Question

In the production of an article, materials are purchased, wages are paid to workers, and certain other expenses are incurred directly. All these take an active and direct part in the manufacture of a product and are, therefore, called indirect costs.

Options

• True

• False

Answer 1

False

Explanation:

Materials, wages, and other expenses that are directly and actively traceable to manufacture are direct costs (not indirect); they form part of prime cost and are charged directly to the product.