What Is Factor Cost?

Factor cost refers to the cost of various factors incurred by an enterprise in the course of production and operation for the production of goods. Such as the consumption of various materials, fuels, power, employee wages, depreciation, overhaul and daily equipment maintenance costs, interest expenses, and other expenses included in production costs. Factor cost mainly refers to the consumption of labor objects, the consumption of labor methods, and the consumption of living labor. It is an important basis for determining the value of compensation and a direct basis for reflecting production consumption. Through the reflection of factor costs, the implementation of various quotas and production expense plans can be evaluated. Since the consumption of materials and materials is reflected in the factor cost, it can provide data for the verification of the enterprise's working capital quota and the preparation of the procurement fund plan. Since factor costs provide specific indicators of materialized labor consumption and live labor consumption, it can also provide important data for calculating industrial net output value and national income. ^[1]

Factor cost

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Factor cost refers to the cost of various factors incurred by an enterprise in the course of production and operation for the production of goods. Such as the consumption of various materials, fuels, power, employee wages, depreciation, overhaul and daily equipment maintenance costs, interest expenses, and other expenses included in production costs. Factor cost mainly refers to the consumption of labor objects, the consumption of labor methods, and the consumption of living labor. It is an important basis for determining the value of compensation and a direct basis for reflecting production consumption. Through the reflection of factor costs, the implementation of various quotas and production expense plans can be evaluated. Since the consumption of materials and materials is reflected in the factor cost, it can provide data for the verification of the enterprise's working capital quota and the preparation of the procurement fund plan. Since factor costs provide specific indicators of materialized labor consumption and live labor consumption, it can also provide important data for calculating industrial net output value and national income. ^[1]

Chinese name

Factor cost

Definition

Indicating low cost of elements

Classification

Labor owner gets paid

Category

Economic terms

meaning

The so-called factor cost is just the manufacturer's cost from the perspective of purchasing factors of production. The factor cost of the manufacturer's expenditure is, on the other hand, the income of the factor owner. Land owners get rent, capital owners get interest, and labor owners get wages. Obviously, factor income and factor cost are identical.

Relationship to cost elements.

Both are related to costs and both related to factors, but the emphasis is the opposite. The cost element emphasizes the element, and the element cost emphasizes the cost.

The use of the two is sometimes indistinguishable. For example, if you want to explain that the factor cost is low, and say "low factor cost" directly, it may give people a sudden and high level of factors. In this case, it is better to use low-cost elements. Although the key words emphasized are different, they generally do not affect the writing.