A. This is only the direct materials used and does not include direct labor, which is also a prime cost.

B. The prime costs are direct materials and direct labor. We are told that the direct labor was $300,000, but will need to calculate the direct materials used cost for January. The beginning direct materials was $134,000. During the period, they purchased $189,000 of direct materials and also incurred $3,000 in transportation in costs. However, they also returned $1,000 of direct materials during the period. Adding these together we can calculate the total direct materials that they had during January as $325,000. Since there was an ending inventory of $124,000, they must have used $201,000 of direct materials during the period. Added to the direct labor, the total prime costs were $501,000. We do not worry about the raw materials and finished goods inventory numbers because the amounts in those accounts were not related to the current period.

C. This is direct labor plus direct materials purchased.

D. This is simply the direct materials, but it is calculated without taking into account transportation in and returns.