Question

. The prime cost of an article was three times than the value of materials used. The cost of raw materials increases in the ratio of 3 : 7 and productive wages as 4 : 9. Find the present prime cost of an article which could formerly be made for ` 18.

Answer 1

Prime cost = Direct materials used + Direct or productive wages + Direct expenses

Since the particulars of direct expenses is NOT given, the prime cost consists of direct materials and direct wages.

Prime cost of the article formerly made = Rs.18

Direct materials of the article formerly made = 18*1/3 = Rs.6

Direct wages of the article formerly made = 18-6= Rs.12

Direct materials of the article presently made = 6*7/3 = Rs.14

Direct wages of the article presently made = 12*9/4 = Rs.27

Prime cost of the article presently made = 14+27 = Rs.41