Question

Calculate prime cost from the following information.
Opening stock of raw materials Rs. 12500
Purchased raw materials Rs. 75000
Expense incurred on raw materials Rs. 5000
Closing stock of raw materials Rs. 22500
Wages Rs. 47600
Direct expense Rs. 23400

Answer 1

Answer:

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Answer 2

Answer:

Prime Cost will be Rs. 141000

Explanation:

• Prime cost refers to the total direct costs of production.
• Prime cost includes raw materials cost and direct labour cost etc.
• Businesses need to calculate the prime cost of each product manufactured to ensure they are generating a profit.

Particulars                                                                            Amount (Rs.)

Opening stock of raw materials                                         Rs. 12500

Add - Purchased Raw Materials                                            Rs. 75000

         Expense incurred on raw materials                             Rs. 5000

         Wages                                                                           Rs. 47600

         Direct expense                                                             Rs. 23400

                                                                            Total         Rs. 163500

Less - Closing stock of raw materials                                 (Rs. 22500)

                                                              Prime Cost is        Rs. 141000

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