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At Allen Company, manufacturing overhead is applied based on direct labor hours. Overhead...

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Accounting

At Allen Company, manufacturing overhead is applied based on direct labor hours. Overhead was estimated to be $700,000 and direct labor hours were estimated to be 350,000.
Actual direct labor costs and actual direct labor hours for the year amounted to $800,000 and 450,000 hours.
In addition, Allen Company incurred the following actual costs during the year:
Administrative expenses, $100,000
Depreciation expense on fixed assets, $800,000(75% of the depreciation expense was related to manufacturing activities)
Indirect material costs, $50,000
Indirect labor costs, $100,000
Utility expense on the manufacturing facility, $125,000
Insurance expense on the manufacturing facility, $40,000
Marketing expenses, $75,000
Sales & promotion expenses, $25,000
Allen Company had the following inventory balances at the beginning and end of the year:
January 1 December 31
Finished goods $450,000 $500,000
Work in process 600,000700,000
Raw (direct) materials 350,000375,000
During the year, the company purchased $300,000 of raw materials and generated sales of $2,500,000.
5. What amount of raw materials were used during the period?
6. What is the amount of prime costs?

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