Study on concept of cost of production: Its implication in management decision

Abstract

Purpose of this study is to understand the concept of Cost of production and how its graph moves during the economic life of product/business. Understand the concept of various costs which helps management in making their decisions. Cost of production is the cost incurred by business for manufacturing goods or for providing services. It is majorly categorised in two major categories variable cost and fixed cost. Cost of production can be understood, analysed and used for decision making in following terms:1. Fixed Cost2. Variable Cost3. Total Cost 4. Average Variable Cost5. Average Fixed Cost 6. Average Total Cost 7. Marginal cost Management use cost of production in making following and various other decision: 1. Product selection for production 2. Product Pricing 3. To review past decisions 4. To correct future decisions5.Costing Cutting