Question

What product cost is both a prime cost and a conversion cost?

Short answer

Direct labor.

Step-by-step solution

Meaning of Product Cost

The direct expenses incurred in creating a product are called product costs. Direct labor, for instance, would be one of a manufacturer's product expenses.

The product cost that is both a prime cost and a conversion cost

Direct labor serves as both a prime cost and a conversion cost. Direct materials and direct labor are included in prime costs, which will be specifically connected to the production of products. Costs related to converting raw assets into finished products, such as direct labor and manufacturing overhead, are considered conversion costs.