Advertising expense $17,200 Wages expense-assemblers 36,840 Depreciation expense

Question

Advertising expense $17,200

Wages expense-assemblers 36,840

Depreciation expense-machines 21,480

Utilities expense-factory 21,120

Wages expense-lathe operators 23,480

Repair expense-machine 4,520

Office salaries expense 23,760

Salary expense-factory foreman 18,270

The company also made the following purchases of raw materials:

Purchases of glue $3,260 Purchases of nails and staples 1,600 Purchases of oak wood 22,000 Purchases of glass 23,000 There was no beginning or ending inventories.

Required:

Calculate the following:

A)Direct materials used

B)Direct labor

C)Indirect production costs

Explanation / Answer

Hi,

Please find the answer as follows:

Part A: Direct Material Used

Purchases of glue $3,260 Purchases of nails and staples 1,600 Purchases of oak wood 22,000 Purchases of glass 23,000 There was no beginning or ending inventories.

Direct Material Used = 3260 (Purchase of Glue) + 1600 (Purchases of Nails and Staples) + 22000 (Purchases of Oak Wood) + 23000 (Purchase of Glass) = 49860

Part B: Direct Labor

Direct Labor = 36840 (Wage Expense - Assemblers) + 23480 (Wage Expense - Lathe Operators) = 60320

Part C: Indirect Production Costs

Notes:

1) Cost of Direct Materials Used is same as Cost of Raw Material Purchases, since there are no ending and beginning inventories of raw material.

2) Cost of direct labor includes wages of both assemblers and lathe operators.

3) Advertising Expense is not a part of indirect production costs.

Thanks.

Depreciation Expense-Machines 21480 Utilities Expense-Factory 21120 Repair Expense-Machine 4520 Salary Expense-Factory Foreman 18270 Total Indirect Production Costs 65390

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