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WAEC Financial Accounting 2001 Question 5

Question 5

Manufacturing Accounts

Prime cost consists of

  1. A.direct material and direct labour cost
  2. B.direct material, direct labour and direct expenses
  3. C.direct material, direct labour, direct expenses and overhead
  4. D.direct material and direct expenses.
Show the answer and explanation

Answer: B (direct material, direct labour and direct expenses)

Explanation

Prime cost is the total of all direct costs: materials, labour and expenses.