Question

Direct labor cost is classified as: Conversion cost Prime Cost A) Yes Yes B) No No C) No Yes D) Yes No Choice A Choice B Choice C Choice D

Answer 1

Answer:

A) Yes Yes

Explanation:

The prime cost is the cost that includes both the direct material cost and the direct labor cost

In mathematically,

Prime cost = Direct material cost + Direct labor cost

While the conversion cost is the cost that includes the direct labor cost and the manufacturing overhead cost

In mathematically,

Conversion cost = Direct labor cost + Manufacturing overhead cost