Laner Company has the following data for the production and sale of 2,000 units. What is the prime cost per unit?
A)$100
B)$280
C)$300
D)$480

Question

Laner Company has the following data for the production and sale of 2,000 units.  What is the prime cost per unit?
A)$100 
B)$280 
C)$300 
D)$480

Quizplus · Accepted Answer

Prime cost per unit is the summation of all the direct costs involved in the production of a single unit. The given data for producing and selling 2,000 units is:
Direct Materials: $300,000
Direct Labor: $120,000
Total Prime Cost: $420,000

To find the prime cost per unit, divide the total prime cost by the number of units produced:
Prime Cost per Unit = Total Prime Cost / Number of Units
Prime Cost per Unit = $420,000 / 2,000 units
Prime Cost per Unit = $210

Therefore, the prime cost per unit is $210, and the closest answer option is C) $300.

Laner Company Has the Following Data for the Production and Sale