Monarch Inc. is a company that creates and distributes butterfly-themed home décor. You are attempting to calculate total product costs for Monarch by using traditional costing. They have the following costs: Direct Materials (DM) of Resin, $12,000; DM of Metal Backing, $9,000; Paint, $6,000; DM of Adhesive, $10,000; Cardboard for Packaging, $3,000; Assembly Line Wages, $55,750; Marketing, $36,000; and Sales Commissions, $60,000. Their Manufacturing Overhead (MOH) will be 85% of their Direct Labor (DL) cost. What are their total product costs?
A) $143,137.50
B) $151,500.00
C) $209,737.50
D) $320,737.50

Question

Quizplus · Accepted Answer

This question requires you to calculate total product costs under traditional costing which entails ensuring that MOH uses the proper input. $143,137.50 (Choice A) correctly added together the DM of ($12,000 + $9,000 + $6,000 + $10,000 + $3,000) $40,000 plus the DL of $55,750 plus the MOH of $47,387.50 ($55,750 × 0.85).
In chapter packaging is part of MOH.
All primary packing materials like cardboard, boxes, cartons, etc. are treated as direct material costs.