Product Costing Review
Mad Dog Enterprises manufactures computer game control devices such as joysticks and steering wheels. Following is a list of the costs incurred by Mad Dog in 2009:
Wages paid to assembly workers . . . . $100,000
Cost of plastic used in making devices . . . 25,000
Insurance on factory building . . . 12,000
Salary of factory supervisor . . . . 57,000
Interest on money borrowed to finance operations . . . 34,000
Wages paid to factory maintenance workers . . 61,000
Cost of computer/controller boards installed in devices . . . . . 38,000
Advertising costs . . . . . . . . . 127,000
Cost of electricity used in factory . . . . 46,000
Compute the total cost for each of the following categories:
1. Direct materials
2. Direct labor
3. Manufacturing overhead
4. Period costs
This is a classification type of problem with little math involved. You begin by properly classifying each line as either Direct Labor (DL), Direct Material (DM), Manufacturing Overhead (MO), or Period Costs (PC).
DL is the actual labor spent on manufacturing the product (i.e. assembly ...
A calculation of Mad Dog Enterprise's direct and indirect costs derived from given financials.