Prime Cost Consists of Direct Materials and What

question 17

Multiple Choice

Prime cost consists of direct materials and what?

• A) Direct labour.
• B) Manufacturing overhead.
• C) Indirect materials.
• D) Cost of goods manufactured.

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Definitions:

Long Run

A period sufficient for all inputs and production processes to be adjusted, including changing the scale of production facilities.

Average Fixed Costs

Average Fixed Costs are the total fixed costs of production divided by the quantity of output produced.

Total Fixed Cost

The sum of all costs that remain constant regardless of the level of production or output in the short run, such as rent or salaries.

TFC

Total Fixed Cost, which refers to the sum of all costs that do not change with the level of output produced by a firm.