Prime Cost Plus Production Overhead is known as

By Ruchika|Updated : July 20th, 2022

Prime cost plus production overhead is known as

(a) Total cost

(b) Selling cost

(c) Production cost or Factory cost

(d) Direct Cost 

Ans: (c) Production cost or Factory cost

Prime Cost Plus Production Overhead is known as Production Cost or Factory Cost

Prime or Direct cost:

Direct costs = Direct Material + Direct Labour + Direct Expenses

Factory overhead or factory expenses:

Factory overhead =Indirect material +Indirect labour +Indirect expenses

Indirect material cost includes the cost of cutting fluid, grease, lubricants, stationery, cotton jute etc

Indirect labour cost includes the cost of a watchman, supervisor, higher officer etc

Indirect expenses include the cost of rent, land, telephone bill, electricity bill etc 

Factory cost:

Factory cost = Prime cost + Factory overhead

Total Cost:

Total cost = Factory cost + Marketing Advertising, Transportation cost etc.

Selling cost:

Selling cost = Total cost + Profit

Summary

Prime Cost Plus Production Overhead is known as

Prime cost plus production overhead is known as Production cost /Factory cost /manufacturing cost.

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