Chapter 2, Problem 2.37P

1.

To determine

Cost:

Cost refers to the expenses incurred by the business to earn revenue from sales, in other words cost is the amount given in order to get something.

Prime Costs:

Prime cost is a sum total of direct material costs and direct manufacturing labor costs. All direct material costs and direct manufacturing labor costs are prime costs.

Conversion Costs:

Conversion cost is sum total of direct manufacturing labor costs and manufacturing overhead costs. All direct manufacturing labor costs and manufacturing overhead costs are conversion costs.

To identify: The total prime costs and total conversion costs.

2.

To determine

Inventoriable Costs:

Inventoriable Costs is the cost of inventory hold by the business and are shown as an asset in the balance sheet and will be treated as an expense in the period in which the goods are sold.

Period Costs:

Period Costs is the cost incurred by the business except the cost of goods sold. Period costs are the expense of the same period in which it is incurred.

To identify: The total inventoriable costs and total period costs.

3.

To determine

To identify: The situation when design and R & D costs are regarded as product costs.

4.

To determine

To identify: The unit costs.

5.

To determine

To identify: The total costs.

6.

To determine

To identify: The depreciation on equipment.