How to Calculate Prime Cost: US Guide & Template

Prime cost, often a critical key performance indicator (KPI) for businesses, provides insights into the direct expenses tied to production. Manufacturers Association for Plastic Processors (MAPP), a notable organization, emphasizes understanding prime cost to maintain profitability in the competitive manufacturing sector. Calculating prime cost involves summing direct materials, such as raw materials sourced from locations like Texas, and direct labor, which can be streamlined using accounting software such as QuickBooks. An accurate assessment of these costs, achieved by understanding how to calculate prime cost, allows companies to strategically price products and improve overall financial health.

Prime Cost: Unlocking Business Profitability Through Direct Cost Mastery

Prime Cost: it’s more than just a number; it’s a fundamental key to unlocking profitability, optimizing pricing strategies, and maintaining tight cost control within your business. Understanding and effectively managing your prime cost is not merely advisable; it's essential for sustained success.

What Exactly is Prime Cost?

Prime cost is the bedrock of your product or service's cost structure. Simply put, prime cost is the total of all direct costs directly attributable to producing a product or delivering a service.

It encompasses the costs of direct materials and direct labor. These are the elements most visibly and directly tied to each unit you create or each service interaction you provide.

Direct Costs vs. Indirect Costs: Why the Difference Matters

Distinguishing between direct and indirect costs is crucial. Direct costs are those that can be directly traced to a specific product or service, whereas indirect costs, often referred to as overhead, are those that support the overall business operation.

Confusing the two can lead to skewed cost analysis and flawed decision-making. Accurately identifying and categorizing costs as either direct or indirect ensures that you have a clear and reliable understanding of your prime cost.

The Power of Prime Cost: Benefits for Your Business

Mastering your understanding of prime cost unlocks several significant advantages for your business.

Strategic Pricing

Your prime cost serves as the foundational baseline for pricing your products or services. By understanding exactly how much it costs to create what you sell, you can establish prices that ensure profitability while remaining competitive in the market.

Profitability Insights

Analyzing your prime cost allows you to pinpoint exactly which products or services are most profitable. This granular level of detail enables you to focus on high-margin offerings and identify areas where cost optimization is needed.

Cost Control Mastery

Effective management of your prime cost empowers you to identify and address areas of inefficiency. By carefully tracking and analyzing your direct material and direct labor expenses, you can proactively implement cost-saving measures and streamline your production processes. This leads to improved profitability and a healthier bottom line.

Understanding the Components of Prime Cost

Now that we've established the importance of Prime Cost, let's delve into its fundamental building blocks. Understanding these components is crucial for accurate calculation and effective management. Prime Cost comprises two key elements: Direct Materials and Direct Labor. Let's examine each in detail.

Direct Materials: The Foundation of Your Product

Direct Materials are the raw materials, components, and parts that are directly used in the production of a finished product. These are the tangible items that become an integral part of what you sell.

Think of a furniture manufacturer: the wood, fabric, screws, and varnish would all be considered Direct Materials. For a bakery, flour, sugar, eggs, and butter are all Direct Materials. In a clothing factory, the fabric, buttons, zippers, and thread all constitute Direct Materials.

Accurately tracking Direct Materials costs is essential for several reasons. It directly impacts the accuracy of your Prime Cost calculation. It helps you monitor material usage and identify potential waste or inefficiencies.

Importance of Accurate Tracking

Reliable inventory management is key to accurately tracking Direct Materials costs. Implementing a robust inventory system allows you to monitor the quantity of materials on hand. It also enables tracking the cost of materials used in production.

Utilizing purchase orders is another best practice. Purchase orders should include details such as the quantity of materials purchased, the price per unit, and the total cost. This provides a clear record of material costs and helps to reconcile invoices.

Consider using a Bill of Materials (BOM). A BOM lists all the components and quantities required to manufacture a single unit of product. This facilitates precise material cost calculations and production planning.

Direct Labor: The Human Element in Production

Direct Labor refers to the wages, salaries, and benefits paid to employees who are directly involved in the production process. These are the individuals who actively work on transforming raw materials into finished goods.

Direct Labor is the effort of the people who turn the raw materials into the products your customers buy.

For example, in an automotive factory, assembly line workers are Direct Labor. In a software company, programmers are Direct Labor. In a restaurant, chefs and cooks are Direct Labor.

