Happy Feet Running Company manufactures running shoes and has the following costs during the past month: What are prime costs for Happy Feet Running Company for the month?
A)$124,250
B)$116,250
C)$91,250
D)$85,000

Question

Happy Feet Running Company manufactures running shoes and has the following costs during the past month:  What are prime costs for Happy Feet Running Company for the month?
A)$124,250 
B)$116,250 
C)$91,250 
D)$85,000

Quizplus · Accepted Answer

Prime costs include direct materials and direct labor. In this case, direct materials cost is $60,000 (given as purchases of raw materials) and direct labor cost is $31,250 (given as wages paid to production workers). Therefore, prime costs for the month are $60,000 + $31,250 = $91,250. Option C is the correct answer.

Happy Feet Running Company Manufactures Running Shoes and Has the Following