The correct answer is 10,000,000
Prime Costs:
In production, prime cost refers to the direct costs involved in producing a given commodity and relates to direct materials and labor cost. There are many costs involved in production including factory overheads, direct costs, indirect costs, and fixed costs among others. Prime costs only entail direct cost of labor and materials.
In this case, prime cost only entails direct material cost and direct labor cost but does not include the factory overheads. Factory overheads $7,000,000 of cannot be ascertained to the production of a unit of output but they are necessary in facilitating production. They may include things like heating, lighting, and security among other
Prime Costs = Direct materials+ Direct labor
=3000000+7000000
=10000000
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