Lawal and co makes blocks and sell to builders. In computing prime cost, which of the following costs would be considered appropriate?
Question 1 Report
Lawal and co makes blocks and sell to builders.
In computing prime cost, which of the following costs would be considered appropriate?
Answer Details
In computing prime cost, the costs that are directly related to the production process are considered appropriate. In this case, Lawal and Co make blocks, so the costs of the materials used in making the blocks would be appropriate to include in computing the prime cost. Option A, which includes the costs of cement, sand, and carriage outwards, would be the most appropriate as it directly relates to the production process. The other options do not directly relate to the production process and would not be included in computing the prime cost.
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