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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.
* All percentages shown are the ratio of each itemâs cost divided by its sales (not total Prime Cost Standards Prime cost is one of the most telling numbers on any restaurantâs profit-and-loss statement. Prime cost is arrived at by adding cost of sales and payroll costs.