The prime cost is $50000 and the direct manufacturing labor is $10000, then the direct material cost will be ____________?
Correct answer: B. $40,000
- A. $60,000
- B. $40,000
- C. $52,000
- D. $20,000
Explanation
Prime cost equals direct material cost plus direct manufacturing labour. Subtracting labour from prime cost gives $50,000 − $10,000 = $40,000.
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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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