Question

Assume the following information pertaining to Cub Company:

Prime costs
$195,000
Conversion costs
221,000
Direct materials used
85,000
Beginning work in process
98,000
Ending work in process
81,000
Direct labor used is calculated to be:
A. $306,000.
B. $26,000.
C. $110,000.
D. $84,000.
E. $111,000.

Answer 1

To calculate the direct labor used by Cub Company, subtract the direct materials used from the prime costs. The calculation is $195,000 (Prime Costs) - $85,000 (Direct Materials Used) = $110,000 (Direct Labor). Thus, the direct labor used is $110,000.

Step-by-step explanation:

The question provided involves the calculation of direct labor costs within the context of manufacturing accounting, specifically within the calculation of prime and conversion costs. The information given includes the total prime costs, the conversion costs, and the direct materials used. Prime costs consist of the direct materials used plus direct labor costs. Conversion costs consist of direct labor costs plus manufacturing overhead. To calculate the direct labor used, we subtract the direct materials from the prime costs.

Here is the step-by-step calculation:

1. Calculate Direct Labor: Prime Costs (total) - Direct Materials Used = Direct Labor.
2. Substitute the given values: $195,000 (Prime Costs) - $85,000 (Direct Materials Used) = Direct Labor.
3. Perform the calculation: $195,000 - $85,000 = $110,000.

Therefore, the direct labor used is calculated to be $110,000.