Total Costs are equal to Production costs plus Non-production costs.

Total Costs are equal to Production costs plus Non-production costs.

• A. Production costs plus Non-production costs
• B. Prime costs
• C. Indirect costs plus production overheads
• D. Historic costs

Answer: (A)

Total costs are the sum of everything spent in running the production and the business outside production. Production costs cover what it costs to make the goods—direct materials, direct labour, and production overheads. Non-production costs are the expenses not tied to producing the goods, such as selling, distribution, and administrative costs. Adding these two groups gives total costs, which is why “Production costs plus Non-production costs” is the correct option. The other choices miss parts of the total cost: prime costs are only direct materials and direct labour; indirect costs plus production overheads exclude direct production costs and non-production costs; historic costs refer to the original cost of assets rather than current production costs.

Total costs are the sum of everything spent in running the production and the business outside production. Production costs cover what it costs to make the goods—direct materials, direct labour, and production overheads. Non-production costs are the expenses not tied to producing the goods, such as selling, distribution, and administrative costs. Adding these two groups gives total costs, which is why “Production costs plus Non-production costs” is the correct option. The other choices miss parts of the total cost: prime costs are only direct materials and direct labour; indirect costs plus production overheads exclude direct production costs and non-production costs; historic costs refer to the original cost of assets rather than current production costs.