Prime costs include
A) direct labour and factory overhead.
B) direct materials and indirect labour.
C) factory overhead and indirect materials.
D) direct labour and direct materials.

Question

Quizplus · Accepted Answer

Prime costs refer to the direct costs of production, which include direct materials and direct labour. Therefore, the best choice is option D, which includes direct labour and direct materials. Option A includes direct labour and factory overhead, but factory overhead is not a part of prime costs. Option B includes indirect labour, which is an indirect cost, and indirect materials, which are not prime costs. Option C includes factory overhead and indirect materials, which are not prime costs.

Prime Costs Include