How does carriage on purchases forms part of prime cost?

Carriage on purchases refers to the transportation costs incurred to bring goods to a business, and it forms part of the prime cost because it is directly associated with acquiring inventory. Prime cost consists of direct materials, direct labor, and direct expenses related to production. Since carriage on purchases is a direct expense linked to obtaining raw materials, it is included in the total calculation of prime cost. This inclusion helps businesses accurately assess the total cost of production when evaluating profitability.