WAEC Financial Accounting 2010 Question 50

Question 50

Manufacturing Accounts

Which of the following is a prime cost?

  1. A.Royalty
  2. B.Salary
  3. C.Commission
  4. D.Discounts allowed
Show the answer and explanation

Answer: A (Royalty)

Explanation

Royalties paid for using a patent in production are a direct expense, part of prime cost.