The following data is provided for Garcon Company and Pepper Company. Garcon Com
ID: 2528059 • Letter: T
Question
The following data is provided for Garcon Company and Pepper Company. Garcon Company Pepper Company Beginning finished goods inventory $ 12,000 $ 16,450 Beginning work in process inventory 14,500 19,950 Beginning raw materials inventory 7,250 9,000 Rental cost on factory equipment 27,000 22,750 Direct labor 19,000 35,000 Ending finished goods inventory 17,650 13,300 Ending work in process inventory 22,000 16,000 Ending raw materials inventory 5,300 7,200 Factory utilities 9,000 12,000 Factory supplies used 8,200 3,200 General and administrative expenses 21,000 43,000 Indirect labor 1,250 7,660 Repairs—Factory equipment 4,780 1,500 Raw materials purchases 33,000 52,000 Selling expenses 50,000 46,000 Sales 195,030 290,010 Cash 20,000 15,700 Factory equipment, net 212,500 115,825 Accounts receivable, net 13,200 19,450 Required: 1. Compute the total prime costs for both Garcon Company and Pepper Company. 2. Compute the total conversion costs for both Garcon Company and Pepper Company.
Explanation / Answer
Garron Company Pepper Company
Beggining Finished Goods $ 12000 $ 164500
Work In Process $ 14500 $ 19950
Beggining Raw Materials $ 7250 $ 9000
Rental Cost on Factory Equipment $ 9000 $ 12000
Factory Supplies used $ 8000 $ 3200
General and Admn Expenses $ 21000 $ 43000
Indirect Labor $ 1250 $ 7660
Repair Factory Equipment $ 4780 $1500
Raw Material Purchases $ 33000 $ 52000
Selling Expenses $ 50000 $46000
Sales $ 195,030 $ 290,010
Cash $ 20000 $ 15700
Factory Equipment $ 212,500 $ 115,825
Receivables $ 13,200 $ 19,450
Prime Costs : Prime Cost is the direct production cost. It includes direct labour, direct material and direct expense.
Conversion Costs: Conversion costs are the cost that is expensed to convert raw material in to fisnished goods. Its includes prime cost plus manufacturing overheads.
Prime Cost for Garcon and Co.
= Beggining Material + Raw Material Purchases
= 7250+33000
=40250 (Prime Cost)
Prime Cost for Pepper and Co.
= Beggining Raw Materials + Raw Materials Purchases
=9000+52000
=61000 (Prime Cost)
Coversion Costs for Garcon and Co.
= 40,250 (Prime Cost)
+ 9,000 (Rental Cost Factory Equipment)
+ 8,000 (Factory Supplies)
+ 21000 (General and Admn Expenses)
+ 1,250 (Indirect Labour)
+ 4,780 (Factory Repair)
+ 212,500 (Factory Equipment)
= $ 296,780 (Conversion costs)
Conversion Costs for Pepper and Co.
= 61,000 (Prime Cost)
+ 12,000 (Rental Cost Factory Equipment)
+ 32,000 (Factory Supplies)
+ 43000 (General and Admn Expenses)
+ 7,660 (Indirect Labour)
+ 1,500 (Factory Repair)
+ 115,825 (Factory Equipment)
= $ 272,985 (Conversion Costs)
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