Prime cost includes _______.

A) direct materials, direct wages and indirect expenses B) indirect materials and indirect labour and indirect expenses C) direct materials, direct wages and direct expenses D) direct materials, indirect wages and indirect expenses

Answer & Solution

Correct Answer: Option C

Prime cost includes direct materials, direct wages and direct expenses. Prime costs are a firm's expenses directly related to the materials and labor used in production. It refers to a manufactured product's costs, which are calculated to ensure the best profit margin for a company.

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Tejasvi C 4 years ago

Answer should be option A,because direct material used is the major portion of product cost while direct labour is the second major element these two are the direct expenditures occurred. While other indirect expenses such as supervisors, clerks salary,electricity,water,gas,stationary etc. Fixed and variable indirect expenses together constitute overheads, these are incidental to production,indirectly.
Thus we can say that prime cost is equal to direct material, direct labour and indirect expenses or overheads.

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Prime cost includes

Prime cost includes _______.

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