Definition, Meaning & Synonyms
prime-cost
noun
/praɪm kɔst/
Definition
The total cost of direct expenses incurred in producing a product or service, generally including direct materials and direct labor but excluding indirect costs.
Examples
- The prime cost of making this chair includes wood and labor.
- Understanding your prime costs can help in pricing strategy and profit margin calculations.
- The restaurant calculated its prime costs to evaluate overall efficiency and profitability.
Meaning
Prime cost is the sum of all the direct costs associated with the production of goods or services, primarily focusing on the basic expenses that directly contribute to the creation of a product.
Synonyms
- direct cost
- variable cost
- production cost
