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Prime cost is defined as the total of materials and labor that goes into making a finished/completed product.
Material = 9
Labor = 4
9 + 4 = 13.
Overhead is considered a conversion cost, so not included in the calculation.
Direct expenses are not well explained, so not included in calculation.
What else can I help you with?
What are the two bases for allocating the factory overhead expenses?
Direct and indirect
Define prime cost?
Direct Material Direct Labor direct Factory Overhead
Is direct labor used as part of the factory overhead?
Direct labor is not part of factory overhead while indirect labor is part of overhead as these labor expenses could not be calculated directly like factory supervisor salary or line manager salary etc.
What are total costs in accounting?
Total cost/ full cost which include Prime Cost *Direct Labour cost *Direct Material Cost *Direct expenses Production Overhead *Variable Overhead *Fixed Overhead Selling and Distribution cost Administration Cost
Is direct material cost an overhead?
no direct cost is not an overhead
How do you determine the overhead rate when applying overhead costs?
Using direct labor hours: Overhead rate = Total Overhead Expenses /Direct labor hours Using Machine hours: Overhead rate = Total Overhead Expenses /Machine hours
Differntiate between prime cost and factory cost?
Prime cost is a subset of Factory cost. Prime cost consist of Direct material, Direct labour and Direct expenses. Factory cost = Prime cost + Production OH
Is direct labor and direct material having any link with direct expenses?
Both direct labor and direct material are part of direct expenses incurred by company to manufactured goods or providing services and both have direct relations with direct expenses it means as much as direct material and direct labor as much the direct expenses which is total of both of them.
Differentiate prime cost and production overhead?
Prime cost includes direct material and direct labor without which no goods can be manufactured while production overhead is that other cost which is not directly identifiable with product but which is required to run factory operations.
Direct expenses list?
Direct Expenses are: The direct expenses means those cost incurred directly to the production which are: 1. Workers wages 2. Material Cost 3. Manufacturing Cost 4. Transport 5. Factory Rent 6. Electricity Power 7. Fuel and etc
What two major functional categories are costs subdivided into?
production and non-production. non-production is classified under selling and administrative expenses production is classified as direct material, direct labor and manufacturing overhead
What is prime expense?
Prime Cost(Expenses) = Direct Material + Direct Labour
