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COST CLASSIFICATION

This topic has 1 reply, 2 voices, and was last updated 4 years ago by John Moffat.

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February 12, 2019 at 6:39 pm #504941
hasnainjangda
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In the lecture it is explained that prime cost is the sum of direct materials and direct labor but in the study text provided by Kaplan Publishing it is stated that prime cost is the sum of direct materials, direct labor and DIRECT EXPENSES as well. Kindly help me out why is there a difference in the statements and please let me know the correct one.Thanks.
February 13, 2019 at 8:59 am #504985
John Moffat
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The prime cost does include direct expenses (and I do mention this). However in the exam expenses are virtually always indirect.
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