Overhead expenses ₦1,500From the data above, compute the prime cost?
Answer Details
The prime cost is the total cost of direct materials, direct labor, and direct expenses that are required to produce a product or service. In this case, we are given the following costs:
Direct material = ₦2,500
Direct labour = ₦5,000
Direct expenses = ₦1,000
To calculate the prime cost, we simply add up these costs:
Prime Cost = Direct Material + Direct Labour + Direct Expenses
Plugging in the numbers from the question, we get:
Prime Cost = ₦2,500 + ₦5,000 + ₦1,000
Prime Cost = ₦8,500
Therefore, the answer is ₦8,500.
In simpler terms, the prime cost is the total cost of the raw materials, labor, and other expenses that are directly involved in the production of a product or service, before overhead expenses are added.