Which of the following is the best example of prime costs for Sharp Edge Mowers?
A)Sales commissions and maintenance on the machine that tightens bolts on lawn mowers during production.
B)Assembly line wages and the cost of tires to be installed on newly assembled lawnmowers.
C)The general manager's salary and the janitorial expense for executives' offices.
D)The interest cost on the manufacturing building and the wages paid for the quality control inspector for the assembly line

Question

Quizplus · Accepted Answer

Prime costs are the direct costs involved in the production of goods, which include the cost of materials and labor. Assembly line wages and the cost of tires to be installed on newly assembled lawnmowers are direct costs associated with producing the mowers, making them the best example of prime costs for Sharp Edge Mowers. Sales commissions and maintenance on the machine that tightens bolts on lawn mowers during production are also direct costs, but they are not as closely tied to the production process as assembly line wages and tire costs. The general manager's salary and the janitorial expense for executives' offices, as well as the interest cost on the manufacturing building and the wages paid for the quality control inspector for the assembly line, are not considered prime costs at all.

Which of the Following Is the Best Example of Prime