XYZ Company recorded the following information related to their inventory accoun
ID: 2504085 • Letter: X
Question
XYZ Company recorded the following information related to their inventory accounts for January:
January 1, 2009 January 31, 2009 Direct materials 36,000 30,000 Work in process 18,000 12,000 Finished goods 54,000 72,000
XYZ Company's accounting records indicated the following costs had been incurred during January:
Advertising ............................................. $37,000 Depreciation, factory building .......................... 40,000 Rent (70% for factory; 30% for office building) ......... 45,000 Direct labor ............................................ 60,000 Direct materials purchased .............................. 84,000 Indirect materials ...................................... 22,000 Sales commissions ....................................... 35,000 Production supervisor's salary .......................... 50,000 Selling & administrative salaries ....................... 61,000 Utilities, factory building ............................. 14,000
Calculate XYZ Company's prime costs for January.
XYZ Company recorded the following information related to their inventory accounts for January:
January 1, 2009 January 31, 2009 Direct materials 36,000 30,000 Work in process 18,000 12,000 Finished goods 54,000 72,000
XYZ Company's accounting records indicated the following costs had been incurred during January:
Advertising ............................................. $37,000 Depreciation, factory building .......................... 40,000 Rent (70% for factory; 30% for office building) ......... 45,000 Direct labor ............................................ 60,000 Direct materials purchased .............................. 84,000 Indirect materials ...................................... 22,000 Sales commissions ....................................... 35,000 Production supervisor's salary .......................... 50,000 Selling & administrative salaries ....................... 61,000 Utilities, factory building ............................. 14,000
Calculate XYZ Company's prime costs for January.
Explanation / Answer
Prime Costs = DM + DL
DM Used
Beg RM 36000
Add Purchases 84000
Total Available 120000
Deduct: Ending RM 30000
Total Used 90000
DL 60000
Prime Cost 150000
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