Prime costs & manufacturing overhead costs for Comfy Furniture Company totaled $214,000 and $252,000 respectively.
- The direct costs of production which includes raw materials and labor is known as "Prime Cost".
The computation of Comfy Furniture Company Prime cost is as follows:
Particulars Amount
Fabric used to upholster furniture $7,000
Freight-in (on raw materials) $2,500
Wages paid to assembly-line workers $132,500
Lumber used to build product <u>$72,000</u>
Total prime cost <u>$214,000</u>
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- The indirect costs of production which includes depreciation of equipment, salary and wages is known as "manufacturing overhead costs"
The computation of Comfy Furniture Company manufacturing overhead costs is as follows:
Particulars Amount
Depreciation on factory equipment $16,000
Factory supervisor salary $52,500
Lubricants used in factory equipment $3,000
Wages paid to factory maintenance workers $115,000
Utilities in factory <u>$44,500</u>
Total manufacturing overhead costs <u>$252,000</u>
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