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What is the difference between prime costs and conversion costs?

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Question added by hossam abbas , Finance Accounting Manager , hammers international for light vehicles industry
Date Posted: 2016/03/20
Shameer Nazir Madari
by Shameer Nazir Madari , Assistant Finance Manager , METAL AND RECYCLING COMPANY K.S.C. (PUBLIC)

Prime costs is consist of two elements of Costs

1.Direct materials costs

2.Direct labor Costs

 

Conversion costs consist of two elements of Costs

1.Direct labor costs

2.Manufacturing overhead costs

 

Main difference between Prime costs and Conversion costs in simple words Conversion is the process of manufacturing where Direct material is converted in to Final product so Conversion cost exclude the cost of direct materials.

 

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