Figure 2-7.Gateway Company produces a product with the following per-unit costs:
$\begin{array}{lr}
\text { Direct materials } & \$ 11 \
\text { Direct labor } & 8 \
\text { Overhead } & 15
\end{array}$ Last year, Gateway produced and sold 750 units at a sales price of $68 each. Total selling and administrative expense was $22,000.
-Refer to Figure 2-7. Prime cost per-unit was?
A) $19
B) $23
C) $34
D) $11

Question

Figure 2-7.Gateway Company produces a product with the following per-unit costs:
 $\begin{array}{lr}
\text { Direct materials } & \$ 11 \
\text { Direct labor } & 8 \
\text { Overhead } & 15
\end{array}$ Last year, Gateway produced and sold 750 units at a sales price of $68 each. Total selling and administrative expense was $22,000.
-Refer to Figure 2-7. Prime cost per-unit was?
A) $19
B) $23
C) $34
D) $11

Quizplus · Accepted Answer

Prime cost per unit is calculated as the sum of direct materials and direct labor costs. In this case, direct materials cost $11 and direct labor costs $8, so the prime cost per unit is $11 + $8 = $19.

Figure 2-7 Direct materials $11 Direct labor 8 Overhead 15\begin{array}{lr}\text { Direct materials } & \$ 11 \\\text { Direct labor } & 8 \\\text { Overhead } & 15\end{array} Direct materials Direct labor Overhead ​$11815​

Figure 2-7 $\begin{array}{lr}\text { Direct materials } & \$ 11 \\\text { Direct labor } & 8 \\\text { Overhead } & 15\end{array}$