What is Prime Cost? – Definition
Prime Cost is the aggregate of direct material cost, direct labor cost and direct expenses. Prime Cost is also known as ‘Flat Cost’, ‘First Cost’ or ‘Direct Cost’.
prime Cost of a product is the total of its direct costs. Once the cost of raw materials used in a particular period has been ascertained and the cost of direct labor and direct expenses is known. The prime cost can be calculated by simply adding up the three figures.
Prime cost calculation formula:
Prime cost = direct materials cost + direct labor cost