Question

Rustic Living Furniture Company manufactures furniture at its central Kentucky factory. Some of its costs from the past year include:
Wages paid to factory maintenance workers: $60,700
Fabric used to upholster furniture: $80,200
Wages paid to assembly - line workers: $100,300
Lumber used to build product: $15,300
Sales commissions: $7,400
Insurance costs for factory: $21,900
Freight-in (on raw materials): $3,500
Utilities in factory: $12,300
Factory supervisor salary: $60,100
Depreciation on factory equipment: $18,400
Utilities in sales office: $26,000
Costs of delivery to customers: $8,600
Depreciation on sales office: $1,400
Lubricants used in factory equipment: $400

Prime costs for Rustic Living Furniture Company totaled:

a. $195,800
b. $241,600
c. $199,300
d. $95,500

Answer 1

Answer:

$195,800

Explanation:

prime cost are expenditures which can be charged directly to a particular unit. They can be easily identified with a particular unit of output. e.g Direct labour, direct expenses, direct materials

The prime cost in  for Rustic living furniture includes :

Fabric used to upholster furniture: $80,200

Wages paid to assembly - line workers: $100,300  

Lumber used to build product: $15,300

$80,200 + $100,300 + $15, 300 = $195,800