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21 September, 19:35

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.

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  1. 21 September, 19:47
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    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.
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