Mechanical Engineering - Industrial Engineering and Production Management - Discussion

Production cost = dm + dl + others.

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.