how are production costs calculated 
production incurs both direct costs and indirect costs direct costs for manufacturing an automobile for example would be materials like plastic and metal as well as workers salaries indirect costs would include overhead such as rent and utility expenses total product costs can be determined by adding together the total direct materials and labor costs as well as the total manufacturing overhead costs to determine the product cost per unit of product divide this sum by the number of units manufactured in the period covered by those costs 1