How Do You Calculate Total Prime Costs?
To calculate total prime costs, you need to add up all the direct expenses involved in producing a product or providing a service. These expenses include the cost of raw materials, direct labor, and direct overhead. Raw materials are the materials required to create a product, while direct labor is the time spent by workers in producing the product. Direct overhead includes expenses such as utilities, rent, and other costs directly related to the production process. By adding up these costs, you can determine the total prime costs of your business operations.