Chapter 2, Problem 2.33BE

Classify and calculate a manufacturer’s costs (Learning Objectives 2 & 4)

An airline manufacturer incurred the following costs last month (in thousands of dollars).

a.	Airplane seats	$300
b.	Production supervisors’ salaries	$110
c.	Depreciation on forklifts in factory	$90
d.	Machine lubricants	$30
e.	Factory janitors’ wages	$50
f.	Assembly workers’ wages	$630
g.	Property tax on corporate marketing offices	$20
h.	Plant utilities	$140
i.	Cost of warranty repairs	$230
j.	Machine operators’ health insurance	$40
k.	Depreciation on administrative offices	$100
l.	Cost of designing new plant layout	$160
m.	Jet engines	$1,400

Requirements

1. 1. Assuming the cost object is an airplane, classify each cost as one of the following: direct material (DM), direct labor (DL), indirect labor (IL), indirect materials (IM), other manufacturing overhead (other MOH), or period cost. What is the total for each type of cost?
2. 2. Calculate total manufacturing overhead costs.
3. 3. Calculate total product costs.
4. 4. Calculate total prime costs.
5. 5. Calculate total conversion costs.
6. 6. Calculate total period costs.