Question

The cost of carrots used in the production of carrot soup are classified as: Conversion Cost Prime Cost Product Cost Choice A No Yes Yes Choice B Yes No Choice C Yes Choice D Yes No Yes No Yes Yes Variable Cost No No Yes Yes O A. Choice A OB. Choice D O C. Choice B OD. Choice C

Answer 1

Cost of carrorts in the production of carrot soup will be considered as a direct materials cost, which is a variable cost

Conversion cost includes direct labor and manufacturing overhead

Prime cost includes direct materials and direct labor

Product cost includes direct materials, direct labor and manufacturing overhead

Thus, cost of carrots used in the production of carrot soup will fall in the category of Prime cost, Product cost and variable cost

So, the answer is : Option D [ Choice C ]