Direct vs Indirect Labour in Manufacturing
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Questions and Answers

What does Prime Cost include?

  • Direct material, direct labour, and direct expenses (correct)
  • Factory overheads only
  • Office and administration overheads
  • Selling and distribution overheads

What is another name for Factory Cost?

  • Administration cost
  • Production cost (correct)
  • Total cost of production
  • Selling cost

How is the Works Cost calculated?

  • Gross Works Cost + Opening Work-in-progress - Closing Work-in-progress (correct)
  • Direct material + Direct labour
  • Selling and distribution overheads
  • Prime Cost + Factory overheads

What does Total Cost or cost of sales comprise of?

<p>Selling and distribution overheads + total cost of production (D)</p> Signup and view all the answers

How should the adjustment for inventories be made for Direct Material Consumed?

<p>Opening Stock of Direct Material + Purchases of Direct Material - Closing Stock of Direct Material (C)</p> Signup and view all the answers

What does Factory Cost comprise of?

<p>Prime cost and factory overheads (A)</p> Signup and view all the answers

What is another term used for Total Cost?

<p>Cost of sales (D)</p> Signup and view all the answers

Which costs are included in Prime Cost?

<p>Direct material, direct labour, and direct expenses (D)</p> Signup and view all the answers

How is the Direct Material Consumed calculated?

<p>Opening Stock of Direct Material + Purchases of Direct Material - Closing Stock of Direct Material (A)</p> Signup and view all the answers

What does Office Cost consist of?

<p>Office overheads and administration cost (B)</p> Signup and view all the answers

Which items are included in Works Cost?

<p>$ Gross Works Cost + Opening Work – in – progress - Closing Work – in – progress$ (B)</p> Signup and view all the answers

How does Cost of Production of goods sold differ from Total Cost?

<p>$Cost of Production + opening stock of finished goods – closing stock of finished goods$ (C)</p> Signup and view all the answers

What is included in Selling and Distribution Overheads?

<p>$Expenses incurred for marketing, securing orders, dispatching goods$ (D)</p> Signup and view all the answers

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