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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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