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Prime cost = direct materials + direct labor
while conversion cost = direct labor + factory overhead( which includes indirect materials, indirect labor and other indirect costs
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What is the common element between prime cost and conversion cost?
Direct Labor.
Prime cost and conversion cost share what common element of total cost?
direct labor
What are prime cost?
Prime Costs: Prime costs are those costs which are prime importance for making any product and include: Prime Cost = Direct Material + Direct Labor
Refers to the cost of procuring prime mission equipment?
weapon system cost.
A word with prime?
contract, cost, lens, meridian, minister, mover, rate, rib, time, vertical
What is the one cost that would be classified as part of both prime cost and conversion cost?
The one cost that would be classified as part of both prime cost and conversion cost would be:
The one cost that would be classified as part of both prime cost and conversion cost would be?
The one cost that would be classified as part of both prime cost and conversion cost
Differentiate between Prime and Conversion costs?
Prime costs is that cost which is prime for the manufacture of units of products while conversion cost is necessary to convert raw material into finished goods.
How prime cost is different from conversion cost and Manufacturing Costs?
Prime cost basically is the cost of direct labor and cost of direct material; whereas conversion costs is Overhead cost and direct labor cost.
Is Amortization of patents on factory machine a prime or conversion product cost?
Conversion
Is indirect labor part of prime cost?
Only direct material and direct labor is part of prime cost while overheads are part of conversion cost so indirect labor is part of overheads so automatically part of conversion cost and not prime cost.
What is differanciate prime cost from conversion cost?
The fact that cost which requires to convert raw material into finished goods like direct labor and overhead differentiate the prime cost from conversion cost which includes raw material and labor.
What is the common element between prime cost and conversion cost?
Direct Labor.
Difference between conversion cost and prime cost?
Prime cost is that cost component without which no production is possible while conversion cost is that cost which required to convert raw materials into finished goods like direct labor and overhead costs.
Prime cost and conversion cost share what common element of total cost?
direct labor
Direct labor cost is a part of?
Direct labor cost is part of prime cost as well as it is part of conversion cost as well.
What is the difference between prime cost and conversion cost?
Prime cost and conversion cost are two essential concepts in cost accounting, and understanding the difference between them is crucial for managing a business's finances effectively. Prime Cost: Imagine you're baking a cake from scratch. The prime cost would be the direct cost of the basic ingredients needed to make the cake. In a business context, prime cost includes the direct costs associated with producing a product. These costs are directly tied to the materials and labor used in manufacturing or creating the product. Prime costs typically consist of: Direct Materials: These are the raw materials or components directly used in the production process. In the cake analogy, it's the flour, sugar, eggs, and other ingredients. Direct Labor: This is the cost of the workforce directly involved in producing the product. In the cake example, it would be the baker's wages. Conversion Cost: Now, think about what it takes to turn those basic cake ingredients into a delicious cake. Conversion cost represents the additional expenses required to convert those raw materials into a finished product. In a business setting, conversion cost encompasses: Direct Labor: This includes not only the workers directly involved in production but also their wages and benefits. Factory Overhead: This category covers all other production costs that aren't direct materials or direct labor. It includes expenses like utilities for the factory, equipment maintenance, and depreciation of manufacturing machinery. In summary, the main difference between prime cost and conversion cost is that prime cost includes only the direct costs directly linked to the production of a product (raw materials and direct labor), while conversion cost includes the direct labor along with the additional manufacturing costs required to convert those raw materials into the finished product (direct labor and factory overhead). So, if you were managing a bakery, the flour, sugar, and eggs used in your cakes would be part of the prime cost, while the wages of your bakers and the costs of running your bakery (oven electricity, cake molds, etc.) would be included in the conversion cost. Understanding these costs helps a business analyze its expenses and make informed decisions about pricing and production efficiency.
