Multiple choice

Directions: Choose the correct option for the given question.

The sum of direct materials and direct labour costs is called

  1. Prime Cost

  2. Factory Cost

  3. Overhead Cost

  4. Value of Stock

  5. Full Cost
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A Correct answer
Explanation

Prime Cost is defined as the sum of direct materials cost and direct labour cost. This is a standard cost accounting concept. Factory Cost includes additional overheads, Overhead Cost refers to indirect costs, and Value of Stock refers to inventory valuation.

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