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Calculation of Prime Cost
Direct Labor
Direct Materiel
Question
Raw Material Opening 3,000
Purchases 60,000
Raw Material Ending 5,000
Direct Labour 42,000
Carriage In 6,000
Direct Expenses 4,000
Indirect Expenses 6,000
Salaries 12,000

Calculation of Prime Cost
Opening Inventory 3,000
Add:Material Purchased 60,000
Carriage In 6,000
Net Purchases 66,000
Raw Material Available for use 69,000
Less: Ending Inventory of RM (5,000)
Direct Material used 64,000
Add Direct Labor 42,000
Add Direct Expenses 4,000
Prime Cost 110,000