Use the following information to answer the given question

\(\begin{array}{c|c} & N \\ \hline \text{Opening stock of raw materials} & 8,000\\ \text{Purchases} & 45,000 \\ \text{Closing stock of raw materials} & 9,500 \\ \text{Direct wages} & 6,450 \\ \text{Indirect wages} & 2,800 \\ \text{Depreciation - Plant and Machinery} & 3,200 \\ \text{Factory rents and rates} & 350 \\ \text{Opening work-in-progress} & 3,250 \\ \text{Closing work-in-progress} & 3,750\end{array}\)

Prime cost is N53,000

  • A N53,000
  • B N52,750
  • C N49,950
  • D N46,300

The correct answer is C. N49,950

The prime cost is calculated as the sum of the cost of raw materials used and direct wages.

  1. Cost of raw materials used = Opening stock of raw materials + Purchases - Closing stock of raw materials = 8,000 + 45,000 - 9,500 = 43,500

  2. Prime cost = Cost of raw materials used + Direct wages = 43,500 + 6,450 = 49,950

So, the correct answer is C. N49,950.

Previous question Next question