Question

the following are the components of total cost
1. total fixed cost
2. marginal cost
3. total variable cost
4. perishable goods ​

Answer 1

Answer:

Components of total cost

Components of total cost are constituted mainly of prime cost, factory cost, office cost and cost of sales. Let us take a detailed look at each of these elements:

1. Prime cost: This comprises direct material, direct wages, and direct expenses. It is also called basic cost, first cost, or flat cost. It can be defined as an aggregate of the price of the material consumed, the wages involved in production, and the direct expenses.

Prime cost = Direct material + Direct wages + Direct expenses

Direct material cost usually refers to the cost of raw materials used or consumed during a given period. To calculate the amount of raw material actually consumed during a given period, you add the opening stock and the amount of material purchased, and deduct the closing stock. Here is the formula for material consumed:

Material consumed = Material purchased + Opening stock of material – Closing stock of material

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