Commercial Applications
To control costs, it is essential to keep control on:
- Prime cost
- Overheads
- Indirect materials and tools cost
- All of these
Cost
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Answer
All of these
Reason — Effective cost control requires managing every component of total cost. Prime cost (direct materials + direct labour + direct expenses) is the largest controllable element of production. Overheads (factory, office, selling) form a significant portion of cost and need control to avoid wastage. Indirect materials and tools also add up over time and need to be carefully monitored. Hence all three must be controlled together for overall cost control.
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Related Questions
It refers to the expenses incurred on those items which are not directly chargeable to production. Salaries of timekeeper, foremen and watchmen are examples of this cost. This cost is incurred for the concern as a whole rather than a particular product.
- Direct cost
- Indirect cost
- Selling cost
- Advertising cost
Which definition best describes indirect costs?
- Indirect costs are those costs which are not controlled directly by a manager.
- Indirect costs are those costs which cannot be directly associated with a product or service.
- Indirect costs are always fixed.
- Indirect costs are always manufacturing overhead cost.
Wages paid to a labour who was engaged in the production activities can be termed as ……………
- Direct cost
- Indirect cost
- Sunk cost
- Implicit cost
Which of the following best describes a fixed cost?
- A cost that remains at the same level up to a particular level of output.
- The cost changes with levels of output.
- A cost that remains at the same level when output increases.
- None of these