Definition

Noun: - The total expense incurred to manufacture a good: This refers to the combined monetary outlay for all direct inputs required to create a product, primarily encompassing raw materials and direct labor.

Usage

This term is used in business, economics, and accounting contexts to analyze and calculate the fundamental expenses of creating an item before other costs (like marketing, distribution, or overhead) are added. - The company is analyzing its production cost to find areas for efficiency savings. - A significant increase in the production cost of steel has affected car prices.

Advanced Usage

• "to keep production costs down": to manage or reduce the expenses of manufacturing.
  • The factory moved to automate processes to keep production costs down.
• "production cost analysis": the detailed examination of the components that make up the manufacturing expense.
  • The production cost analysis revealed that raw materials were the largest variable.

Variants and Related Words

• Cost of production (n): A synonymous phrase with identical meaning.
  • The cost of production must be lower than the selling price to generate profit.
• Manufacturing cost (n): A very close synonym, often used interchangeably, though it may sometimes imply a more factory-based process.
• Production (n): The general process of making goods.
• Cost (n): An expenditure required to achieve something.

Synonyms

• Manufacturing expense
• Factory cost
• Direct cost (when referring specifically to these direct inputs)

Related Phrases

• "Below production cost": Sold for less than it cost to make.
  • The company was accused of dumping goods below production cost in foreign markets.
• "Production cost per unit": The average cost to manufacture a single item.
  • Our goal is to reduce the production cost per unit by 10% this year.

Noun

1. combined costs of raw material and labor incurred in producing goods