Question

Difference between prime cost and supplementary cost

Answer 1

Difference between prime cost and supplementary cost

Supplementary cost : The general cost of an undertaking as a whole including administration, interest, taxes, general maintenance, depreciation.  

Prime cost: The combined total of raw material and direct labour costs incurred in production broadly  

The calculation for prime costs includes the total amount spent on direct materials in addition to direct labour. Tangible components, such as raw materials, to create a finished product are include in direct materials.    

Answer 2

Difference between prime cost and supplementary cost:

Supplementary cost

• It is undertaking as a whole that includes the administration, taxes, interest, depreciation, general maintenance, and obsolescence
• They supplementary costs are also referred to as fixed costs and the supplementary costs do not vary with the volume of production.
• Whatever may be the number of goods produced, the charges on account of rent, taxes, interest, salaries, and more are incurred and need to be paid.

Prime costs:

• Prime costs is explained as the expenditures directly connected to creating finished products.
• The Prime costs involve the expenses of the firm directly related to the materials and labor used in production.
• It refers to the cost involved in manufacturing the product which are calculated to ensure maximum profit for a company.

To know more about Supplementary costs

Is supplementary cost and conversion cost are same?

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