How is prime cost calculated?
A)indirect materials cost plus indirect labour cost
B)direct materials cost plus direct labour cost
C)period costs plus overhead cost
D)selling cost plus administrative cost

Question

Quizplus · Accepted Answer

Prime cost is the sum of direct materials cost and direct labour cost. Therefore, option B is the correct choice. Option A includes indirect costs in the calculation, which are not part of prime cost. Option C and D include costs that are not directly related to production, which are not included in prime cost.

How Is Prime Cost Calculated