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ira [324]
3 years ago
13

Last year, Barnard Company incurred the following costs: direct materials, $50,000; direct labor, $20,000; manufacturing overhea

d, $130,000; selling expense, $40,000; administrative expense, $36,000.
Barnard produced and sold 10,000 units at a price of $31 each.
Refer to the information for Barnard Company above.

Prime cost per unit is :

a. $7.00

b. $20.00

c. $15.00

d. $5.00

e. $27.60
Business
1 answer:
Marizza181 [45]3 years ago
8 0

Answer:

Prime cost per unit is:  a. $7.00

Explanation:

Prime costs are direct costs and calculated by the following formula:

Prime costs = Direct materials + Direct labor

Prime cost per unit = Prime costs/ number of units are produced

Barnard Company produced and sold 10,000 units. Direct materials were $50,000; Direct labor were $20,000.

Prime costs = $50,000 + $20,000 = $70,000

Prime cost per unit = $70,000/10,000 = $7.00

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Sage Company is operating at 90% of capacity and is currently purchasing a part used in its manufacturing operations for $14.00
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Explanation:

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Therefore the cost differential would be as follows:

⇒ Differential \ cost = (Current \ purchasing \ price-Manufacturing \ cost \ excluding  \ fixed \ cost)\times 38,493On putting the values in the above formula, we get

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