Answer:
The question is incomplete; the complete question is given below:
$
Direct materials 15,000.00
Direct labor 25,000.00
Factory depreciation expense 45,000.00
Factory utilities expense 2,000.00
Payroll staff's salary 15,000.00
Prime cost= $40,000, Conversion cost= $72,000
Explanation:
Prime cost: It is the summation of all direct costs. Direct costs are costs that are incurred directly for a particular product, and therefore can be traced to it.
Examples of direct costs include; direct material costs, direct labour cost and direct expense
Direct materials cost: the costs of all materials used directly to manufacture a product. <em>For example, cocoa powder, vanilla used in making chocolate</em>. <em>Every other materials costs are indirect material costs</em>
Direct labor cost: the cost of the labor hours of workers actively involved in the production of a product. For example, the cost of the total hours paid to workers for packing the chocolates into cartons. <em>Every other labor costs are indirect labor costs</em>
Prime cost = Direct material cost+ Direct labour cost + Direct expense
Prime cost = $15,000 + $25,000= $40,000
Conversion cost = The sum of direct labour costs and <u>manufacturing overheads</u>
Conversion cost= $25,000 + $45,000 + $2000= $72,000
Note that payroll staff cost was excluded because payroll function is an administrative activitiy not manufacturing.
