The following information pertains to Fry Enterprises: $$\begin{array} { l c }
\text { Cost of goods manufactured } & \$ 450,000 \
\text { Bepinning wark-in-process inventary } & 210,000 \
\text { Ending work-in-process inventory } & 180,000 \
\text { Manufacturing overhead } & 150,000
\end{array}$$ What are the prime costs for the year?
A)$270,000
B)$300,000
C)$360,000
D)$480,000

Question

The following information pertains to Fry Enterprises: $$\begin{array} { l c } 
\text { Cost of goods manufactured } & \$ 450,000 \
\text { Bepinning wark-in-process inventary } & 210,000 \
\text { Ending work-in-process inventory } & 180,000 \
\text { Manufacturing overhead } & 150,000
\end{array}$$ What are the prime costs for the year?
A)$270,000
B)$300,000
C)$360,000
D)$480,000

Quizplus · Accepted Answer

Prime costs are direct material and direct labor. The cost of goods manufactured is the sum of the beginning work-in-process inventory, direct material, direct labor, and manufacturing overhead. Since we do not have the direct material and direct labor costs, we can subtract the manufacturing overhead from the cost of goods manufactured to get the prime costs. Therefore, the prime costs are $450,000 - $150,000 = $300,000.

The Following Information Pertains to Fry Enterprises What Are the Prime Costs for the Year? A)$270,000 B)$300,000

The Following Information Pertains to Fry Enterprises What Are the Prime Costs for the Year?
A)$270,000
B)$300,000