Answer:
1. The total prime cost in January was $480,000
2. The prime cost per unit in January was $120 per units
3. The total conversion cost in January was $400,000
4. The conversion cost per unit in January was $100 per units
Explanation:
Prime costs are direct costs and calculated by the following formula:
Prime costs = Direct materials + Direct labor
Prime cost per unit = Prime costs/ number of units are produced
1. Total prime cost in January = $400,000 + $80,000 = $480,000
2. Prime cost per unit in January = $480,000/4,000 = $120 per units
Conversion costs are those production costs required to convert raw material to finished goods. Conversion costs include direct labor and manufacturing overheads.
Conversion Costs = Direct Labor + Manufacturing Overheads
3. Total conversion cost in January = $80,000 + $320,000 = $400,000
4. Conversion cost per unit in January = Total conversion cost/number of units are produced = $400,000/4,000 = $100 per units