Factory overhead can be charged on the basis of _______.

The correct answer is: C. prime cost.

Factory overhead is the indirect costs of manufacturing a product. It includes costs such as rent, utilities, and indirect labor. Factory overhead can be charged to products on the basis of prime cost, which is the direct labor cost plus the direct material cost. This is the most common method of charging factory overhead.

Option A is incorrect because material cost is only one component of prime cost.

Option B is incorrect because labor cost is only one component of prime cost.

Option D is incorrect because direct expenses are not included in factory overhead.