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JAMB Principles of Accounts 2001 Question 24

Question 24

Manufacturing Accounts

Given:
(₦)
Direct material 2,500
Direct labour 5,000
Direct expenses 1,000
Overhead expenses 1,500
From the data above, compute the prime cost

  1. A.₦8,500
  2. B.₦7,500
  3. C.₦6,500
  4. D.₦6,000.
Show the answer and explanation

Answer: A (₦8,500)

Explanation

Prime cost = direct material + direct labour + direct expenses = 2,500 + 5,000 + 1,000 = ₦8,500.