Use the information below to answer this question.
\(\begin{array}{c|c}
\text{Raw materials jan.} & 5,000 \\
\hline
\text{Raw materials dec.} & 5,800 \\
\hline
\text{Purchase of raw materials} & 45,000 \\
\hline
\text{Salary} & 61,000 \\
\hline
\text{Factory lubricant} & 2,050 \\
\hline
\text{plant depreciation} & 1,300 \\
\hline
\text{Factory insurance} & 1,250 \\
\end{array}\)
The prime cost for the company is
\(\begin{array}{c|c}
\text{Raw materials jan.} & 5,000 \\
\hline
\text{Raw materials dec.} & 5,800 \\
\hline
\text{Purchase of raw materials} & 45,000 \\
\hline
\text{Salary} & 61,000 \\
\hline
\text{Factory lubricant} & 2,050 \\
\hline
\text{plant depreciation} & 1,300 \\
\hline
\text{Factory insurance} & 1,250 \\
\end{array}\)
The prime cost for the company is
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Correct Answer: Option A
Explanation:
The prime cost are direct cost,direct material cost, direct labour cost and direct expenses.
Therefore:
Raw materials (jan)5000
Add purchases 45,000
Less raw materials (dec) 5,800
Cost of raw materials consume 44,200
Prime cost 169,200
The prime cost are direct cost,direct material cost, direct labour cost and direct expenses.
Therefore:
Raw materials (jan)5000
Add purchases 45,000
Less raw materials (dec) 5,800
Cost of raw materials consume 44,200
Prime cost 169,200