First Cost (FC)

Tags: Glossary

The cost of producing or purchasing a product, not including any additional costs.

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What is First Cost (FC) & how is it Calculated?

First Cost (FC) refers to the initial cost of a product, including the cost of materials, labor, and any other expenses incurred during the manufacturing or production process. First Cost is an important factor in determining the overall cost of a product and is often used to calculate profit margins and pricing strategies. 


To calculate First Cost, you would add up all of the expenses incurred during the manufacturing or production process, including the cost of raw materials, labor costs, transportation costs, and any other expenses associated with bringing the product to market. For example, if a company produces a product that has a material cost of $10, a labor cost of $5, and a transportation cost of $2, the First Cost of the product would be calculated as follows: 


First Cost = Material Cost + Labor Cost + Transportation Cost 


First Cost = $10 + $5 + $2 


First Cost = $17 


So, the First Cost of the product in this example would be $17. This means that the company would need to sell the product for more than $17 in order to make a profit, and the First Cost would be used to calculate the product’s profit margin and determine its selling price. 

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