# Prime Cost and Conversion CostGrin Company manufactures digital cameras. In January, Grin produced 2,250 cameras with the following costs:Direct materials\$440,000Direct labor136,000Manufacturing overhead736,000There were no beginning or ending inventories of WIP.Required:If required, round your answers to the nearest cent.1.  What was the total prime cost in January?\$2.  What was the prime cost per unit in January?\$per unit3.  What was the total conversion cost in January?\$4.  What was the conversion cost per unit in January?\$per unit

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Prime Cost and Conversion Cost

Grin Company manufactures digital cameras. In January, Grin produced 2,250 cameras with the following costs:

 Direct materials \$440,000 Direct labor 136,000 Manufacturing overhead 736,000

There were no beginning or ending inventories of WIP.

Required:

1.  What was the total prime cost in January?
\$

2.  What was the prime cost per unit in January?
\$per unit

3.  What was the total conversion cost in January?
\$

4.  What was the conversion cost per unit in January?
\$per unit

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Step 1

The prime cost is the cost of direct labor and direct material used. It is calculated by adding the cost of direct material used and direct labor.

The conversion cost is referred to the cost incurred in converting the raw material into the finished goods. It is calculated by adding the cost of manufacturing overhead in the cost of direct labor.

Step 2

1)
Total prime cost in January is calculated as follows:

Step 3

2)

Prime cost per unit in January:

Total prime cost: \$576,000

Total number of units: 2,250

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