Lakeland Inc. manufactured 5,000 units during the month of March. They incurred direct materials cost of $100,000 and overhead cost of $40,000. If their per-unit prime cost was $26.00 per unit how much direct labor cost did they incur during March?
A) $20,000
B) $35,000
C) $90,000
D) $30,000

Question

Quizplus · Accepted Answer

Prime cost = Direct Materials Cost + Direct Labor Cost
Prime cost per unit = Prime cost / Number of units produced

Given, 
Prime cost per unit = $26.00
Direct materials cost = $100,000
Number of units produced = 5,000

Using the formula, 
Prime cost = Prime cost per unit x Number of units produced
Prime cost = $26.00 x 5,000
Prime cost = $130,000

Now we can find the direct labor cost using the formula, 
Direct Labor Cost = Prime Cost - Direct Materials Cost - Overhead Cost
Direct Labor Cost = $130,000 - $100,000 - $40,000
Direct Labor Cost = $30,000

Therefore, the answer is D) $30,000.