JAMB Accounts Principles of Accounts 2012 Paper

Concept:Total production cost is made up of prime cost plus factory overhead cost.Explanation:Prime cost includes direct materials and direct labour used in production.Factory overhead is the indirect production cost, so it must be removed from total production cost.Given:Total production cost $= \#360,000$Factory overhead cost $= \#56,000$Prime cost $= \#360,000 - \#56,000$Prime cost $= \#304,000$Answer:B. $\#304,000$