## Prime Cost Solution

STEP 0: Pre-Calculation Summary
Formula Used
Prime Cost = Direct Materials Cost+Direct Labour Cost
CPrime = DMC+DLC
This formula uses 3 Variables
Variables Used
Prime Cost - Prime Cost is the total of direct materials and direct labor costs used in production.
Direct Materials Cost - Direct Materials Cost is the expense of raw materials that are directly used in the manufacturing of a product.
Direct Labour Cost - Direct Labour Cost is the expense of wages for workers who are directly involved in the production of goods.
STEP 1: Convert Input(s) to Base Unit
Direct Materials Cost: 1000 --> No Conversion Required
Direct Labour Cost: 600 --> No Conversion Required
STEP 2: Evaluate Formula
Substituting Input Values in Formula
CPrime = DMC+DLC --> 1000+600
Evaluating ... ...
CPrime = 1600
STEP 3: Convert Result to Output's Unit
1600 --> No Conversion Required
1600 <-- Prime Cost
(Calculation completed in 00.004 seconds)
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## Credits

Created by Keerthika Bathula
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IGNOU (IGNOU), India
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## < 25 Cost Accounting Calculators

Material Cost Variance
Material Cost Variance = (Standard Quality for Actual Output*Standard Price)-(Actual Quantity*Actual Price)
Labour Cost Variance
Labour Cost Variance = (Standard Hours for Actual Output*Standard Rate)-(Actual Hours*Actual Rate)
Revised Standard Quantity
Revised Standard Quantity = (Standard Quantity of each Material/Total Standard Quantity)*Total Actual Quantity
Learning Curve
Learning Curve = (Time Taken to Produce Initial Quantity*Cumulative Number of Batches)^(-Learning Coefficient)
Labour Efficiency Variance
Labour Efficiency Variance = Standard Rate*(Standard Time-Actual Time)*Variance
Time to Receive = Time for Stock Validation+Time to Add Stock to Records+Time to Prep Stock for Storage
Labour Rate Variance
Labour Rate Variance = Actual Time*(Standard Rate-Actual Rate)*Variance
Cycle Time
Cycle Time = Process Time+Inspection Time+Move Time+Queue Time
Revised Standard Hours of Labours
Revised Standard Hours of Labours = (Actual Mix/Standard Mix)*(Standard Hours of Labour)
Material Yield Variance
Material Yield Variance = (Actual Unit Usage-Standard Unit Usage)*Standard Cost per Unit
Overall Equipment Effectiveness
Overall Equipment Effectiveness = Good Count*Ideal Cycle Time/Planned Production Time
Avoided Cost
Avoided Costs = Assumed Repair Cost+Production Losses-Preventative Maintenance Cost
Material Usage Variance
Material Usage Variance = Standard Price*(Actual Quantity Units-Standard Quantity)
Labour Mix Variance
Labour Mix Variance = Standard Rate*(Reversed Standard Rate-Actual Time)
Material Price Variance
Material Price Variance = Actual Quantity*(Standard Price-Actual Price)
Material Quantity
Material Quantity = Standard Price*(Standard Quantity-Actual Quantity)
Customer Acquisition Cost
Customer Acquisition Cost = Cost of Sales and Marketing/Number of New Customers Acquired
Total Addressable Market = Annual Contract Value per Client*Number of Potential Clients
First Pass Yield
First Pass Yield = Number of Good Products Finished/Number of Production Orders Started
Average Days Delinquent
Average Days Delinquent = Days Sales Outstanding-Best Possible Days Sales Outstanding
Backorder Rate
Backorder Rate = (Number of Undeliverable Orders/Total Number of Orders)
Monthly Recurring Revenue
Monthly Recurring Revenue = Number of Customers*Average Billed Amount
Sell -Through Rate
Sell Through Rate = Number of Units Sold/Number of Units Received
Takt Time
Takt Time = Production Available Time/Customer Demand
On-Time Delivery
On-Time Delivery = On Time Units/Total Units

## < 16 Important Formulas of Cost Accounting Calculators

Labour Cost Variance
Labour Cost Variance = (Standard Hours for Actual Output*Standard Rate)-(Actual Hours*Actual Rate)
Learning Curve
Learning Curve = (Time Taken to Produce Initial Quantity*Cumulative Number of Batches)^(-Learning Coefficient)
Labour Efficiency Variance
Labour Efficiency Variance = Standard Rate*(Standard Time-Actual Time)*Variance
Overall Equipment Effectiveness
Overall Equipment Effectiveness = Good Count*Ideal Cycle Time/Planned Production Time
Cost of Goods Sold
Cost of Goods Sold = Beginning Inventory+Purchases During the Period-Ending Inventory
Material Usage Variance
Material Usage Variance = Standard Price*(Actual Quantity Units-Standard Quantity)
Noria Effect
Noria Effect = (New Hires Salary Cost-Leavers Salary Cost)/Previous Salary Cost
Customer Acquisition Cost
Customer Acquisition Cost = Cost of Sales and Marketing/Number of New Customers Acquired
Total Addressable Market = Annual Contract Value per Client*Number of Potential Clients
Backorder Rate
Backorder Rate = (Number of Undeliverable Orders/Total Number of Orders)
Conversion Cost
Conversion Cost = Direct Labour Cost+Manufacturing Overhead Cost
Production Cost
Production Cost = Total Fixed Costs+Total Variable Costs
Prime Cost
Prime Cost = Direct Materials Cost+Direct Labour Cost
Takt Time
Takt Time = Production Available Time/Customer Demand
On-Time Delivery
On-Time Delivery = On Time Units/Total Units
Unit Cost
Unit Cost = Total Cost/Total Units Produced

## Prime Cost Formula

Prime Cost = Direct Materials Cost+Direct Labour Cost
CPrime = DMC+DLC

## What is Prime Cost ?

Prime cost refers to the combined total of direct materials and direct labor costs that are directly attributable to the production of goods. Direct materials are the raw materials that are essential and can be directly traced to the finished product, while direct labor involves the wages paid to workers who are directly involved in the manufacturing process. Prime cost is a key metric in cost accounting as it helps businesses determine the efficiency and cost-effectiveness of their production processes by focusing on the primary inputs required to create a product. By analyzing prime costs, companies can better manage and control these expenses, ultimately improving their overall profitability and competitiveness.

## How to Calculate Prime Cost?

Prime Cost calculator uses Prime Cost = Direct Materials Cost+Direct Labour Cost to calculate the Prime Cost, The Prime Cost is the sum of direct materials and direct labor costs incurred in production. Prime Cost is denoted by CPrime symbol.

How to calculate Prime Cost using this online calculator? To use this online calculator for Prime Cost, enter Direct Materials Cost (DMC) & Direct Labour Cost (DLC) and hit the calculate button. Here is how the Prime Cost calculation can be explained with given input values -> 1600 = 1000+600.

### FAQ

What is Prime Cost?
The Prime Cost is the sum of direct materials and direct labor costs incurred in production and is represented as CPrime = DMC+DLC or Prime Cost = Direct Materials Cost+Direct Labour Cost. Direct Materials Cost is the expense of raw materials that are directly used in the manufacturing of a product & Direct Labour Cost is the expense of wages for workers who are directly involved in the production of goods.
How to calculate Prime Cost?
The Prime Cost is the sum of direct materials and direct labor costs incurred in production is calculated using Prime Cost = Direct Materials Cost+Direct Labour Cost. To calculate Prime Cost, you need Direct Materials Cost (DMC) & Direct Labour Cost (DLC). With our tool, you need to enter the respective value for Direct Materials Cost & Direct Labour Cost and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.
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