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Use the information below to answer this question.

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Use the information below to answer this question.

Raw materials jan.5,000Raw materials dec.5,800Purchase of raw materials45,000Salary61,000Factory lubricant2,050plant depreciation1,300Factory insurance1,250

The prime cost for the company is

A.

N169,200

B.

N44,200

C.

N55,800

D.

N230,200

Correct answer is A

The prime cost are direct cost,direct material cost, direct labour cost and direct expenses.

Therefore:

Raw materials (jan)5000

Add purchases 45,000

Less raw materials (dec) 5,800

Cost of raw materials consume 44,200

Prime cost 169,200