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

The correct answer is A. N169, 200

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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