The Costs of Direct Materials Are Classified As $\begin{array} { ccc} & \text { Conversion cost } & \text { Manufacturing cost } & \text { Prime cost } \\\end{array}$

question 54

Multiple Choice

The costs of direct materials are classified as:
$\begin{array} { ccc} & \text { Conversion cost } & \text { Manufacturing cost } & \text { Prime cost } \\\end{array}$
A. $\begin{array} { ccc} &&& \text { Yes } &&&&&& \text { Yes } &&&&&&& \text { Yes } \\\end{array}$
B. $\begin{array} { ccc} &&& \text { No } &&&&&&& \text { No } &&&&&&& \text { No } \\\end{array}$
C. $\begin{array} { ccc} &&& \text { Yes } &&&&&& \text { Yes } &&&&&&& \text { No } \\\end{array}$
D. $\begin{array} { ccc} &&& \text { No } &&&&&& \text { Yes } &&&&&&& \text { Yes } \\\end{array}$

• A) Choice A
• B) Choice B
• C) Choice C
• D) Choice D

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Definitions:

Present Value Index

A calculation used to assess the profitability of an investment relative to its current cost, by discounting future cash flows.

Total Present Value

The sum of the present values of future cash flows expected from an investment or project, used in evaluating its attractiveness.

Net Cash Flow

The amount of cash generated or spent over a specific period, typically the result of operating, investing, and financing activities.

Present Value

The value today of a future payment, or series of future payments, discounted at some appropriate interest rate.