In economics and cost accounting, total cost
(TC) is described as the total economic cost of production and is made up of
variable costs. This may vary according to the quantity of a good produced and
this also includes inputs such as labor and raw materials, plus fixed costs.
These are independent of the quantity of goods produced and include inputs
(capital) that cannot be varied in the short term, such as buildings and
machinery. Included as well in the computation of the total costs is the total
opportunity cost. The opportunity cost or alternative cost is defined as the
value if the business entity will choose the best alternative cost when making
a decision in relation to production.
