Which of the Following Is a Prime Cost and a Conversion

question 228

Multiple Choice

Which of the following is a prime cost and a conversion cost?

• A) manufacturing overhead
• B) direct materials
• C) direct labor
• D) selling expenses

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Definitions:

Earnings

The amount of profit that a company produces during a specific period, which can also refer to an individual’s total income and benefits acquired through employment.

Capital Income

The income earned from investments in assets like stocks, bonds, and real estate, excluding labor income.

Dividends

Payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders.

Marginal Product

The additional output resulting from one more unit of a given input, holding all other inputs constant, in the production process.