| N | |
| Direct material | 2,500 |
| Direct labour | 5,000 |
| Direct expenses | 1,000 |
| Overhead expenses | 1,500 |
use the information contained in the table to anwser the qustion below;
from the data above, compute the prime cost.
-
A.
N6,500 -
B.
N 8,500 -
C.
N6,000 -
D.
N7,500
Correct Answer: Option B
Explanation
Prime cost is the direct cost of a commodity in terms of the materials and labour involved in its production, excluding fixed costs. from the table above, prime cos is derivrd thus; Prime cost = direct material + direct labour + direct expenses
2,500+5,000+1,000=8,500