Cost classification in estimating: Factory manufacturing cost equals the sum of which components for a chemical plant?

Introduction / Context:
Understanding standard cost breakdowns is essential in chemical engineering economics. “Factory manufacturing cost” (often called manufacturing cost) aggregates the costs required to manufacture the product before selling and administrative expenses are added to form the total product cost.

Given Data / Assumptions:

• We use conventional textbook definitions (e.g., Peters & Timmerhaus, plant design and economics).
• Terminology: direct production cost (raw materials, operating labor, utilities, etc.), fixed charges (depreciation, taxes, insurance), plant overhead (supervision, maintenance, payroll overhead).
• Administrative and selling expenses are excluded from factory manufacturing cost.

Concept / Approach:
Manufacturing (factory) cost = Direct production cost + Fixed charges + Plant overhead cost. This subtotal precedes the addition of general expenses (administrative, selling, distribution, R&D) to produce the total product cost. Recognizing what is inside or outside each subtotal prevents double-counting or omissions.

Step-by-Step Solution:
Identify direct charges tied to making the product: direct production cost.Add time-based ownership costs: fixed charges (depreciation, taxes, insurance).Include factory-level support: plant overhead (maintenance, supervision, plant services).Exclude administrative and selling: they belong to general expenses, not factory manufacturing cost.

Verification / Alternative check:
Cross-check a typical cost tree: Total product cost = Manufacturing cost + General expenses, where Manufacturing cost includes the three components selected above. This partitioning is standard in feasibility studies and detailed estimates.

Why Other Options Are Wrong:
Direct production cost and plant overhead only: Omits fixed charges, thereby understating factory cost.Plant overhead and administrative expenses: Adds non-manufacturing administrative costs improperly.None of these / Direct + general: Do not match the accepted structure.

Common Pitfalls:
Confusing “manufacturing cost” with “total product cost,” or misplacing fixed charges into general expenses. Always keep component definitions consistent across estimates.

Final Answer:
Direct production cost, fixed charges, and plant overhead cost