Figure 2-1.Concam Inc. manufactures television sets. Last month direct materials (electronic components, etc.) costing $500,000 were put into production. Direct labor of $800,000 was incurred, overhead equaled $450,000, and selling and administrative costs totaled $360,000. The company manufactured 8,000 television sets during the month. Assume that there were no beginning or ending work in process balances.
-Refer to Figure 2-1. The total per unit prime cost was:

Question

Quizplus · Accepted Answer

The total per unit prime cost can be calculated by adding together the direct materials, direct labor, and any other directly attributable costs to production (in this case, there are no other directly attributable costs).

Total per unit prime cost = (Direct materials + Direct labor) ÷ Units produced 
                         = ($500,000 + $800,000) ÷ 8,000 
                         = $162.50

Therefore, the best choice is C, as it matches the calculated total per unit prime cost.