Total Cost

Total cost refers to the complete expense incurred when producing a good or service. It combines both fixed costs, which remain constant irrespective of production levels (like rent and salaries), and variable costs, which fluctuate based on the amount produced (like materials and labor). Understanding total cost is essential for businesses to set prices, manage budgets, and evaluate profitability, ensuring they can cover all expenses while achieving financial goals. It helps in making informed decisions about production and pricing strategies.