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Perfect Pad manufacturers floor mats for trailers that are used to transport horses. The mats provide for a firm footing surface that quickly sheds water. Mats a e made to customer specifications via orders submitted over an internet site. The mats are completed and shipped in about one day. As a result, Perfect Pad does not maintain any work in process or finished goods inventory. The following costs were incurred in producing and selling mats during August
Synthetic rubber used in the mat
$213.500
Lubricant used In the molding machine
15.500
Factory rent
10.600
Electricity to run the molding machine
2,800
Labor cost of machine operators
45,100
Internet sales site
2,300
Administrative salaries
14.500
Depredation of molding machine
7.800
Salary of factory safety inspector
4.100
Office rent
14,400
Question 1: Evaluate these costs, and determine the amount of direct material direct labor, factory overhead, and selling/general/administrative costs. Next, identify how much is considered to be a "prime cost" and how much is considered to be a "conversion cost."
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