Prime cost and conversion cost grin company manufactures digital cameras. in january, grin produced 4,000 cameras with the following costs: direct materials, $400,000; direct labor, $80,000; manufacturing overhead, $320,000. there were no beginning or ending inventories of wip. refer to the information for grin company above.

1. what was the total prime cost in january? $
2. what was the prime cost per unit in january? $
3. what was the total conversion cost in january? $
4. what was the conversion cost per unit in january? $

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

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