Financial & Managerial Accounting
13th Edition
ISBN: 9781285866307
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 16, Problem 16.3APE
To determine
Prime cost:
Prime cost refers to a cost which is directly involved in the process of manufacturing an item. Prime cost includes direct materials, direct labor and other direct
Conversion cost:
A conversion cost refers to the cost of converting the raw materials into a finished product. Conversion cost includes direct labor as well as the
To identify: The prime cost and the conversion cost of the given items of an automobile manufacturer.
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Identify the following costs as a prime cost (P), conversion cost (C), or both (B) for an automobile manufacturer:a. Wages of employees that operate painting equipmentb. Wages of the plant managerc. Steeld. Oil used for assembly line machinery
1. Prime vs conversion cost. For each of the following costs incurred in a manufacturing
operation, indicate whether they are included in prime costs (P), conversion costs (C), or
both (B).
a. Property taxes on the factory C
b. Wages for drivers delivering the final product from production plant to customers C
c. Assembly line worker's salary B
d. Direct materials used in production process P
e. Lubricating oil for plant machines P
f Fixed manufacturing overhead
1. Property taxes on a manufacturing plant is an element of:
a. Conversion cost
b. Prime cost
c. Period cost
d. Fixed cost
2. Factory supplies for manufacturing plant are generally
a. Prime cost
b. Fixed cost
c. Period cost
d. Variable cost
3. Wages paid to timekeeper in a factory is a
a. Prime cost
b. Direct Material
c. Conversion cost
d. Direct labor
Chapter 16 Solutions
Financial & Managerial Accounting
Ch. 16 - What are the major differentes between managerial...Ch. 16 - A. Differentiate between a department with line...Ch. 16 - What manufacturing cost term is used to describe...Ch. 16 - Prob. 4DQCh. 16 - What is the difference between a product cost and...Ch. 16 - Name the three inventory accounts for a...Ch. 16 - In What order should the three inventories of a...Ch. 16 - Prob. 8DQCh. 16 - For a manufacturer, what is the description of the...Ch. 16 - How does the Cost of Goods Sold section of the...
Ch. 16 - Prob. 16.1APECh. 16 - Management process Three phases of the management...Ch. 16 - Prob. 16.2APECh. 16 - Prob. 16.2BPECh. 16 - Prob. 16.3APECh. 16 - Prime and conversion costs Identify the following...Ch. 16 - Product and period costs Identify the following...Ch. 16 - Product and period costs Identify the following...Ch. 16 - Prob. 16.5APECh. 16 - Cost of goods sold, cost of goods manufactured...Ch. 16 - Classifying costs as materials, labor, or factory...Ch. 16 - Classifying costs as materials, labor, or factory...Ch. 16 - Prob. 16.3EXCh. 16 - Classifying costs as product or period costs For...Ch. 16 - Concepts and terminology From the choices...Ch. 16 - Concepts and terminology From the choices...Ch. 16 - Prob. 16.7EXCh. 16 - Classifying costs The following report was...Ch. 16 - Financial statements of a manufacturing firm The...Ch. 16 - Manufacturing company balance sheet Partial...Ch. 16 - Cost of direct materials used in production for a...Ch. 16 - Prob. 16.12EXCh. 16 - Prob. 16.13EXCh. 16 - Income statement for a manufacturing company Two...Ch. 16 - Statement of cost of goods manufactured for a...Ch. 16 - Prob. 16.16EXCh. 16 - Cost flow relationships The following information...Ch. 16 - Prob. 16.18EXCh. 16 - Classifying costs The following is a list of costs...Ch. 16 - Classifying costs The following is a list of costs...Ch. 16 - Cost classifications for a service company A...Ch. 16 - Manufacturing income statement, statement of cost...Ch. 16 - Statement of cost of goods manufactured and income...Ch. 16 - Prob. 16.1BPRCh. 16 - Classifying costs The following is a list of costs...Ch. 16 - Prob. 16.3BPRCh. 16 - Manufacturing income statement, statement of cost...Ch. 16 - Prob. 16.5BPRCh. 16 - Prob. 16.1CPCh. 16 - Prob. 16.2CPCh. 16 - Managerial accounting in the management process...Ch. 16 - Prob. 16.4CPCh. 16 - Using managerial accounting information The...
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- Conversion costs include all of the following except: A. wages of production workers B. depreciation on factory equipment C. factory utilities D. direct materials purchasedarrow_forwardAssign each of the following expenses to either the machine cost pool or the factory cost pool: A. property taxes B. heat and air-conditioning C. electricity, machines D. plant depreciation E. electricity, plant F. machine maintenance wagesarrow_forwardWhich of the following is a prime cost? A. indirect materials B. direct labor C. administrative expenses D. factory depreciation expensesarrow_forward
- What costs are considered conversion costs?a. Steel in a car factory b. Depreciation on factory equipmentc. Monthly advertising expenses d. Sales commissionsarrow_forwardArabica Manufacturing Company uses a predetermined manufacturing overhead rate based on a percentage of direct labor cost. At the beginning of 2012, they estimated total manufacturing overhead costs at $1,050,000, and they estimated total direct labor costs at $840,000. In June, 2012, Arabica completed job number 511. Job stats are as follows: Direct materials cost $27,500 Direct labor cost $13,000 Direct labor hours 400 hours Units of product produced: 200 crates How much manufacturing overhead was allocated to the job? O a. $5,000 O b. $34,375 O c $16,250 O d. $10,400arrow_forwardQuestion Content Area Which of the following would be included in the cost of a product manufactured according to absorption costing? a. sales salaries b. advertising expense c. office supplies costs d. depreciation expense on factory buildingarrow_forward
- Identify the following costs as a product cost or a period cost for an automobile manufacturer:a. Steelb. Wages of employees that operate painting equipmentc. Rent on office buildingd. Sales staff salariesarrow_forwardWhich of the following is a fixed cost in an automobile manufacturing plant? C. Sales commissions a. Administrative salaries b. Flectricity used by assembly-line machinas d. Windows for each car produced.arrow_forwardWhich of the following is a direct cost with respect to producing a motor car? a. Salary of production supervisor b. Plant utilities c. Cost of car engine d. Depreciation of plant & equipmentarrow_forward
- Classifying costs Wheels, Inc. manufactures wheels for bicycles, tricycles, and scooters. For each cost given below, determine if the cost is a product cost or a period cost. If the cost is a product cost, further determine if the cost is direct materials (DM), direct labor (DL), or manufacturing overhead (MOH) and then determine if the product cost is a prime cost, conversion cost, or both. If the cost is a period cost, further determine if the cost is a selling expense or administrative expense (Admin). Cost (a) is answered as a guidearrow_forwardIdentify each of the following costs as either a product cost or a period cost. Factory maintenance sales commissions depreciation factory equipmentarrow_forwardFor manufacturing firms, inventoriable costs include ________. a. plant supervisor salaries. b. depreciation motor vehicles – sales staff. c. advertising costs. d. distribution costs.arrow_forward
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