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In: Accounting

ABC Company applies overhead to products using a pre-determined rate of 125% of direct labor cost....

ABC Company applies overhead to products using a pre-determined rate of 125%
of direct labor cost. ABC Company's accounting records for 2019 indicated the
following costs had been incurred:

Direct materials purchased ................... $122,000
Depreciation, factory equipment ..............   33,000
Direct labor .................................     ?
Utilities.....................................     ?
Sales commissions.............................   52,000
Indirect materials............................   11,000
Depreciation, office equipment ...............     ?
Production supervisor's salary ...............   57,000
Advertising...................................   66,000

60% of the utilities relate to the factory while 40% of the utilities relate
to the general office building.

ABC Company's inventory accounts had the following balances during 2019:

                     January 1, 2019        December 31, 2019
Direct materials          50,000                  36,000
Work in process           22,000                  41,000
Finished goods            38,000                  35,000

For 2019, ABC Company reported sales revenue of $527,000; an unadjusted cost
of goods sold of $331,500; an adjusted cost of goods sold of $328,200; and
net income of $45,000

Calculate ABC Company's prime costs for 2019.

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