Causes of increased cost of production.

[TOZZIBLINKZ]

A lot of things can happen inside a business organisation, when cost of production in goods and services increases. It is always advised for a business owner to maintain normal and original cost when making in availability goods and services for sale and rendering, but to some extent a business owners efforts to maintain relative and normal cost of producing goods and services production can be thwarted by economic factors. Hence, that's takes us to the two main causes of increased cost of production. Business cause and economic cause. Let's consider them briefly.

Business cause: indeed the business itself might be the problem why it may be facing the problem of increased cost of production. When business owners do not observe the reason to prepare a budget when trying to restock the business with new inventories and stocks, the business may be involved in resources wastage, and that in turn makes the cost of making goods and services available to accumulate into a huge unbearable price or cost possibly at the end of a year or month.

Economic cause: the economy in which a particular business finds itself may totally be the cause why it spends a lot in making goods and services available for sale and for rendering to customers and clients. An economy presently facing societal problems like, recession and inflation can totally have a drastic and negative effects on business established within it. Inflation especially, makes prices of goods and services to be unbearable for buyers and purchasers, and that is possibly as a result of the cost of production of these goods and services being on an increased rate.

 

[Carpon]

I think one of the reasons is economic recession. This is a condition that makes the prices of things to go higher including the price of raw materials used in producing the various goods and commodities which businesses sell. This has a corresponding effect on the price of those goods and commodities because the cost of production has increased.

The cost of production entails the amount used or spent in manufacturing or producing an item. It is calculated by summing all the individual ingredients used in such an items' production and once the prices of such ingredients and raw materials go higher, you should expect that the cost of production will also go higher.

I think this is one of the most reasons of the increase in the cost of production of items. And it comes as a result of economic recession and it is widespread nowadays. It leads to an increase in the price of items in the Market.