Prime cost

Prime cost,

Definition of Prime cost:

  1. The direct cost of a commodity in terms of the materials and labor involved in its production, excluding fixed costs.

  2. The total of direct material costs, direct labor costs, and direct expenses.

  3. Prime cost=Direct raw materials+Direct labor ext{Prime cost} = ext{Direct raw materials} + ext{Direct labor} Prime cost = Direct raw materials + Direct labor.

  4. Prime costs are a firm's expenses directly related to the materials and labor used in production. It refers to a manufactured product's costs, which are calculated to ensure the best profit margin for a company. The prime cost calculates the direct costs of raw materials and labor that are involved in the production of a good. Direct costs do not include indirect expenses, such as advertising and administrative costs.

How to use Prime cost in a sentence?

  1. Prime costs for newspaper production were rising fast.
  2. Businesses need to calculate the prime cost of each product manufactured to ensure they are generating a profit.
  3. You should factor in the prime cost and try to get as close to it as you can any time that you are offloading a product.
  4. A prime cost is the total direct costs of production, including raw materials and labor.
  5. I had to determine the prime cost of the item because it would help me later on identify some key factors.
  6. Indirect costs, such as utilities, manager salaries, and delivery costs, are not included in prime costs.
  7. The morning meeting was devoted primarily to issues pertaining to the rising prime cost during the previous quarter, alarming everyone involved.

Meaning of Prime cost & Prime cost Definition