Prime costs are defined as
A)Manufacturing costs plus non-manufacturing costs.
B)Direct labor plus direct materials.
C)Variable costs equal fixed costs.
D)Manufacturing overhead plus direct labor.

Question

Quizplus · Accepted Answer

Prime costs are the direct costs involved in the production of a product, including direct labor and direct materials. Option A is incorrect as it includes non-manufacturing costs, which are not part of prime costs. Option C is incorrect as variable costs are not equal to fixed costs. Option D is incorrect as it includes manufacturing overhead, which is not part of prime costs.

Prime Costs Are Defined as