Answer-Which of the following costs would NOT be included while computing the Prime Cost of a product? &nbs...

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Prime cost is the  sum of  Direct Material ,  Direct  Labour   and  Direct Expenses .        As GST is available as input tax credit, that can be claimed back, it is not  a real cost  to the business. As such, it will not form the part of Prime cost.       All the other costs are direct costs because      Transportation to  factory   is   Carriage inward  which is d irectly attributable to material  and hence i ncluded in direct material cost        Primary packing  is n ecessary to make product saleable . It is therefore a d irect expense  to be included in prime cost        Overtime premium for specific job  is t raceable to  particular order  and should be included as d irect  labour        Royalty per unit  is a d irect expense  associated with the product and hence included in prime cost         Please note   Overtime cost treatment will differ based the situation as follows      Overtime for Specific or urgent job  - If overtime is due to urgent, specific customer orders, or directly traceable to a particular order, the entire cost regular pay  premium is directly charged to that job. In such case, it will be a direct cost and form part of prime cost        Overtime for general production  - If overtime arises from general production bottlenecks, seasonal demand, or inefficient scheduling,  or labour shortage,  it is often treated as indirect  labor  and charged to factory overhead, not prime cost.        Abnormal Reasons  If overtime is caused by issues like machine breakdown, it is considered an abnormal cost and charged to the Costing Profit  Loss Account, excluded from both prime cost and overheads.

Which of the following costs would NOT be included while computing the Prime Cost of a product?

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