What describes the sum of both fixed and variable costs in production?

The sum of both fixed and variable costs in production is described as total costs. Fixed costs are those expenses that do not change with the level of output—such as rent, salaries, and insurance—while variable costs fluctuate with production volume, like raw materials and direct labor. When you combine these two types of expenses, you arrive at total costs, which represent the overall financial outlay required to produce goods or services.

This concept is critical in understanding a firm's cost structure and profitability. Total costs inform businesses about how much they need to generate in revenue to cover all expenses and start making a profit. Average costs, total revenue, and marginal costs, while related to production and cost analysis, do not accurately represent the total of fixed and variable costs together. Average costs focus on the cost per unit produced, total revenue refers to the income generated from sales, and marginal costs involve the cost of producing one additional unit. Therefore, total costs is the most comprehensive term reflecting the complete cost of production.