To calculate the prime cost, we need to identify the direct materials used and direct labor costs.

To find the direct materials used, we use the following formula:

$$\text{Direct Materials Used} = \text{Opening Raw Materials Inventory} + \text{Purchases of Raw Materials} + \text{Carriage Inwards on Raw Materials} - \text{Returns on Raw Materials} - \text{Closing Raw Materials Inventory}$$

From the provided information:

• Inventories on 1 October 2023: Raw materials = M15 000
• Purchases of raw materials = M25 000
• Carriage inwards: Raw materials = M1 800
• Returns on raw materials = M3 800
• Inventories on 30 September 2024: Raw materials = M12 000

Substitute the values into the formula:

$$\text{Direct Materials Used} = \text{M}15\,000 + \text{M}25\,000 + \text{M}1\,800 - \text{M}3\,800 - \text{M}12\,000$$ $$\text{Direct Materials Used} = \text{M}40\,000 + \text{M}1\,800 - \text{M}3\,800 - \text{M}12\,000$$ $$\text{Direct Materials Used} = \text{M}41\,800 - \text{M}3\,800 - \text{M}12\,000$$ $$\text{Direct Materials Used} = \text{M}38\,000 - \text{M}12\,000$$ $$\text{Direct Materials Used} = \text{M}26\,000$$

From the provided information, Manufacturing wages represent direct labor.

• Manufacturing wages = M9 200

Now, add the direct materials used and direct labor to find the prime cost:

$$\text{Prime Cost} = \text{Direct Materials Used} + \text{Direct Labor}$$ $$\text{Prime Cost} = \text{M}26\,000 + \text{M}9\,200$$ $$\text{Prime Cost} = \text{M}35\,200$$

The prime cost is $\text{M}35\,200$.