[amp_mcq option1=”discuss costs” option2=”prime costs” option3=”resale cost” option4=”merchandise costs” correct=”option2″]
The correct answer is B. prime costs.
Direct material costs are the costs of the materials that are used directly in the production of a good or service. Direct manufacturing costs are the costs of the labor and materials that are used directly in the production of a good or service. Prime costs are the sum of direct material costs and direct manufacturing costs.
Resale cost is the price at which a product is sold to a customer. Merchandise costs are the costs of goods that a company purchases to sell to customers.
Here is a table that summarizes the different types of costs:
| Type of cost | Description |
|—|—|
| Direct material costs | The costs of the materials that are used directly in the production of a good or service |
| Direct manufacturing costs | The costs of the labor and materials that are used directly in the production of a good or service |
| Prime costs | The sum of direct material costs and direct manufacturing costs |
| Resale cost | The price at which a product is sold to a customer |
| Merchandise costs | The costs of goods that a company purchases to sell to customers |