Question

The workers who sweep the factory floor are a part of prime cost, but not conversion...

The workers who sweep the factory floor are a part of prime cost, but not conversion cost.

TRUE OR FALSE

Note: Please give an explanation whether it's TRUE or FALSE. I would appreciate if very much.

Homework Answers

Answer #1

The Given Statement is false

Prime cost includes Direct Material & Direct Labor cost. Direct Labor means the labor cost which exclusively relates to the production

Conversion Cost is the cost which is relates to transforming the raw material to finished goods, it includes both labor cost & overhead cost

Since sweep cost is relates to overheads it will be included in conversion cost but not in prime cost

Hence the given statement is false.

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