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from the data above, compute the prime cost. 

Accounts - Principles of Accounts
JAMB 2018

  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
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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


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