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Company manufactured 100,000 units in 2019 and reported the following costs: Indirect manufacturing labor 275
Company manufactured 100,000 units in 2019 and reported the following costs: Indirect manufacturing labor 275.200 Rental costs-plant $ 384,000 Fire insurance-plant 116,000 Depreciation-plant 224,000 Property taxes-plant 32,000 Administration costs 800,000 Direct materials, 1/1/X5 384,000 Sales revenue 12,800,000 Direct manufacturing labor 2.176,000 Direct material purchases 3,136,000 Finished goods, 12/31/X5 1.280,000 Sales commissions 640,000 Advertising costs 480,000 Direct materials, 12/31/X5 576,000 What are the total prime costs incurred in 2019? Select one: O a. $ 2.944,000 O b.$ 5,312.000 0. c. $ 2.176,000 O d. $ 5.120.000
Expert Solution
Option D $5,120,000 is the Answer.
Prime cost is the total direct costs of production including raw materials and labour. Direct costs do not include indirect expenses such as advertising and administrative costs
Workings :
Direct Matrials = Opening direct materials + Current year direct material purchase - closing direct materials
= 384,000 +3136,000 -576,000
= 2944,000
Add: Direct Manufacturing Labour = 2,176,000
Prime cost = 2944,000+2,176,000
=$5,120,000
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