Question

WHAT IS PRIME OVERHEAD COST?

Answer 1

The total direct costs of production, including raw materials and labor.

That is a prime cost

Answer 2

• A prime cost is the total direct costs of production, including raw materials and labor.
• Indirect costs, such as utilities, manager salaries, and delivery costs, are not included in prime costs.
• The prime cost equation is equal to the cost of raw materials plus direct labor.
• Businesses need to calculate the prime cost of each product manufactured to ensure they are generating a profit.