The costs incurred in manufacturing of product BB are raw materials RM150, 000, direct labour RM240, 000, direct expenses RM30, 000, variable production overheads RM62, 000 and fixed production overheads RM35, 500.Based on the above information, prime cost for product BB is .....

INTRODUCTION TO COST ACCOUNTING

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

The costs incurred in manufacturing of product BB are raw materials RM150, 000, direct labour RM240, 000, direct expenses RM30, 000, variable production overheads RM62, 000 and fixed production overheads RM35, 500.Based on the above information, prime cost for product BB is ____

A	RM 390, 000
B	RM 482, 000
C	RM 420, 000
D	RM 517, 500

Explanation:

Detailed explanation-1: -Manufacturing costs fall into three broad categories of expenses: materials, labor, and overhead.

Detailed explanation-2: -What Is The Formula Of Manufacturing Cost? The formula for manufacturing cost is the sum of direct materials, direct labor, and manufacturing overheads.

Detailed explanation-3: -Under the variable costing method, only the variable cost to produce is considered as a product cost. All other costs incurred will be treated as period costs. A product cost is capitalized as an inventory cost while a period cost is expensed outright.

Detailed explanation-4: -The total cost of manufacturing (TCM) refers to the cost incurred to produce a product, including the cost of materials, labor, and overhead. On the other hand, the cost of goods sold (COGS) only includes the direct costs associated with producing a product, such as the cost of materials and labor.

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