ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Production costs refer to the costs a company incurs from manufacturing a product or providing a service that generates revenue for the company. Production costs can include a variety of expenses, such as labor, raw materials, consumable manufacturing supplies, and general overhead.

Detailed explanation-2: -Labor costs are also classified as fixed costs or variable costs. For example, the cost of labor to run the machinery is a variable cost, which varies with the firm’s level of production. A firm can easily increase or decrease variable labor cost by increasing or decreasing production.

Detailed explanation-3: -In short, labor cost in manufacturing industry is the total amount spent on employees by your company. The total amount includes the salaries for hourly and salaried workers, plus employee taxes, bonuses, and company-specific extras such as employee compensation schemes.

Detailed explanation-4: -Factory cost: This is made up of prime cost plus factory overhead, which includes indirect wages, indirect material and indirect expenses. Factory cost is also known as works cost, production cost, or manufacturing cost. 3. Office cost: This is also called administration cost or total cost of production.

Detailed explanation-5: -Direct costs examples include direct labor and direct materials. Although direct costs are typically variable costs, they can also be fixed costs. Rent for a factory, for example, could be tied directly to a production facility.