The Cost of Production

The cost of production refers to the total expenses involved in manufacturing a good or service. It includes direct costs like raw materials and labor, as well as indirect costs such as rent, utilities, and equipment. These costs influence how much a product costs to produce and, ultimately, its selling price. Understanding production costs helps businesses set prices that cover expenses and generate profit. Efficient management of these costs can improve profitability, while high or rising costs may require adjustments in pricing or production methods.