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Published
26 Apr 2023
Last updated
28 May 2026

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When direct material expenses are combined with direct manufacturing expenses, which cost category is determined?

Multiple choice question for Accounting Concepts. Select an option, then review the explanation below.

Choose the correct answer

Explanation

Prime costs are calculated by adding direct material costs to direct manufacturing labor costs. This total represents the primary expenses directly tied to production. Other options like operating, selling, or inventory costs refer to different cost classifications and are not computed by summing direct material and manufacturing expenses.

Practice related questions from the same subject.

  1. 1.In project costing, what is the term used for wages paid to workers during periods of inactivity caused by material shortages?
  2. 2.Given that the direct material cost amounts to $85,000 and the direct manufacturing labor cost is $25,000, what is the total prime cost?
  3. 3.Given that the direct material cost amounts to $5,500 and the prime cost totals $25,000, what is the value of the direct manufacturing labor?
  4. 4.Which category includes the expenses for employee health care premiums and pension contributions?
  5. 5.What term is used to describe the stock of completed products that have not been sold yet?

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