A company's prime costs total $3,000,000 and its conversion costs total $7,000,000. If direct materials are $1,000,000 and factory overhead is $5,000,000, then direct labor is:
A) $2,000,000.
B) $4,000,000.
C) $1,000,000.
D) $3,000,000.
E) $14,000,000.

Question

Quizplus · Accepted Answer

Prime costs are the sum of direct materials and direct labor. Given prime costs of $3,000,000 and direct materials of $1,000,000, direct labor is $2,000,000.

A Company's Prime Costs Total $3,000,000 and Its Conversion Costs