It's important to note that only labor directly involved in production qualifies as Direct Labor.

Differentiating Direct vs. Indirect Labor

Direct Labor is different from Indirect Labor.

Indirect Labor includes the wages and benefits of employees who support the production process but are not directly involved in it.

Examples of Indirect Labor include factory supervisors, maintenance staff, security personnel, and quality control inspectors.

While essential to the overall operation, their costs are not included in Prime Cost but are typically classified as overhead expenses. Careful differentiation between Direct and Indirect Labor is critical for precise Prime Cost calculation and cost allocation.

The Importance of Analyzing Prime Cost for Business Decisions

Understanding the individual components of Prime Cost is essential, but the real power lies in analyzing this metric to inform strategic business decisions. Prime Cost analysis provides valuable insights that directly impact pricing, profitability, and cost control, acting as a compass guiding businesses toward greater financial success.

Impact on Pricing Strategies

Prime Cost serves as the fundamental baseline for pricing decisions. It represents the absolute minimum cost incurred to produce a product or deliver a service.

To ensure profitability, a business must price its offerings above this baseline.

Failing to accurately account for Prime Cost can lead to underpricing, resulting in losses on each sale, even if revenue appears healthy.

Consider a scenario where a product's Prime Cost is \$10. Simply adding a small markup without considering overhead and other expenses might result in a selling price of \$12.

While this might seem appealing, it may not cover all associated costs, ultimately eroding profitability.

A robust pricing strategy incorporates Prime Cost, desired profit margins, and an understanding of market dynamics and competitor pricing. This ensures that prices are both competitive and profitable.

Profitability Analysis

Analyzing Prime Cost enables businesses to accurately assess the profitability of individual products or services.

By subtracting the Prime Cost from the revenue generated by a specific offering, companies can determine its gross profit.

This is a vital step in identifying which products or services are most profitable and which may be underperforming.

For example, if a company offers two products—one with a high Prime Cost and low sales volume and another with a low Prime Cost and high sales volume—analyzing these figures will reveal which product contributes more to the bottom line.

This knowledge allows for strategic decisions such as focusing on high-profit items, adjusting the pricing of underperforming ones, or even discontinuing them altogether.

Further, analyzing Prime Cost can expose hidden inefficiencies or cost drivers specific to certain products or services, allowing for targeted improvements.

Cost Control

Tracking and analyzing Prime Cost is essential for effective cost control. By monitoring changes in Direct Materials and Direct Labor expenses, businesses can identify areas where costs are increasing or are higher than expected.

This early detection enables proactive measures to mitigate these issues.

For instance, if Direct Materials costs are rising, the company can explore alternative suppliers, negotiate better pricing, or optimize material usage to reduce waste.

If Direct Labor costs are increasing, management can implement training programs to improve efficiency, streamline production processes, or invest in automation to reduce labor hours.

Moreover, analyzing Prime Cost against industry benchmarks can reveal areas where a company is underperforming compared to its competitors.

This comparative analysis can highlight opportunities for adopting best practices and implementing cost-saving initiatives.

By consistently tracking and analyzing Prime Cost, businesses gain the insight needed to proactively manage costs, improve efficiency, and ultimately enhance their financial performance.

Calculating Prime Cost: A Step-by-Step Guide

Understanding the individual components of Prime Cost is essential, but the real power lies in calculating this metric accurately. This calculation offers a clear, actionable view of your direct production expenses.

Let's explore how to gather the necessary data, apply the formula, and leverage tools for efficient Prime Cost calculation.

Gathering the Data: The Foundation of Accuracy

The accuracy of your Prime Cost calculation hinges on the quality of the data you collect. Meticulous record-keeping is therefore paramount.

Sourcing Direct Materials Costs

Direct Materials costs encompass all raw materials and components directly used in the production of your goods. Accurate tracking is critical.

• Invoices and Purchase Orders: These documents provide a detailed breakdown of the cost of each material purchased. Ensure you have a system for archiving and easily retrieving this information.
• Inventory Records: Maintain precise inventory counts to determine the quantity of materials used in a specific production period. Regularly updated inventory systems are invaluable here.
• Bill of Materials (BOM): If applicable, a BOM is a comprehensive list of all materials required to manufacture a single unit of your product. This is a crucial document for accurate materials cost allocation. BOM software can streamline the creation and management of these lists.

