Question

Distinguished between production cost and extraction cost

Answer 1

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Answer 2

Cost of Production:

• Production costs are all of the direct and indirect expenses organizations incur when producing goods or rendering services.
• Various expenditures, including labour, raw materials, consumable manufacturing supplies, and general overhead, might be included in production costs.

Cost of extraction:

• It is defined as the number of units of producible output consumed in extracting one unit of the resource for use in production.
• The cost associated with using a specific resource is measured.
• The economy's initial endowment in terms of resources.

Production costs are the expenses a business has to pay while producing a good or offering a service that brings in money for the business. The total cost of the product can be calculated by adding the total cost of direct materials and labour as well as the total cost of manufacturing overhead.

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