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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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JackMan Company produces die-cast metal bulldozers for toy shops. JackMan estimated the following average costs per bulldozer:

Chapter 2, Problem 11MCQ, JackMan Company produces die-cast metal bulldozers for toy shops. JackMan estimated the following

Prime cost per unit is

  1. a. $8.65.
  2. b. $1.10.
  3. c. $0.95.
  4. d. $2.05.
  5. e. $9.75.

To determine

Calculate the amount of prime cost per unit.

Explanation

Prime Cost Per Unit:

Prime cost per unit can be defined as the summation of per unit cost of direct labor and direct material. The amount of indirect cost is not included while evaluating the prime cost.

e.

Use the following formula to calculate the prime cost per unit:

Prime cost per unit=Direct material per unit+Direct labor per unit

Substitute $8.65 for direct material per unit and $1.10 for direct labor per unit in the above formula.

Prime cost per unit=$8

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