Custom Creations Furniture Company manufactures furniture at its Akron, Ohio, factory. Some of its costs from the past year include:
Depreciation on sales office $ 11,000
Depreciation on factory equipment $ 16,000
Factory supervisor salary $ 52,500
Sales commissions $ 23,000
Lubricants used in factory equipment $ 3,000
Insurance costs for factory $ 21,000
Wages paid to factory maintenance workers $ 115,000
Fabric used to upholster furniture $ 7,000
Freight-in (on raw materials) $ 2,500
Costs of delivery to customers $ 9,000
Wages paid to assembly-line workers $ 132,500
Lumber used to build product $ 72,000
Utilities in factory $ 44,500
Utilities in sales office $ 26,500
What are the prime costs and manufacturing overhead costs, respectively, for Comfy Furniture Company totaled?
A. $325,300.
B. $236,800.
C. $132,100.
D. $261,800.

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Tundexi Tundexi · Answer 1 · 2021-09-17T13:30:00+02:00

Prime costs & manufacturing overhead costs for Comfy Furniture Company totaled $214,000 and $252,000 respectively.

The direct costs of production which includes raw materials and labor is known as "Prime Cost".

The computation of Comfy Furniture Company Prime cost is as follows:

Particulars Amount

Fabric used to upholster furniture $7,000

Freight-in (on raw materials) $2,500

Wages paid to assembly-line workers $132,500

Lumber used to build product $72,000

Total prime cost $214,000

The indirect costs of production which includes depreciation of equipment, salary and wages is known as "manufacturing overhead costs"

The computation of Comfy Furniture Company manufacturing overhead costs is as follows:

Particulars Amount

Depreciation on factory equipment $16,000

Factory supervisor salary $52,500

Lubricants used in factory equipment $3,000

Wages paid to factory maintenance workers $115,000

Utilities in factory $44,500

Total manufacturing overhead costs $252,000

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