| Direct material | N2,500 |
| Direct labour | N5,000 |
| Direct expenses | N1,000 |
| Overhead expenses | N1,500 |
A. N6,500
B. N 8,500
C. N6,000
D. N7,500
Correct Answer:
Option B – N 8,500
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 derived thus; Prime cost = direct material + direct labour + direct expenses
2,500+5,000+1,000=8,500
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