The following product costs are available for Arrez Company on the production of DVD cases: direct materials, $1,120; direct labor, $15.50; manufacturing overhead, applied at 150% of direct labor cost; selling expenses, $1,450; and administrative expenses, $950. The direct labor hours worked for the month are 90 hours. Round your answers to two decimal places. A. What are the prime costs? $fill in the blank 1 B. What are the conversion costs? $fill in the blank 2 C. What is the total product cost? $fill in the bl
The following product costs are available for Arrez Company on the production of DVD cases: direct materials, $1,120; direct labor, $15.50; manufacturing
| A. | What are the prime costs? | $fill in the blank 1 |
| B. | What are the conversion costs? | $fill in the blank 2 |
| C. | What is the total product cost? | $fill in the blank 3 |
| D. | What is the total period cost? | $fill in the blank 4 |
| E. | If 1,400 equivalent units are produced, what is the equivalent material cost per unit? | $fill in the blank 5 |
| F. | What is the equivalent conversion cost per unit? |
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Introduction:
The expenses incurred by the company that are directly related to the materials and labor used in production are referred to as prime costs. It refers to the costs of a manufactured product that are calculated to ensure a company's best profit margin. The prime cost is calculated as the direct costs of raw materials and labor involved in the production of a good. The total actual expenses of producing a saleable item, which can be fixed or variable, are referred to as prime costs. Prime costs are used by businesses to calculate the total cost of the production inputs needed to produce a given output. By analyzing its prime costs, a company can set prices that result in desired profits.
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