Total works cost is calculated to include________________?
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Answer: D. primary cost + factory expenses
Explanation
Total works cost is calculated by combining prime cost with factory expenses. Factory expenses cover all overhead costs incurred within the manufacturing plant facility. Prime cost includes direct material, direct labor, and direct operational expenses. Cost accounting categorizes manufacturing expenditures into direct prime costs and factory overheads. Factory overhead includes supervision salaries, facility maintenance, electricity, and depreciation. Works cost represents the total direct and indirect expenditure required to manufacture goods.
Financial controllers calculate works cost to determine accurate minimum product pricing floors. Manufacturing businesses monitor factory overhead expenses to control overall production budgets. Accurate cost accounting ensures profitable pricing strategies across competitive industrial markets. Primary cost alone omits essential factory overhead expenses incurred during manufacturing. Factory cost is synonymous with works cost but usually requires adding prime costs. Factory expenses alone represent only the indirect overhead portion of total costs.
- Subject
- Engineering
- Category
- Mechanical Engineering
- Topic
- —
- Difficulty
- medium
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