Concept:Prime cost includes all direct costs of production, such as direct materials, direct labour, and direct expenses.
Explanation:Prime cost is calculated as direct materials plus direct wages plus direct expenses.
Depreciation of factory equipment is an indirect production cost, because it cannot be directly traced to a specific unit of product.
Direct expenses are specifically incurred for a particular job or product, so they are part of prime cost.
Direct wages are paid to workers who directly manufacture the product, so they are part of prime cost.
Carriage on raw materials is treated as part of the cost of raw materials, so it is included in prime cost.
Hence, depreciation of factory equipment is not a prime cost.
Answer:A. depreciation of factory equipment