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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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