Given: Direct material ₦2,500 Direct labour ₦5,000 Direct expenses ₦1,000 Overhead expenses ₦1,500From the data above, compute the prime cost?
Question 1 Report
Given:
Direct material ₦2,500
Direct labour ₦5,000
Direct expenses ₦1,000
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.
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