Collecting Direct Labor Costs

Direct Labor costs consist of wages, benefits, and payroll taxes paid to employees directly involved in the production process.

• Payroll Records: These records contain detailed wage information for each employee. Clearly identify employees who are directly involved in production.
• Time Sheets: Require production employees to accurately track their time spent on specific production tasks. This helps allocate labor costs appropriately.
• Labor Reports: Some companies generate labor reports that summarize labor costs associated with specific projects or production runs. These can be a valuable data source.
• Time Tracking Software: Consider implementing time tracking software to automate the collection of labor data. This can significantly improve accuracy and efficiency.

The Formula for Prime Cost: Simple Yet Powerful

The Prime Cost formula is straightforward, but its impact is profound:

Prime Cost = Direct Materials + Direct Labor

Here’s how to apply it, with an example:

Scenario: Imagine a small furniture manufacturer.

• Direct Materials: For the month of July, the manufacturer used $10,000 worth of lumber, fabric, and hardware.
• Direct Labor: The production team earned $8,000 in wages and benefits for the same period.

Calculation: Prime Cost = $10,000 (Direct Materials) + $8,000 (Direct Labor) = $18,000

In this example, the Prime Cost for July is $18,000. This figure represents the core, direct cost of production.

Step-by-Step Example

1. Determine the accounting period: Establish a date range for the calculation.
2. Total direct materials cost: Sum all the raw material expenses.
3. Total direct labor cost: Sum all wages, benefits and expenses paid.
4. Calculate Prime Cost: Use the Prime Cost Formula.
5. Apply Prime Cost: Analyze what is the average unit price to use to make pricing decision.

Tools for Calculation: Choosing the Right Approach

While the formula is simple, the complexity of the calculations can vary depending on the size and nature of your business. Thankfully, there are tools to simplify and automate the process.

Spreadsheet Software

Spreadsheet software like Microsoft Excel or Google Sheets allows for manual calculation and tracking of Prime Cost.

• Pros: Flexible, customizable, and readily accessible.
• Cons: Can be time-consuming and prone to errors if not carefully managed. It is not the best option for medium to large businesses.
• Use Case: Suitable for small businesses with relatively simple production processes.

Accounting Software

Accounting software packages such as QuickBooks, Xero, and NetSuite offer built-in features for tracking costs, including Direct Materials and Direct Labor.

• Pros: Automates calculations, provides reporting capabilities, and integrates with other accounting functions.
• Cons: May require some setup and training.
• Use Case: Ideal for small to medium-sized businesses seeking to streamline their accounting processes.

Cost Accounting Software

Specialized cost accounting software provides advanced features for detailed cost analysis, variance analysis, and cost control.

• Pros: Offers sophisticated costing methods, detailed reporting, and insights into cost drivers.
• Cons: Can be more complex and expensive than general accounting software.
• Use Case: Suited for businesses with complex production processes or a need for in-depth cost analysis.

Enterprise Resource Planning (ERP) Systems

ERP systems integrate various business functions, including finance, manufacturing, and supply chain management. They provide a comprehensive view of costs across the entire organization.

• Pros: Integrates cost data across all business functions, provides real-time visibility, and supports data-driven decision-making.
• Cons: Can be expensive and complex to implement.
• Use Case: Best suited for large enterprises with complex operations.

By understanding how to calculate Prime Cost, you gain valuable insight into the core expenses driving your business. This knowledge empowers you to make informed decisions, optimize pricing strategies, and control costs effectively. Remember that choosing the right tools will depend on the business size, the resources and objectives.

[Calculating Prime Cost: A Step-by-Step Guide Understanding the individual components of Prime Cost is essential, but the real power lies in calculating this metric accurately. This calculation offers a clear, actionable view of your direct production expenses. Let's explore how to gather the necessary data, apply the formula, and leverage tools for...]

Analyzing Prime Cost: Unlocking Actionable Insights

Once you've calculated your Prime Cost, the next crucial step is analysis. This is where raw numbers transform into valuable insights, informing strategic business decisions and driving operational improvements.

By benchmarking against industry standards, tracking trends over time, and integrating Prime Cost data with your financial statements, you can gain a comprehensive understanding of your cost structure and identify opportunities for optimization.

