| 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.
- N6,500
-
N 8,500
- N6,000
- N7,500
The correct answer is: 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