In a manufacturing company, direct labour costs combined with direct materials costs are known as
A)period costs.
B)conversion costs.
C)prime costs.
D)opportunity cost.

Question

Quizplus · Accepted Answer

Prime costs include all costs directly associated with the production of a product, which includes direct labour costs and direct materials costs. Conversion costs, on the other hand, only include the costs of converting raw materials into a finished product, such as direct labour costs and manufacturing overhead costs. Period costs are expenses that are not directly related to the production process, such as selling and administrative expenses. Opportunity cost refers to the cost of foregoing the next best alternative when making a decision.

In a Manufacturing Company, Direct Labour Costs Combined with Direct