Total cost

Lower total cost ( engl. total cost ) is understood in the operational cost and management accounting, the sum of all costs incurred in a company in a given period. The term is generally used in cost resolution at which the costs are divided into variable costs and fixed costs.


When put together, the cost of operating the Underlying both fixed and variable costs of components are mixed or total cost. The cost theory is usually from an S- shaped curve of the total cost curve (production function of type A). But Erich Gutenberg has pointed out that at least for the industrial production of a linear cost over the total cost is more representative. Starting from limitational factors of production he developed from this the production function of type B. For then the total cost would increase with increasing employment by the same amount in each case, the total cost curve is a linear basis, the marginal costs are constant; the average variable cost is equal to marginal cost. However Gutenberg goes in his assumptions are not of constant production conditions in a company from.


The total cost () are made up of the fixed () and variable costs (). These two cost components tell us something about whether costs respond to changes in employment (variable costs ) or not (fixed costs ). A further division is possible in direct costs () and overheads ( ), depending on whether the cost can be a cost object directly attributed ( direct costs ) or not ( overheads):

Hence we have:

The total cost will be dissected at the total cost method in accordance with § 275 section 2 HGB in various types of costs, particularly in material and labor costs and depreciation.


The absolute measure of the total costs can win by taking into account in determining operating ratios of cogency. So you can see the total costs facing the revenue and then obtains the degree of cost recovery

In addition, they can be in relation to the amount produced over the same period set ( unit cost as opposed to the total cost)

Or they calculate per employee.


While speaking in the cost and performance accounting of total costs, hereby identical term full cost is rather used in the cost allocation and costing.