Question
All of the following are Prime cost except
_____Solution
Prime cost relates to the direct cost associated with the production of a product and includes direct material cost, direct labour cost and other direct expenses. A direct cost is cost traceable to the production of a specific item, such as a product or service. It includes • the cost of the materials used to create a product • Freight charges paid to get the material for the product • Other consumables used in production • Labour cost associated with production • Primary packing of product produced Indirect costs are other costs not directly related to production and not associatable to a particular unit of product. These include: • rent • salaries • maintenance and repair • insurance • depreciation • interest
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