Question

Benton Engineering Services Company incurred the following during 2016 Direct labor $94,000 Overhead 126,000 Selling expenses 112,000 Administrative expenses 102,000 Calculate prime cost and conversion cost for Benton Engineering Services Company during 2016.

Answer 1

Answer:

Prime cost = $94,000

Conversion cost =  $135,400.

Explanation:

Prime cost is the addition of direct material cost , direct labor cost and direct expenses.

Conversion cost is the cost of converting raw materials into finished product. It s the sum of direct labour cost and production overheads.

For Bento Engineering,

Prime cost = direct labour cost  (since no figure is given for direct material and direct expenses.)

Prime cost = $94,000

Conversion cost = Direct labour cost + overheads

Conversion cost = $94,000 + 126,000

                          =  $135,400.

Prime cost = $94,000

Conversion cost =  $135,400.