Prime Cost consists of: MCQ with Answer and Explanation

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Prime Cost consists of:

A. Indirect Material + Indirect Labor + Indirect Expenses

B. Direct Material + Direct Labor + Factory Overheads

C. Factory Cost + Administrative Overheads

D. Direct Material + Direct Labor + Direct Expenses

Answer: Option D

Solution (By JKSSB Mock Tests)

Prime cost is the aggregate of all direct costs: direct materials, direct labor, and direct/chargeable expenses.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1

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The 'Sustainability Reporting' in India for top listed companies is mandated by:

A. ICAI

B. MCA

C. SEBI (Business Responsibility and Sustainability Report - BRSR)

D. RBI

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Correct Answer: Option C

Explanation:
SEBI requires the top 1000 listed companies to file BRSR.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #2

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S1: In a partnership, if the existing profit-sharing ratio is 3:2 and the new ratio is 1:1, the sacrificing/gaining ratio is 1:1. S2: If the old ratio is 3:2 and the new ratio is 2:3, Partner A sacrifices 1/5th and Partner B gains 1/5th. Which statement(s) is/are correct?

A. S1 only

B. Neither S1 nor S2

C. Both S1 and S2

D. S2 only

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Correct Answer: Option C

Explanation:
In S1, Sacrificing = Old - New. A: 3/5 - 1/2 = 1/10. B: 2/5 - 1/2 = -1/10. Ratio is 1:-1, which means 1:1 sacrificing/gaining. In S2, A: 3/5 - 2/5 = 1/5 sacrifice. B: 2/5 - 3/5 = -1/5 (gain). Both are correct.

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Question #3

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The 'Contract Costs' under Ind AS 115 include:

A. Only material

B. Only direct labour

C. All costs

D. Incremental costs of obtaining a contract and costs to fulfil a contract that are not covered by other standards

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Correct Answer: Option D

Explanation:
Incremental costs (like sales commissions) are capitalised if expected to be recovered.

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