Question

As the level of output varies, which of these costs also changes?
O
prime costs
O
indirect costs
0
real costs
0
none of these​

Answer 1

Answer:

Option 1

Explanation:

Among the various options given, the correct one is prime cost.

Prime cost

Prime cost is that cost that constitute all the costs involved in the production of a product. This includes the cost of raw materials, the labour engaged to produce, the utilities consumed etc. Hence when the output varies, all factors including raw material, utilities and labour utilization.

Answer 2

Prime Costs

Explanation:

Prime costs always varies because it is fully based on production costs. It is the cost which incurred in the process of manufacturing a product or an item, and it includes the production cost of goods including raw material, labor costs. It is the combination of two direct product costs i.e. direct material costs and direct labor costs. It can vary depending on the cost of production. Companies use prime costs to price their products. For example, business in the garment industry need to strike a balance between profitability and the need to create unique and designer garments with high-quality of fabrics. In this industry, the various designers, labors and high quality embroidery, cutting, stitching machineries that a designer uses to build its boutique or stores designs are its raw materials.

Prime costs = Raw material + Direct labour