Question

Total costs are made up of what components?

Answer 1

Answer is as follows:

Components of Total Cost are : a) Prime Cost

b) Factory Cost

c) Cost of Production

d) Cost of Sales

a.Prime Cost includes: Direct Material, Direct Labour and Direct Expenses.

b. Factory Cost means Prime Cost plus Manufacturing Overheads.

c. Cost of Production means Factory Cost plus Office & Administrative overheads.

d. Cost of Sales means Cost of Production plus Selling & Distribution overheads.

Cost of Sales is Total Cost as it includes all the cost components.