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Prime Cost = Raw Materials + Direct Labor. The prime cost of a single bed frame is ($6,500 + $750) / 10, or $72.50. In order to generate a profit, the company must sell each frame for more than $72.50.
Using an example of a $74 per diem, and NO meal is provided on a travel departure or return day, the calculation would be as follows: $74 (full per diem) x 75% = $55.50. When meals are provided, such as in conjunction with a conference, the per diem is reduced by the allowable rate for that meal.