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    Question

    In cost accounting, the sum of direct materials and

    direct labor is known as:
    A Total Cost Correct Answer Incorrect Answer
    B Prime Cost Correct Answer Incorrect Answer
    C Conversion Cost Correct Answer Incorrect Answer
    D Factory Cost Correct Answer Incorrect Answer
    E Variable Cost Correct Answer Incorrect Answer

    Solution

    Prime Cost is the aggregate of all direct costs. It is calculated as Direct Materials + Direct Labor + Direct Expenses (if any). Conversion Cost (C) is Direct Labor + Factory Overheads, which is the cost of converting raw materials into finished goods.

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