Cost on the Basis of Function

Prime Cost: It consist of  all the direct expenses incurred in connection of production.

Factory Cost/ Work Cost:  When prime cost is added with factory expenses (either fixed or variable) or work expenses (fuel, repairs, depreciation etc) it will give factory cost.

Office Cost/ Cost of Production:  When factory cost is added with administrative expenses like salaries, office lighting etc then it is known as Office Cost.

Total Cost: When selling and distribution expenses are added to office cost then it is known as Total Cost.

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By Hassham

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