Subcomponents are:

Prime Cost, Factory cost, Office cost and Cost of sales.

The total cost has been divided into sub components representing the cost at various stages. 

Following are the various components of cost shown in the cost sheet or production account:

1. Prime Cost: Prime cost is also named as “Direct Cost”, “Flat Cost”, “Basic Cost” or “First Cost”. It is the summation of all direct costs relating to production, i.e. direct material, direct labour and direct expenses. 

2. Factory Cost: Factory cost is also named as “Work Cost”, “Manufacturing Cost” or “Production Cost”. It is the summation of prime cost and factory overheads that includes indirect material, indirect labour and indirect expenses of factory. Factory cost includes all the direct cost relating to product and the indirect cost relating to factory. 

3. Office Cost: Office Cost is also named as “Cost of Production” or “Administration Cost”. Office cost is the summation of factory or work cost and office & administrative overheads. Any cost related to sales and distribution is not the part of office and administrative cost as they form a separate category. This total cost of production is adjusted with the opening and closing stock of finished goods to get the cost of goods sold. 

4. Cost of Sales: It is also named as “Total Cost”. It is derived by adding selling and distribution overheads to the cost of goods sold.