In a chemical process plant, the cost of utilities (steam, power, cooling water, fuel, compressed air, etc.) is classified under which cost category?

Introduction / Context:
Operating cost breakdown is essential for budgeting and pricing. Utilities are essential consumables used directly in production (e.g., process steam and power), and their classification affects product costing and margin analysis.

Given Data / Assumptions:

• Utilities are recurring, variable or semi-variable costs tied to production levels.
• Standard cost taxonomy from plant design/operations applies.

Concept / Approach:
Direct production cost includes raw materials, direct labor, operating supplies, and utilities consumed in making the product. By contrast, fixed charges (depreciation, insurance, taxes) and general expenses (admin, selling) are not directly proportional to production throughput in the short run.

Step-by-Step Solution:
1) Identify utility items: steam, power, water, compressed air, fuel.2) Confirm they are consumed as part of the operation of unit processes and equipment.3) Place them in the direct production (operating) cost bucket.

Verification / Alternative check:
Cost sheets in chemical operations list utilities within operating costs alongside raw materials and catalysts.

Why Other Options Are Wrong:
Plant overhead: covers indirect factory costs like supervision and maintenance overhead, not metered utility consumption per se.
Fixed charges: capital-related, not consumption-based.
General expenses: admin and selling costs.
Capitalized cost: pertains to investments, not recurring consumption.

Common Pitfalls:
Misclassifying utilities as overhead due to plant-wide billing; in cost accounting, they are treated as direct operating costs to the process.

Final Answer:
Direct production cost (operating cost)