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otal of all direct costs is termed as .a.works cost.b.cost of production.c.prime cost.d.cost of sale

Question

Total of all direct costs is termed as:

  • a. works cost.
  • b. cost of production.
  • c. prime cost.
  • d. cost of sale.
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Solution

The total of all direct costs is termed as c. Prime Cost.

Here's why:

a. Works Cost: This includes direct materials, direct labor, and other direct costs, but it also includes indirect manufacturing costs (also known as factory overheads).

b. Cost of Production: This includes the cost of the raw materials, labor used in production, and all overhead costs used in producing a product.

c. Prime Cost: This is the total of direct costs, which may include direct materials, direct labor, and other direct costs. This does not include indirect costs.

d. Cost of Sale: This is the total cost of manufacturing and delivering a product or service to consumers. It includes both direct and indirect costs.

So, the answer is c. Prime Cost.

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