Mechanical Engineering - Industrial Engineering and Production Management - Discussion

The correct answer is factory and administration overheads.

Production cost, also known as manufacturing cost, refers to the total cost incurred to produce a product, which includes:

1. Prime cost (direct costs):
- Direct materials
- Direct labour
- Direct expenses
2. Factory overheads (indirect costs):
- Indirect labour
- Indirect materials
- Factory rent
- Utilities
- Depreciation
- Insurance
3. Administration overheads (indirect costs):
- Salaries of administrative staff
- Office expenses
- Rent and utilities for administrative offices

Production cost does not include:

- Sales overheads (marketing and distribution costs)
- Profit (the amount earned by the business)

The other options are incorrect because:
- Option 3 includes sales overheads, which are not part of production cost.
- Option 4 includes profit, which is not a cost, but rather the earnings of the business.

Production cost is an important concept in cost accounting, as it helps businesses determine the cost of producing a product and set prices accordingly.

Prime cost = Direct material cost+Direct labour cost+Direct Expenses.
Factory Cost = Prime Cost+Factory Expenses.
Production Cost = Factory Cost+Administrative expenses.
Total Cost = Production Cost+selling expenses+Distribution Expenses.
Selling Price = Total Cost+Profit.

According to these relations.
Production cost = PRIME COST+ FACTORY EXPENSES+Administrative expenses.

[B] should be correct.

Product cost refers to the costs used to create a product. These costs include direct labor, direct materials, consumable production supplies, and factory overhead = Product unit cost.

So, option "A" is perfect.

A is perfect option overhead include any cost links with production indirectly such as administration costs, distribution cos, advertising costs >>etc.

Production Line cost : Prime cost + factory overhead + Administrative Cost.
Production cost : Prime Cost+ Factory Overheads.

Hence Option A.

B is correct.
Production cost = prime cost+ administration overhead.
Factory cost = prime cost + fact overheads.

Factory overheads is right. I agree with the given answer.

Option B should be correct the correct answer.

According to me, Answer B should be correct.

Production cost = dm + dl + others.