Prime costs consist of direct materials, indirect materials, and direct labor.

Prime Costs

The combined total of direct labor and direct materials cost incurred in the manufacturing of products.

Direct Materials

Raw materials that are directly traceable to the production of a specific product and are an integral part of the finished product.

Indirect Materials

Materials used in the production process that cannot be directly linked to a specific product, such as lubricants and cleaning supplies.

Attain an understanding of the distinct kinds of costs associated with manufacturing, namely direct materials, direct labor, and factory overhead.
Understand the distinctions among prime costs, conversion costs, and period costs.

Verified Answer

NiMrAt SiNgHMay 15, 2024

Final Answer :

False

Explanation :

Prime costs consist of direct materials and direct labor, but not indirect materials. Indirect materials are part of manufacturing overhead, not prime costs.

Learning Objectives

Attain an understanding of the distinct kinds of costs associated with manufacturing, namely direct materials, direct labor, and factory overhead.
Understand the distinctions among prime costs, conversion costs, and period costs.

Prime costs consist of direct materials, indirect materials, and direct labor.

Definitions

Learning Objectives

Learning Objectives

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