Asked by LeeAnn Tiffany on Apr 25, 2024
Verified
Prime cost equals manufacturing overhead cost.
Prime Cost
The combined direct costs of raw materials and labor that are directly attributable to the production of a product.
Manufacturing Overhead
All manufacturing costs that are not directly associated with the production of a product, including indirect materials, labor, and other overhead expenses.
- Comprehend the fundamentals of prime cost and conversion cost, including their constituent parts.
- Acknowledge the importance of manufacturing overhead in the calculation of product costs.
Verified Answer
RM
rebecca mironchukApr 26, 2024
Final Answer :
False
Explanation :
Prime cost includes direct materials and direct labor costs, while manufacturing overhead cost includes indirect expenses such as rent, utilities, and depreciation. Therefore, prime cost is not equal to manufacturing overhead cost.
Learning Objectives
- Comprehend the fundamentals of prime cost and conversion cost, including their constituent parts.
- Acknowledge the importance of manufacturing overhead in the calculation of product costs.