Prime costs are

Prime costs are

• A. Indirect costs and overhead
• B. All costs including non-production
• C. The total of all direct production costs
• D. Labour cost only

Answer: (C)

Prime costs are the direct costs of manufacturing a product, consisting of direct materials and direct labour. They are costs that can be directly traced to making the product, so overhead and other indirect costs are not included. The option that describes prime costs as the total of all direct production costs matches this idea, since it covers both direct materials and direct labour. The other statements don’t fit: indirect costs and overhead are not prime costs because they can’t be traced directly to a single product; all costs including non-production would be total costs, which is broader than prime costs; and labour cost only omits the direct materials, which are also part of prime costs.

Prime costs are the direct costs of manufacturing a product, consisting of direct materials and direct labour. They are costs that can be directly traced to making the product, so overhead and other indirect costs are not included. The option that describes prime costs as the total of all direct production costs matches this idea, since it covers both direct materials and direct labour.

The other statements don’t fit: indirect costs and overhead are not prime costs because they can’t be traced directly to a single product; all costs including non-production would be total costs, which is broader than prime costs; and labour cost only omits the direct materials, which are also part of prime costs.