ECONOMICS

Detailed explanation-1: -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.

Detailed explanation-2: -Answer & Solution Solution: Prime cost includes direct materials, direct wages and direct expenses.

Detailed explanation-3: -Prime costs comprise a company’s direct material and direct labor costs. Businesses calculate prime costs when analyzing manufacturing expenses, efficiency, and profitability. Accountants break down product costs into three categories: direct material, direct labor, and manufacturing overhead.

Detailed explanation-4: -Total of all direct costs is termed as prime cost. A prime cost is the total direct costs, which may be fixed or variable, of manufacturing an item for sale.

Detailed explanation-5: -Prime costs are those that can be traced directly to a specific batch, or job lot, of products. These are the direct labour and direct materials costs of production.