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Prime cost is the sum of direct material, direct labour and

  • A.factory overhead
  • B.administration overhead
  • C.selling and distribution overhead
  • D.direct expenses

Answer: D

Correct answer: direct expenses

Prime cost is everything traceable directly to the job: material, labour and any direct expense such as a special tool or a royalty per unit. Every kind of overhead is excluded by definition, since overheads are apportioned rather than traced.

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