Question

Given the information below find prime cost in dollars for the month of June

Guest Hotel Inc.

Income Statement

for the period ending June 30, 2019

Sales

Food 212,975

Beverage 86,202

Total Sales -

Cost of Sales

Food 78,154

Beverage 30,811

Total cost of goods sold -

Gross Profit -

Controllable Expenses

Salaries & Wages 90,187

Occupancy 29,453

Office & General 14,600

Utilities 10,398

Transportation 7,353

Kitchen supplies 6,380

Professional fees 6,026

Advertising 10,550

Insurance 14,246

Vehicle 5,263

Total Controllable Expenses -

Net Profit / Loss -

Your Answer:

Answer 1

1- Prime Cost :

Prime costs are a firm's expenses directly related to the materials and labor used in production. It refers to a manufactured product's costs, which are calculated to ensure the best profit margin for a company. The prime cost calculates the direct costs of raw materials and labor that are involved in the production of a good. Direct costs do not include indirect expenses, such as advertising and administrative costs.

Formula and Calculation of Prime Cost

Prime cost=Direct raw materials+Direct labor

2 - Cost of Goods Sold – COGS:-

Cost of goods sold (COGS) refers to the direct costs of producing the goods sold by a company. This amount includes the cost of the materials and labor directly used to create the good. It excludes indirect expenses, such as distribution costs and sales force costs.

HERE IN THE QUESTION , COST OF GOODS SOLD IS GIVEN , THAT IS THE PRIME COST OF GOODS.

SO ,

THE PRIME COST OF,

1- food = 78154

2- Beverages =30811

3- Total Prime Cost =108965