Janet's Jewelry Makes Sterling Silver Jewelry

question 60

Multiple Choice

Janet's Jewelry makes sterling silver jewelry. One of the most popular rings, the Love Knot, is produced in batches of 10. The standard variable costs to produce one batch are as follows: direct material average cost is $13 per ounce; average ounces per batch is 20; direct labor average rate per hour is $22; average hours per batch is 10; variable overhead average rate per hour is $10; average hours per batch is 10. The standard monthly fixed costs are as follows: fixed manufacturing overhead is $1,400; selling and administrative costs are $1,500. Janet's Jewelry produces 10 batches per month. What is the manufacturing cost per batch?

• A) $58
• B) $72
• C) $720
• D) $870

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Definitions:

Prime Costs

The direct costs of manufacturing a product, specifically direct materials and direct labor.

Direct Materials

Raw materials that can be directly traced to the manufacturing of a product and are considered a variable cost.

Direct Labor

The cost of wages paid to workers directly involved in the production of goods or provision of services.

Direct Materials

The raw materials directly traceable to the manufacturing of a product and included in the cost of goods sold.