Prime Cost Consists Of $\begin{array}{llcc} \underline{\text { direct material } }&\underline{ \text { direct labor }} & \underline{ \text {overhead }}\\\end{array}$

question 106

Multiple Choice

Prime cost consists of $\begin{array}{llcc} \underline{\text { direct material } }&\underline{ \text { direct labor }} & \underline{ \text {overhead }}\\\end{array}$

• A) no yes no
• B) yes yes no
• C) yes no yes
• D) no yes yes

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Definitions:

Departmental Overhead Rates

Refers to the allocation of indirect costs to specific departments within a company, which is used for cost control and pricing decisions.

Machine Hours

A measure of production activity; the total hours that machines are operating in a manufacturing process.

Direct Labor Hours

The total hours worked by employees directly involved in the manufacturing process of a product.

Departmental Overhead Rates

The overhead costs charged to specific departments based on their respective activities or consumption of resources.