In: Accounting
Craigmont Company's direct materials costs are $5,000,000, its direct labor costs total $8,800,000, and its factory overhead costs total $6,800,000. Its prime costs total:
Prime Costs Include only Direct materials ,Direct Labour and Direct Expenses and doesnot include Overhead costs which are part of production costs but not Prime Costs
Prime Costs are Direct costs related to production which forms major part of Total Production costs
In this case Craigmont Company's Prime costs = Direct Material Costs +Direct Labour Costs
= $ 5,000,000 + $ 8,800,000
= $ 13,800,000