WAEC Accounting 2016 Objective — Question 22

Question 22 of 50 from the West African Examinations Council (WAEC) Accounting 2016 Objective paper, with the correct answer and a full explanation.

22. Which of the following expenses constitutes prime cost? I. Direct labour cost II. Factory overheads III. Hiring of machine for production IV. Warehouse rent A. I and II only B. I and III only C. I, II and III only D. I, II and IV only

A. I and II only
B. I and III onlyCorrect
C. I, II and III only
D. I, II and IV only

Explanation

Prime cost can be defined as all direct cost of production, i.e. the cost that can be traced to unit of output produced — direct labour cost and hiring of machine for production.

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