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CoursHeroTranscribedText: Exercise 4 (Classification of costs, prime and conversion costs) Tanaka Metal Products reports the...

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CoursHeroTranscribedText: Exercise 4 (Classification of costs, prime and conversion costs) Tanaka Metal Products reports the following components in its manufacturing costs for April 20X 1 (in thousands): Direct costs: Direct materials P430 Direct manufacturing labor salaries 110 Subcontracting 120 P 660 Manufacturing overhead: Fringe benefits on direct manufacturing labor 40 Production setup 60 Other manufacturing overhead 240 340 P.1,000 Subcontracting costs are treated as a direct-cost item separate from direct materials. Required: 1. Compute (a) the prime costs and (b) the conversion costs of Tanaka Metal Products using the cost classifications described above. 2. Assume now that Tanaka changes the classification of two items - both fringe benefits on direct manufacturing labor and production setups will now be classified as direct costs. Compute (a) the prime costs and (b) the conversion costs of Tanaka after this change in cost classifications, and comment on the results. 3. What information might Tanaka use to change two items in requirement 2 to be direct-cost items rather than manufacturing overhead cost items

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