AP3 6 Seved Help Save &Exit; Submit Check my work Bodin Company manufactures fin
ID: 2532452 • Letter: A
Question
AP3 6 Seved Help Save &Exit; Submit Check my work Bodin Company manufactures finger splints for kids who get tendonitis from playing video games. The firm had the following inventories at the beginning and end of the month of January Sanswucy on Jenurg 3 Pinished goods Hork in proces8 Raw material 125,000 235,000 132,000 S 117.00 251, 000 124.000 The following additional data pertain to January operations $192, 0 00 300,000 70 000 115,000 Raw material purchased Direct labor Actual manufacturing overhead Actual selling and administr?.tive expenses The company applies manufacturing overhead at the rate of 60 percent of direct-labor cost. Any overapplied or underapplied manufacturing overhead is accumulated until the end of the year Exercise 3-27 Part 1 1. Compute the company's prime cost for January KPrev3 4 57of 13 NextExplanation / Answer
Prime cost is the combination of a manufactured product's costs of direct materials and direct labor. In other words, prime cost refers to the direct production costs. Indirect manufacturing costs are not part of prime cost. Computation company's Prime Cost for January Raw Material January 1 $132,000.00 Add : Raw Material Purchased $192,000.00 Less : Raw Material January 31 $124,000.00 Raw Material Consumed $200,000.00 Direct Labor $300,000.00 Company's Prime Cost for January $500,000.00