Which item is considered a prime cost?

• A. Utilities
• B. The sum of food cost and direct labor cost
• C. Rent
• D. Marketing

Answer: (B)

Prime costs are the costs directly tied to producing the menu item: the raw materials (food cost) and the labor directly involved in making it (direct labor). These are the expenses that scale with output. Utilities, rent, and marketing are overhead or selling/operating costs that aren’t tied to a specific unit of production, so they don’t count as prime costs. Therefore, the best choice is the sum of food cost and direct labor cost, since it represents the two elements directly used to create the dish. For example, if ingredients cost $4 and direct labor for the dish is $3, the prime cost would be $7.