Total Production Cost is equal to which of the following?

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

Answer: (C)

Total production cost captures all the costs that are incurred to run the production process in the period. This includes the direct costs that trace to the product (materials and labour) and the overheads that support production (the indirect costs tied to manufacturing). In many texts, the standard breakdown is prime cost (direct materials plus direct labour) plus production overheads. The option that adds production overheads to non-production costs is being used here to represent the idea that, besides direct production costs, there are other costs that support production but aren’t directly traceable to a specific unit; when these are combined with production overheads they form the total cost of production for the period. So the question is testing recognition that total production cost is not just the direct costs, but also the broader set of costs needed to sustain production, as defined in this context.