplane seats 260 DM e Jet engines 1400 DM f Machine lubricant 45 IM g Plant utilities 130 IM h Depreciation on forklift 80 MOH i Cost of warranty repairs 225 MOH j Machine operators health insurance 40 MOH k Cost of designing new plant layout 195 MOH l property tax on corporate marketing 30 Period cost m Depreciation on admin offices 70 Period cost 3295 Total Mfg OH Sl NO Particulars Amount($) Nature of Expense 1 Depreciation on forklift 80 MOH 2 Cost of warranty repairs 225 MOH 3 Machine operators health insurance 40 MOH 4 Cost of designing new plant layout 195 MOH 540 Total Prime cost Sl NO Particulars Amount($) Nature of Expense a Production supervisor salary 140 DL b Factory jonitors wages 20 DL c Assembly workers wages 660 DL d Airplane seats 260 DM e Jet engines 1400 DM 2480 Inventorable cost Sl NO Particulars Amount($) Nature of Expense a Production supervisor salary 140 DL b Factory jonitors wages 20 DL c Assembly workers wages 660 DL d Airplane seats 260 DM e Jet engines 1400 DM f Machine lubricant 45 IM g Plant utilities 130 IM h Depreciation on forklift 80 MOH i Cost of warranty repairs 225 MOH j Machine operators health insurance 40 MOH k Cost of designing new plant layout 195 MOH 3195 Total convertion cost Sl NO Particulars Amount($) Nature of Expense a Production supervisor salary 140 DL b Factory jonitors wages 20 DL c Assembly workers wages 660 DL e Machine lubricant 45 IM f Plant utilities 130 IM g Depreciation on forklift 80 MOH h Cost of warranty repairs 225 MOH i Machine operators health insurance 40 MOH j Cost of designing new plant layout 195 MOH 1535 Total period cost Sl NO Particulars Amount($) Nature of Expense a property tax on corporate marketing 30 Period cost b Depreciation on admin offices 70 Period cost 100

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