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Question

In manufacturing a product, prime cost will be ______________________.

A
Raw materials and manufacturing overhead
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B
Indirect materials and manufacturing overhead
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C
Indirect labour and manufacturing overhead
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D
Direct materials, direct labour and direct expense
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Solution

The correct option is D Direct materials, direct labour and direct expense
Cost sheet is prepared to find out the cost of goods sold of the product.
There are various stages for which the unit cost is calculated. Prime cost denotes the cost of direct material , direct labor and direct expense.

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