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Build the cost sheet to prime cost

Exercise and reference answers

Unit
Rs
Start
Item
Direct material consumed
Value
220000
Steps
  1. Operation
    add
    Item
    Add: Direct employee cost
    Value
    90000
  2. Operation
    add
    Item
    Add: Direct expenses
    Value
    15000
Other choices
  1. Explanation
    Factory overhead is added after prime cost, to reach cost of production
    Item
    Add: Factory overhead
    Value
    40000
  2. Explanation
    Selling overhead comes much later, after cost of goods sold
    Item
    Add: Selling overhead
    Value
    12000
Instructions
Tap the line that comes next. The running total updates as you go.
Result
Prime Cost

Explanation

_Source: ICAI Cost and Management Accounting Ch6 'Cost Sheet', sections 6.3.1 to 6.3.4_
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