Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 15

Cost Concepts

The controller at Emporia Precision Parts asks for your help in sorting out some cost information. She is called to a meeting, but hands you the following information for June:

Prime costs, June	$147,000
Total manufacturing costs, June	267,000
Cost of goods manufactured, June	270,000
Cost of goods sold, June	212,000
Direct material inventory, June 30	15,000
Work-in-process inventory, June 1	9,000
Finished goods inventory, June 30	72,000
Direct materials purchased, June	84,000
Direct labor costs, June	60,000

Required

Compute for the month of June:

a. Direct materials used, June.

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b. Direct material inventory, June 1.

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c. Conversion costs, June.

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d. Work-in-process inventory, June 30.

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e. Manufacturing overhead, June.

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f. Finished goods inventory, June 1

Step 1 of 24

Prime costs

Prime costs are the basic cost incurred in manufacturing the product. They represent direct costs of production. Prime costs consist of direct material costs plus direct labor costs.

Formula to calculate prime costs