Which of the following expenses constitutes prime cost?

I. Direct labour cost II. Factory overheads III. Hiring of machine for production IV. Warehouse rent

  • A Direct labour cost II. Factory overheads III. Hiring of machine for production IV. Warehouse rent
  • B I and II only
  • C I and III only
  • D I, II and III only
  • E I,II and IV only
waec 2016accounting

The correct answer is B. I and II only

Prime costs consist of direct materials and direct labor. Direct materials include all tangible components of a product. For example, direct materials include raw materials, supplies, and any other component that becomes part of the finished product.

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