To determine the prime cost from the given data, we need to understand what prime cost is and how to calculate it. Definition of Prime Cost Prime cost refers to the total direct costs of manufacturing a product. It includes all direct costs that can be directly attributed to the production of goods. Specifically, prime cost consists of:

1. Direct Materials: The raw materials that are used in the production of goods.
2. Direct Labour: The wages of workers who are directly involved in the manufacturing process.
3. Direct Expenses: Any other direct costs that can be attributed to the production of goods.

Given Data From the question, we have the following costs: - Direct Material: N 10,000 - Direct Labour: N 5,000 - Direct Expenses: N 2,000 - Factory Overhead: N 4,000 (This is not included in prime cost) Step-by-Step Calculation of Prime Cost To calculate the prime cost, we will sum up the direct materials, direct labour, and direct expenses:

1. Direct Materials: N 10,000
2. Direct Labour: N 5,000
3. Direct Expenses: N 2,000

Now, we add these amounts together: [ \text{Prime Cost} = \text{Direct Materials} + \text{Direct Labour} + \text{Direct Expenses} ] Substituting the values: [ \text{Prime Cost} = N 10,000 + N 5,000 + N 2,000 ] Calculating this gives: [ \text{Prime Cost} = N 17,000 ] Conclusion Thus, the correct answer is B. N 17,000. Explanation of Other Options

• Option A: N 21,000: This option incorrectly includes factory overhead, which is not part of prime cost. The calculation would be incorrect as it adds N 4,000 (factory overhead) to the prime cost components.
• Option C: N 15,000: This option is incorrect because it seems to omit one of the components. If we were to subtract the direct expenses (N 2,000) from the total, we would arrive at N 15,000, which is not the correct calculation for prime cost.
• Option D: N 6,000: This option is incorrect as it does not include any of the direct costs. It appears to be a miscalculation or misunderstanding of what constitutes prime cost.

Common Pitfalls

• Confusing Prime Cost with Total Cost: Remember that prime cost only includes direct costs. Factory overheads and indirect costs are not included.
• Omitting Components: Ensure that all components of direct costs are included in the calculation.
• Misunderstanding Direct vs. Indirect Costs: Be clear on the definitions of direct and indirect costs to avoid miscalculating.

Revision Summary

• Prime cost includes direct materials, direct labour, and direct expenses.
• Factory overhead is not included in prime cost calculations.
• The correct calculation for prime cost from the given data is N 17,000.
• Always double-check which costs are direct and which are indirect to avoid errors.