Prime Costs Include ________

question 214

Multiple Choice

Prime costs include ________.

• A) direct materials and direct manufacturing labor costs
• B) direct manufacturing labor and manufacturing overhead costs
• C) direct materials and manufacturing overhead costs
• D) only direct materials

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Definitions:

Margin of Safety

This metric indicates the difference between actual or projected sales and the break-even sales point, highlighting the buffer a business has before it incurs a loss.

Operating Leverage

A financial metric that indicates how a company's operating income reacts to a change in sales volume, showing the degree of fixed versus variable costs.

Sales Increase

A rise in the amount of goods or services sold, often measured as a percentage increase over a previous period.

Contribution Format

A method of income statement presentation that stresses the contribution margin, which is sales revenue minus variable costs.