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WAEC Accounting 2011 Paper

Question : 22

Total: 47

Prime cost is derived by adding i. cost of raw materials consumed ii. indirect expenses iii. direct labour iv. factory expenses v. work-in-progress vi. direct expenses

i, ii and iv
i, iii and vi
iv, v and vi
ii, iii and v

Validate

Solution:

Concept:

Prime cost is the total of all direct costs incurred in production, which includes direct materials, direct labour, and direct expenses.

Explanation:

Prime cost is calculated using the formula:

\text{Prime Cost} = \text{Cost of Raw Materials Consumed} + \text{Direct Labour} + \text{Direct Expenses}

From the list given, item i is the cost of raw materials consumed, which counts as direct materials.

Item iii is direct labour, which is a direct cost.

Item vi is direct expenses, which are also direct costs.

Items ii (indirect expenses), iv (factory expenses), and v (work-in-progress) are not part of prime cost because they are indirect costs or valuation items.

Hence, prime cost is obtained by adding i, iii, and vi only.

Answer:

Option B: i, iii and vi.

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