Correct Answer:
D. Direct materials, direct labor and direct expenses
Prime cost = direct materials + direct labor + direct expenses.
November 13, 2026 · Accounting and Finance MCQs, Cost & Management Accounting MCQs
Prime cost is the sum of:
Related MCQs
Joint costs are costs:
A.
Incurred after the split-off point
B.
Of products sold separately by two firms
C.
Incurred up to the split-off point for products that are produced together
D.
Of selling and distribution only
Correct answer is:
C. Incurred up to the split-off point for products that are produced together
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INTOSAI stands for:
A.
International Office of Standard Audit and Investigation
B.
International Organization of Supreme Audit Institutions
C.
International Organization of Statutory Auditors and Inspectors
D.
Institute of National Taxation and Statistics
Correct answer is:
B. International Organization of Supreme Audit Institutions
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In zero-based budgeting, managers must:
A.
Add a fixed percentage to last year's budget
B.
Justify every budgeted item from zero in each budget period
C.
Use only last year's figures
D.
Avoid preparing a budget
Correct answer is:
B. Justify every budgeted item from zero in each budget period
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EBIT is Rs. 300,000 and interest expense is Rs. 60,000. The times interest earned ratio is:
A.
0.2 times
B.
4 times
C.
6 times
D.
5 times
Correct answer is:
D. 5 times
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The cost of a machine bought last year and already paid for is, in a new investment decision:
A.
A relevant cash outflow
B.
A future opportunity cost
C.
Added to the project cost
D.
A sunk cost and ignored
Correct answer is:
D. A sunk cost and ignored
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Process costing is most suitable for:
A.
Continuous mass production of homogeneous products
B.
Building a bridge to a customer's design
C.
Producing a single custom machine
D.
Repair of vehicles
Correct answer is:
A. Continuous mass production of homogeneous products
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