# Prime Cost

*in*Manufacturing Accounts

## 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**

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