Question

How is the total cost of a factory or other production site determined?

Answer 1

fixed cost plus variable cost

Answer 2

The fixed costs and variable costs are calculated collectively to get the total cost of the product.

• Fixed cost is business costs, example an office rent. An office rent is fixed cost that must be paid in any case whether the number of goods produced or not.

• A variable cost is a corporate expense that varies in proportion with production amount. Variable costs rise or decline depending on a company's production capacity.