otal of all direct costs is termed as .a.works cost.b.cost of production.c.prime cost.d.cost of sale
Question
otal of all direct costs is termed as .a.works cost.b.cost of production.c.prime cost.d.cost of sale
Solution
The total of all direct costs is termed as c. Prime Cost.
Here's why:
a. Works Cost: This includes direct materials, direct labor, and other direct costs, but it also includes indirect manufacturing costs (also known as factory overheads).
b. Cost of Production: This includes the cost of the raw materials, labor used in production, and all overhead costs used in producing a product.
c. Prime Cost: This is the total of direct costs, which may include direct materials, direct labor, and other direct costs. This does not include indirect costs.
d. Cost of Sale: This is the total cost of manufacturing and delivering a product or service to consumers. It includes both direct and indirect costs.
So, the answer is c. Prime Cost.
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