Total cost is defined as?

Total cost is defined as?

• A. Variable costs plus fixed costs only
• B. Full production and non-production costs
• C. Administrative costs only
• D. Production costs only

Answer: (B)

Total cost means all expenses the business incurs in running, not just those tied to making the product. It combines production costs—materials, direct labor, and manufacturing overhead—with non-production costs such as administration, selling and distribution, and office expenses. So it’s the full amount the business spends. Focusing only on production costs misses the costs outside production, and narrowing to administrative costs or to production costs only leaves out significant expenses needed to run the business.

Total cost means all expenses the business incurs in running, not just those tied to making the product. It combines production costs—materials, direct labor, and manufacturing overhead—with non-production costs such as administration, selling and distribution, and office expenses. So it’s the full amount the business spends. Focusing only on production costs misses the costs outside production, and narrowing to administrative costs or to production costs only leaves out significant expenses needed to run the business.