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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.
The breakeven sale price should be computed over a range of production and sale quantities using the. formula below. First you need to categorize your costs into the managerial cost categories of fixed and variable. A key con-. cept in this formula is the fixed cost per unit of sales.