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What is the difference between prime costs & conversion costs, and how are they calculated?

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Question added by Huda Adam , Faculty of Commerce Graduate , Cairo University
Date Posted: 2015/11/21

Prime costs = direct material + direct labor .

Conversion costs = manufacturing overhead + direct labor 

Prime cost is aggregate of direct material, direct labour, direct expenses related to maufacturing but conversion cost is only cost involved to convert direct materials into product i.e sum of labour cost and manufacturing cost.

 

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