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    Question

    Prime Cost

    includes:
    A Direct material + Indirect labour Correct Answer Incorrect Answer
    B Direct labour + Overheads Correct Answer Incorrect Answer
    C Direct material + Direct labour + Direct expenses Correct Answer Incorrect Answer
    D Works cost − Factory overheads Correct Answer Incorrect Answer
    E Total cost − Admin expenses Correct Answer Incorrect Answer

    Solution

    Prime Cost = Direct material + Direct labour + Direct expenses.  It represents the basic/primary cost of production. Adding factory overheads to prime cost gives works cost. This classification helps in cost analysis and control.

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