The following information pertains to Steel Wheels, Inc: $$\begin{array} { l r }
\text { Cost of goods manufactured } & \$ 350,000 \
\text { Beginning work-in-process inventory } & 110,000 \
\text { Ending work-in-process inventory } & 80,000 \
\text { Manufacturing overhead } & 50,000
\end{array}$$ What are the prime costs for the year?
A)$360,000
B)$480,000
C)$270,000
D)$300,000

Question

The following information pertains to Steel Wheels, Inc: $$\begin{array} { l r } 
\text { Cost of goods manufactured } & \$ 350,000 \
\text { Beginning work-in-process inventory } & 110,000 \
\text { Ending work-in-process inventory } & 80,000 \
\text { Manufacturing overhead } & 50,000
\end{array}$$ What are the prime costs for the year?
A)$360,000
B)$480,000
C)$270,000
D)$300,000

Quizplus · Accepted Answer

Prime costs consist of direct materials and direct labor. They do not include manufacturing overhead. To find the prime costs, we need to calculate the total manufacturing costs and then subtract the manufacturing overhead. Total manufacturing costs can be found by adding the cost of goods manufactured to the ending work-in-process inventory and then subtracting the beginning work-in-process inventory: $350,000 + 80,000 - 110,000 = $320,000. Subtracting the manufacturing overhead ($50,000) from this amount gives us the prime costs: $320,000 - $50,000 = $270,000.

The Following Information Pertains to Steel Wheels, Inc What Are the Prime Costs for the Year? A)$360,000 B)$480,000

The Following Information Pertains to Steel Wheels, Inc What Are the Prime Costs for the Year?
A)$360,000
B)$480,000