Prime Costs Consist of Factory Overhead and Direct Labor

question 72

True/False

Prime costs consist of factory overhead and direct labor.

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Definitions:

Conversion Costs

The combined costs of direct labor and manufacturing overhead that are incurred to convert raw materials into finished goods.

Manufacturing Costs

Expenses directly related to the production of goods, including raw materials, labor, and factory overhead.

Direct Materials

Resources that are directly linked to the creation of particular products or services.

Direct Labour

Represents the wages of employees who are directly involved in the production of goods or the provision of services.