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Use the information below to answer this question. \(\begin{array}{c|c} \text{Raw materials jan.} & 5,000 \\...

Accounts - Principles of Accounts
JAMB 2015

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

  • A. N169, 200
  • B. N44, 200
  • C. N55, 800
  • D. N230, 200
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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


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