We appreciate your visit to Prime Cost and Conversion Cost Benton Engineering Services Company incurred the following during 2019 Direct labor 60 000 Overhead 110 000 Selling expenses 56 000. This page offers clear insights and highlights the essential aspects of the topic. Our goal is to provide a helpful and engaging learning experience. Explore the content and find the answers you need!
Answer :
Final answer:
To calculate the prime cost and conversion cost for Benton Engineering Services during 2019: Prime cost is the direct labor cost of $60,000 and conversion cost is the sum of direct labor and overhead, amounting to $170,000.
Explanation:
The student asked how to calculate the prime cost and conversion cost for Benton Engineering Services Company during 2019. The prime cost is the sum of direct materials and direct labor, while the conversion cost is the sum of direct labor and manufacturing overhead costs.
For Benton Engineering Services Company, the prime cost is simply the direct labor cost, which is $60,000, as no direct materials cost is provided. The conversion cost is the sum of direct labor and overhead, amounting to $60,000 (direct labor) + $110,000 (overhead) = $170,000.
It is important to note that selling expenses and administrative expenses are not included in either the prime cost or conversion cost calculations, as they are considered period costs and not product costs.
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Answer:
Prime cost is $60,000
And, the conversion cost is $170,000
Explanation:
The computation of the prime cost and the conversion cost is shown below:
Prime cost is
= Direct material + Direct labor
= $0 + $60,000
= $60,000
And,
Conversion cost = Direct labor + Overhead
= $60,000 + $110,000
= $170,000
Basically we applied the above formula so that the prime cost and conversion cost could come
