Prime Cost Definition:

Prime cost is equal to total direct materials cost plus direct labor cost.

Formula of prime cost can be written as: Prime cost  = Direct materials + Direct labor

Relevant terms:

Conversion cost
Total factory cost

Other Related Accounting Articles:

• Cost of Goods Manufactured COGM and Sold Statement Formulas
• Conversion Cost Definition
• Materials Quantity Variance Definition
• Labor Rate Variance Definition
• Inventory Conversion Period
• Labor Efficiency Variance Definition
• Direct Labor Definition
• Direct Labor Definition
• Marginal Costing Definition
• Direct Labor Efficiency Variance