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    Question

    Prime cost refers to which among the following?

    A Direct Cost + Indirect Cost Correct Answer Incorrect Answer
    B All the overheads Correct Answer Incorrect Answer
    C Direct Material + Indirect Material Correct Answer Incorrect Answer
    D Direct Labour + Indirect Labour Correct Answer Incorrect Answer
    E Direct Material + Direct Labour + Direct Expenses Correct Answer Incorrect Answer

    Solution

    Prime costs are the sum of direct costs incurred during the manufacture of a product. These costs comprise Direct Material, Direct Labour and Direct Expenses. Prime cost does not include indirect expenses like factory rent or supervisor’s salary.

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