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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