Which of the following costs is classified as a prime cost in a manufacturing account?
AFactory rent and rates
BDepreciation of factory machinery
CDirect labour wagesCORRECT
DFactory supervisor's salary
GCEFinancial AccountingManufacturing Accounts2021
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Why the answer is C, and why the others tempt you.
Prime cost consists of direct materials, direct labour, and direct expenses. Direct labour wages are a direct cost that can be traced specifically to units of production. Factory rent, depreciation of machinery, and supervisor's salary are all factory overheads, not prime costs.
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