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    Question

    A company incurred direct material costs of Rs.100,000,

    direct labour cost of Rs.68,000, variable overheads of Rs.24,000 and fixed overheads of Rs.1,50,000. What is the prime cost?
    A Rs.1,00,000 Correct Answer Incorrect Answer
    B Rs.1,68,000 Correct Answer Incorrect Answer
    C Rs.1,74,000 Correct Answer Incorrect Answer
    D Rs.1,92,000 Correct Answer Incorrect Answer
    E Rs.3,42,000 Correct Answer Incorrect Answer

    Solution

    Prime cost is the total of all direct costs including direct material, direct labour and direct expenses. Thus here, Prime cost = direct material + direct labour                                     = 1,00,000 + 68,000 = Rs.1,68,000

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