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      Question

      FTH Ltd shared the following information about its

      production during the year. Calculate the prime cost for the company:
      A ₹7,20,000 Correct Answer Incorrect Answer
      B ₹7,30,000 Correct Answer Incorrect Answer
      C ₹7,90,000 Correct Answer Incorrect Answer
      D ₹8,10,000 Correct Answer Incorrect Answer
      E ₹8,30,000 Correct Answer Incorrect Answer

      Solution

      Prime cost = direct material + direct labour + direct expenses = (Opening RM + Purchases – Closing RM) + Wages paid = 60,000 + 4,80,000 – 50,000 + 2,40,000 = 7,30,000   Note – there are no direct expenses. Prime cost will not consider any overheads, Work-in progress or finished goods. 

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