Prime Cost is the direct cost of producing goods or services, including raw materials and direct labor.
Prime Cost represents the core production expenses that can be directly traced to the manufacturing of a product. It excludes indirect costs like rent, utilities, and administrative expenses.
It is widely used in cost accounting and pricing decisions.
👉 Prime Cost = Direct Materials + Direct Labor
"<ul > <li >Raw materials = ₹50,000</li> <li >Direct labor = ₹30,000</li> </ul> <p >👉 Prime Cost = ₹80,000</p>"