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Formula for prime cost = direct material + direct labor
Formula for conversion cost = direct labor + manufacturing overheads

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Abel companys manufacturing overhead is 20 percent of its total conversion costs If direct labor is 38000 and if direct material are 47000 the manufacturing overhead is?

Well, honey, if manufacturing overhead is 20% of total conversion costs, and direct labor is $38,000 and direct materials are $47,000, then total conversion costs would be $38,000 + $47,000 = $85,000. So, if manufacturing overhead is 20% of that, it would be 0.20 x $85,000 = $17,000. So, the manufacturing overhead would be $17,000.


What costs are inventoriable under GAAP for service organisation merchandising businesses and manufacturing businesses?

service - none merchandising - freight costs, closing inventory manufacturing - direct material, direct labor, freight cost, manufacturing overhead


Abbey Company's manufacturing overhead is 60 percent of its total conversion costs If direct labor is 35000 and if direct materials are 55000 the manufacturing overhead is?

Conversion Cost (CC) = Direct Labour (DL) + Manufacturing Overhead (MO) CC = 35000 + (35000/40)*60 Therefor, M0 = (35000/40)*60 = 52500


What is conversion costs?

Pricing is based on direct labor and overhead. Materials does not affect pricing. Example: Your customer provides materials used in production.


How prime cost is different from conversion cost and Manufacturing Costs?

Prime cost basically is the cost of direct labor and cost of direct material; whereas conversion costs is Overhead cost and direct labor cost.


What is plant overhead cost?

plant overhead cost, also called manufacturing overhead or factory burden, is the total cost involved in operating all production facilities of a manufacturing business. It generally applies to indirect labor and indirect cost, it also includes all costs involved in manufacturing with the exception of the cost of raw materials and direct labor. Factory overhead also includes certain costs such as quality assurance costs, cleanup costs, and property insurance premiums


What is Overhead cost?

plant overhead cost, also called manufacturing overhead or factory burden, is the total cost involved in operating all production facilities of a manufacturing business. It generally applies to indirect labor and indirect cost, it also includes all costs involved in manufacturing with the exception of the cost of raw materials and direct labor. Factory overhead also includes certain costs such as quality assurance costs, cleanup costs, and property insurance premiums


Assuming that direct labor is a variable cost product costs under variable costing include only?

B. Direct materials, direct labor, and variable manufacturing overhead.


How fixed manufacturing overhead costs shifted from one period to another under absorption costing.?

What arguments are there in favor of treating fixed manufacturing overhead costs as product costs? As period costs?


What is the difference in the flow of costs between manufacturing and service organizations?

In a service organisation which uses job-order costing, the cost of inputs brought from outside (subcontracted work) is comparable to the cost of direct materials used in a manufacturing organisation. Similarly, the direct staff costs in a service organisation correspond with the direct labour costs in a manufacturing organisation. The office overhead expenses in a service organisation is similar to the manufacturing overhead in a manufacturing organisation. The cost of any completed work is simlar to the cost of finished goods inventory in a manufacturing organisation. Basically the names of the accounts used in a service organisation are different to those used in a manufacturing organisation. The work-in-process account in a service organisation would therefore have cost of subcontracted work, direct staff cost and office overhead cost on the debit side; the cost of completed work would be on the credit side. Other than the terminology, everything else in the flow of costs remains the same. The pre-determined overhead rate can be calculated by using an overhead allocation base such as direct staff costs and each completed job can be allocated with the appropriate portion of the estimated overhead based on the actual direct staff costs incurred on the project.


What is difference between product cost period cost and expenses?

Product costs is the costs are the costs incurred in the making of the product. Manufacturing costs --Direct Materials, Direct Labor, and Manufacturing Overhead. Product cost are also factory costs Period costs are the selling and administration costs. Electricity costs for the Accounting dept. is an administration costs but Electricity costs for the factory is Manufacturing Overhead.


A debit balance in the manufacturing overhead account at year end means?

It means you have incurred more actual manufacturing overhead costs than you have applied to your products (i.e., manufacturing overhead is underapplied).