If the direct material cost is $85000 and direct manufacturing labor is $25000, then prime cost would be _________?
Correct answer: D. $110,000
- A. $13,500
- B. $55,600
- C. $60,000
- D. $110,000
Explanation
Prime cost consists only of direct materials plus direct manufacturing labor: $85,000 + $25,000 = $110,000. Manufacturing overhead is excluded from prime cost.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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