Question 2 The following data pertains to Lam Co.\'s manufacturing operations: I

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Question 2

The following data pertains to Lam Co.'s manufacturing operations:

Inventories   4/1   4/30
Direct Materials   $18,000   $15,000
Work in Process   9,000   6,000
Finished Goods   27,000   36,000

Additional information for the month of April:

Direct materials purchased   $32,000
Direct labor   $30,000
Direct labor rate per hour   $10.00
Factor overhead incurred   $40,000

Overhead is applied at $12 per direct labor hour.

For the month of April, prime cost incurred was:
      
$75,000.
      
$66,000.
      
$65,000.
      
$62,000.

Explanation / Answer

Direct materials used = 32000+18000-15000 = $35000 Prime cost incurred = 35000+30000 = $65000 Option 3 is correct

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