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Lakeland Inc. manufactured 5,000 units during the month of March. They incurred direct materials cost of $100,000 and overhead cost of $40,000. If their per-unit prime cost was $26.00 per unit how much direct labor cost did they incur during March?

Question

Lakeland Inc. manufactured 5,000 units during the month of March. They incurred direct materials cost of 100,000andoverheadcostof100,000 and overhead cost of 40,000. If their per-unit prime cost was $26.00 per unit how much direct labor cost did they incur during March?

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Solution

The prime cost of a product is the sum of the direct materials cost and the direct labor cost.

Given that the prime cost per unit is 26.00and5,000unitsweremanufactured,thetotalprimecostforthemonthofMarchis26.00 and 5,000 units were manufactured, the total prime cost for the month of March is 26.00 * 5,000 = $130,000.

The direct materials cost for March is given as $100,000.

The direct labor cost can be found by subtracting the direct materials cost from the total prime cost.

So, the direct labor cost for March is 130,000(totalprimecost)130,000 (total prime cost) - 100,000 (direct materials cost) = $30,000.

This problem has been solved

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