The factory cost of producing goods is made up of

The factory cost of producing goods is made up of

Answer Details

The factory cost of producing goods is made up of two components: prime cost and factory overhead. Prime cost is the sum of direct material cost and direct labor cost. It represents the cost of the materials and labor used directly in the production of the goods. Factory overhead, on the other hand, refers to the indirect costs of production, such as rent, utilities, and indirect labor. These costs are not directly related to the production of a specific unit of product, but are necessary for the production process to take place.