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Which of the following is a prime cost?

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Accounts - Principles of Accounts WAEC 2010

Which of the following is a prime cost?

  • royalty checkmark
  • salary
  • commission
  • discounts allowed

The correct answer is: A

Explanation

Prime cost is the direct cost incurred during production. Royalty is paid on production basis and on sales basis. If it is paid on production basis then it is considered direct expense (prime cost) and debited to Trading Account

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