Prime costs include:
A)Direct material, direct labor, and manufacturing overhead.
B)Direct material and direct labor.
C)Direct labor and manufacturing overhead.
D)Direct material and manufacturing overhead.
E)Variable overhead and fixed overhead.

Question

Quizplus · Accepted Answer

Prime costs are the direct costs of the production process, which include the cost of direct materials and direct labor. Manufacturing overhead is considered an indirect cost and is not included in prime costs. Therefore, choice B, which includes direct material and direct labor, is the best answer.

Prime Costs Include