Differntiate between prime cost and factory cost?

What are the components of cost sheet?

There are three components of a cost sheet. These components are the prime cost, the factory cost, and the total cost.

Is Amortization of patents on factory machine a prime or conversion product cost?

Conversion

Define prime cost?

Direct Material Direct Labor direct Factory Overhead

Prime cost and conversion cost?

Prime cost = direct materials + direct laborwhile conversion cost = direct labor + factory overhead( which includes indirect materials, indirect labor and other indirect costs

What is the difference between prime cost and variable cost?

lina

Does prime cost plus conversion cost equal the cost of manufacturing?

Total Manufacturing Cost = Direct Material + Direct Labor + Factory Overheads Prime Cost = Direct material + Direct Labor Conversion Cost = Direct Labor + Factory Overhead So yes prime cost and conversion cost is equal to total manufacturing cost

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.

What is the common element between prime cost and conversion cost?

Direct Labor.

Differentiate prime cost and production overhead?

Prime cost includes direct material and direct labor without which no goods can be manufactured while production overhead is that other cost which is not directly identifiable with product but which is required to run factory operations.

What is difference between sales and prime cost?

gross profit

What is the Difference between prime cost and overhead cost?

Prime cost is the cost of materials and labor involved in production of a commodity, excluding fixed costs. Overhead cost is the cost of on-going expenses, such as rent, utilities, and insurance. Overhead costs are one of the major factors in determining how a company charges for its service or product.

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.