Prime cost

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Cost and management accounting.

1.

Prime cost may be defined to include:

  • Direct labour costs;
  • Direct material costs; and
  • Direct expenses.


Under this definition of Prime cost, prime cost together with indirect overhead cost comprise total production cost.


2.

The term 'prime cost' may also be defined more broadly, or more narrowly, than this.

Here as elsewhere, consistency of definition and of calculation are essential to producing meaningful comparable figures.


See also