How is prime cost calculated?
A) direct materials cost plus direct labour cost
B) indirect materials cost plus indirect labour cost
C) direct labour cost plus manufacturing overhead cost
D) direct material cost plus manufacturing overhead cost

Question

Quizplus · Accepted Answer

Prime cost is calculated as the sum of direct materials cost and direct labour cost. This excludes any indirect costs such as manufacturing overheads. Therefore, option A is the correct answer.

How Is Prime Cost Calculated