Benchmarking: Gauging Your Performance

Benchmarking involves comparing your Prime Cost to industry averages or the performance of leading competitors. This comparison reveals how efficiently your company is managing direct costs relative to others in your sector.

Identifying Areas for Improvement

The key to effective benchmarking is identifying meaningful comparisons. For instance, comparing a small, artisanal bakery to a large-scale commercial bakery might not yield useful insights.

Instead, focus on businesses with similar production volumes, product lines, and target markets.

If your Prime Cost is significantly higher than the industry average, it signals potential inefficiencies. Investigate the underlying causes. Are you paying more for raw materials? Is your labor productivity lower than your competitors?

Addressing Cost Discrepancies

Identifying the root causes of cost discrepancies is paramount. This may involve a detailed review of your supply chain, production processes, and labor management practices.

Trend Analysis: Spotting Patterns Over Time

Trend analysis involves tracking your Prime Cost over time to identify patterns and tendencies. This longitudinal perspective offers invaluable insights into the effectiveness of your cost management strategies.

Understanding the Impact of Operational Changes

Significant changes in your Prime Cost can often be linked to specific operational changes. Did the introduction of new equipment lead to lower labor costs? Did a new supplier agreement result in lower material costs?

By analyzing these trends, you can quantify the impact of your decisions and make informed choices about future investments.

Proactive Cost Management

Consistent monitoring enables you to anticipate potential cost increases and proactively implement strategies to mitigate their impact. Are raw material prices expected to rise in the coming months? Can you secure a better price through bulk purchasing or alternative suppliers?

Integrating with Financial Statements: Connecting the Dots

Prime Cost doesn't exist in a vacuum. It's intrinsically linked to your financial statements, particularly the Cost of Goods Sold (COGS) and Gross Profit Margin.

Impact on Cost of Goods Sold (COGS)

Prime Cost is a major component of COGS. Therefore, any changes in Prime Cost will directly affect your COGS. A higher Prime Cost translates to a higher COGS, which, in turn, reduces your gross profit.

Effect on Gross Profit Margin

Your Gross Profit Margin (Revenue - COGS) / Revenue is a key indicator of profitability. By effectively managing your Prime Cost, you can improve your Gross Profit Margin.

A lower Prime Cost increases your gross profit, giving you more financial flexibility for other business operations, such as marketing, research and development, or expansion.

Inventory Valuation

Prime cost plays a critical role in inventory valuation, which determines the value of goods held for sale. Accurate inventory valuation is essential for financial reporting and decision-making.

Inventory Valuation Methods

Various methods exist for inventory valuation, each with its own implications for Prime Cost. The choice of method can significantly impact your financial statements.

• First-In, First-Out (FIFO): Assumes that the first units purchased are the first units sold.

  Under FIFO, Prime Cost is allocated based on the oldest costs in inventory.

• Last-In, First-Out (LIFO): Assumes that the last units purchased are the first units sold.

  Under LIFO, Prime Cost is allocated based on the most recent costs in inventory (note: LIFO is not permitted under IFRS).

• Weighted-Average Cost: Calculates the average cost of all units available for sale.

  This method uses a weighted average of Prime Cost to determine the value of inventory.

By understanding how Prime Cost influences inventory valuation, you can make informed decisions about inventory management and reporting.

Roles and Responsibilities in Managing Prime Cost

Understanding the individual components of Prime Cost is essential, but the real power lies in calculating this metric accurately. This calculation offers a clear, actionable view of your direct production expenses.

Let's explore how to gather the necessary data, apply the formula, and leverage tools for effective Prime Cost management. This requires a coordinated effort across different roles within an organization.

Different teams, from the shop floor to the executive suite, each contribute uniquely to maintaining and optimizing this crucial metric. Let's break down each person's function.

The Cost Accountant: Guardian of Accuracy

Cost accountants are at the heart of Prime Cost management.

They are responsible for meticulously tracking all relevant expenses, ensuring accuracy and compliance with accounting standards.

Their duties extend beyond simple data entry.

They are responsible for analyzing cost data to identify trends, variances, and potential areas for improvement.

Regular, detailed reporting is also a key function, providing stakeholders with the insights they need to make informed decisions.

Without accurate data, the entire Prime Cost analysis becomes unreliable.

The Production Manager: Efficiency on the Front Lines

Production managers have hands-on responsibility for controlling Direct Materials and Direct Labor costs.

