Question

Craigmont Company's direct materials costs are $4,200,000, its direct labor costs total $8,080,000, and its factory overhead costs total $6,080,000. Its prime costs total: Multiple Choice $12,280,000. $10,280,000. $14,160,000.

Answer 1

$12,280,000.

Step-by-step explanation:

All the direct costs involved in the manufacturing of a product except fixed cost is called prime cost e.g direct material, direct labor etc.

Direct Material = $4,200,000

Direct labor = $8,080,000

Total Prime cost = Direct material + Direct labor = $4,200,000 + $8,080,000 = $12,280,000

Overhead costs are not classified as the prime cost because these are indirect costs.