Use the following information to answer the question that follows N Direct material used 64,000 Direct labour 30,000 Production overheads 22,000 Work-in-pro...
Question 1 Report
Use the following information to answer the question that follows
| N | |
| Direct material used | 64,000 |
| Direct labour | 30,000 |
| Production overheads | 22,000 |
| Work-in-progress at beginning | 9,000 |
| Work-in-progress at close | 14,000 |
Prime cost of production is?
Answer Details
The prime cost of production is the sum of direct materials and direct labor costs. In this case, the direct material used is N64,000 and the direct labor cost is N30,000. Therefore, the prime cost of production is N64,000 + N30,000 = N94,000.
We do not need to consider the production overheads or the work-in-progress at the beginning and end since they are not part of the prime cost of production. Prime cost only considers the direct costs associated with the production of goods, which are the direct materials and direct labor costs.
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