They are in a unique position to identify and implement efficiency improvements in the production process.

This might involve streamlining workflows, reducing waste, or optimizing resource allocation.

By collaborating with the Cost Accountant, the Production Manager can see the financial implications of their actions.

They can then implement changes to lower the overall Prime Cost.

This collaboration leads to continuous cost reduction in production.

The Business Owner: Strategic Oversight and Profitability

For business owners, understanding Prime Cost is not optional—it's essential for financial survival.

It informs critical decisions, from pricing strategies to investment choices.

A clear understanding of Prime Cost enables owners to set appropriate prices, ensuring a healthy profit margin while remaining competitive.

This knowledge also helps them to identify the most profitable products or services.

Business owners can then focus resources on areas that maximize returns.

The owner also plays a key role in fostering a company culture of cost consciousness.

The Purchasing Manager: Negotiation and Quality Control

The Purchasing Manager plays a crucial role in managing Direct Materials costs.

They are responsible for sourcing materials, negotiating favorable prices with suppliers, and ensuring the quality of purchased goods.

Effective negotiation can significantly reduce Direct Material costs, directly impacting Prime Cost.

The Purchasing Manager must also balance cost considerations with quality requirements.

Sourcing cheaper materials may compromise the final product. This would ultimately damage the business.

Building strong relationships with reliable suppliers is also key to maintaining consistent material costs.

The Accountant: Compliance, Audit, and Financial Statements

Accountants play a vital role in preparing financial statements.

They also audit the Prime Cost to ensure compliance and accuracy.

Their role involves verifying the accuracy of cost data, ensuring that Prime Cost is properly reflected in the company's financial reports.

Accountants ensure compliance with accounting standards and regulatory requirements.

Regular audits of Prime Cost help to identify any discrepancies or errors.

This enhances the reliability of financial information.

Their function is critical for building trust with stakeholders and ensuring the financial health of the business.

Prime Cost in Action: Industry-Specific Examples

Understanding the individual components of Prime Cost is essential, but the real power lies in calculating this metric accurately. This calculation offers a clear, actionable view of your direct production expenses.

Let's explore how to gather the necessary data, apply the formula, and leverage tools, through real-world industry examples that put the theory into practice.

Manufacturing: Precision in Production

Manufacturing provides a clear illustration of Prime Cost at work. Consider a furniture manufacturer producing wooden chairs.

Direct Materials might include wood, screws, glue, and fabric for the seat. Direct Labor would encompass the wages of workers operating the cutting machines, assemblers, and upholsterers.

Let’s say, for one chair:

• Wood costs \$15
• Screws and glue cost \$2
• Fabric costs \$8
• Labor costs \$20

The Prime Cost for one chair would be \$15 + \$2 + \$8 + \$20 = \$45.

The Impact of Automation

Automation, such as robotic assembly lines, can significantly reduce Direct Labor costs but often requires substantial upfront investment. This shifts the cost structure, increasing capital expenditure while potentially lowering the Prime Cost per unit in the long run.

Construction: Building the Foundation

In construction, Prime Cost is crucial for bidding accurately and managing project profitability.

Imagine a construction company building a small residential house.

Direct Materials include lumber, concrete, roofing materials, windows, and doors. Direct Labor involves the wages of carpenters, bricklayers, plumbers, and electricians directly involved in constructing the house.

Effective project management is crucial to keep material and labor costs within budget, especially given the fluctuating prices of building materials.

Food and Beverage: Savoring the Savings

The food and beverage industry faces unique challenges due to perishable goods and variable demand. Calculating the Prime Cost of menu items is essential for profitability.

Consider a restaurant calculating the Prime Cost of a burger.

Direct Materials would include the cost of the beef patty, bun, cheese, lettuce, tomato, and condiments. Direct Labor would be the wages of the cooks preparing the burger.

Managing Food and Labor Costs

Restaurants must closely manage food waste and labor efficiency to control Prime Cost. Implementing inventory management systems and optimizing kitchen workflows can significantly impact the bottom line.

For example, a burger's direct material costs could be \$3.50, and the direct labor involved in making it \$1.50, making the Prime Cost \$5.

This information can be crucial for setting the selling price and managing margins.

Prime Cost Across Industries: Adaptability is Key

The principles of Prime Cost apply across diverse industries, even those beyond traditional manufacturing or construction. The key is identifying and accurately tracking direct costs associated with producing goods or delivering services.

For a software development company, Direct Labor might be the salaries of the developers directly coding a software application. For a consulting firm, it could be the hourly wages of consultants working on a client project. Direct Materials for a catering business would include the raw ingredients used in creating menus for special events.

Tailoring Prime Cost analysis to different industry requirements allows businesses to make informed decisions about pricing, profitability, and cost control, ultimately leading to greater success.

Advanced Prime Cost Topics: Variance Analysis and Cost Control

Prime Cost in Action: Industry-Specific Examples. Understanding the individual components of Prime Cost is essential, but the real power lies in calculating this metric accurately. This calculation offers a clear, actionable view of your direct production expenses.

Variance analysis and cost control are essential for any business aiming for sustained profitability and operational efficiency. These advanced strategies allow businesses to move beyond basic Prime Cost calculation to actively manage and optimize their direct costs.

Understanding Prime Cost Variance Analysis

Variance analysis is the process of examining the differences between budgeted, or standard, costs and the actual costs incurred. This comparison helps businesses pinpoint areas where performance deviates from expectations.

Types of Prime Cost Variances

Material Price Variance: This variance measures the difference between the actual price paid for direct materials and the standard price expected.

For example, if you budgeted $10 per unit of raw material but ended up paying $12, you have an unfavorable material price variance.

Material Quantity Variance: This variance measures the difference between the actual quantity of direct materials used and the standard quantity expected for the actual output achieved.

If you planned to use 2 pounds of material per product but used 2.5 pounds, that's an unfavorable material quantity variance.

Labor Rate Variance: The labor rate variance reflects the difference between the actual wage rate paid to direct labor employees and the standard wage rate expected.

Paying employees $25/hour when the budget was $22/hour would create an unfavorable labor rate variance.

Labor Efficiency Variance: This variance measures the difference between the actual hours worked by direct labor and the standard hours expected for the actual production level.

If a product took 5 hours to assemble, but the standard was 4, there's an unfavorable labor efficiency variance.

Conducting Effective Variance Analysis

1. Calculate the Variances: Use the appropriate formulas to determine the monetary value of each variance (Price, Quantity, Rate, Efficiency).

2. Investigate Significant Variances: Focus on variances that exceed a pre-determined threshold, indicating substantial deviations from the plan.

3. Identify Root Causes: Dig deep to uncover the underlying reasons for the variances. This may involve examining supplier agreements, production processes, or employee training levels.

4. Implement Corrective Actions: Develop and execute strategies to address the root causes of unfavorable variances and prevent their recurrence.

Implementing Prime Cost Control Strategies

Effective cost control involves proactively managing and reducing Direct Materials and Direct Labor costs without compromising product quality or operational efficiency.

Reducing Direct Materials Costs

Negotiate Supplier Contracts: Regularly review and renegotiate contracts with suppliers to secure better pricing and payment terms. Consider bulk purchasing discounts.

Optimize Material Usage: Implement strategies to minimize material waste, such as improving production processes, using more efficient cutting techniques, and recycling scrap materials.

Value Engineering: Systematically analyze product designs to identify opportunities for reducing material costs without sacrificing functionality or performance.

Strategic Sourcing: Evaluate and select suppliers based on a comprehensive assessment of factors beyond just price, including quality, reliability, and delivery performance.

Improving Labor Efficiency

Employee Training and Development: Invest in training programs to enhance employees' skills and productivity. Well-trained employees can perform tasks more efficiently and make fewer errors.

Process Improvements: Analyze and optimize production processes to eliminate bottlenecks, streamline workflows, and reduce the time required to complete tasks.

Lean Manufacturing Principles: Implement Lean principles, such as reducing waste, improving flow, and minimizing inventory, to enhance labor efficiency.

Automation and Technology: Explore opportunities to automate repetitive tasks or implement technology solutions that can improve labor productivity. However, consider the impact on the Prime Cost before implementation.

By mastering variance analysis and implementing effective cost control strategies, businesses can gain a competitive advantage, improve profitability, and enhance their overall financial performance.

So, there you have it! Calculating prime cost might seem a little daunting at first, but with a solid understanding of your direct costs and a good template, you'll be a pro in no time. Now you can use this guide to understand how to calculate prime cost and make smarter decisions for your business! Good luck!