1. What is a production cost?
The cost of raw materials, transportation fees, custom taxes/surcharges and a percentage of your overall expenses for doing business (rent, equipment, licenses, and insurance). Most small businesses like ours do not yet have rent to consider but you may have other expenses that should be included in this list as well.
2. What is a labor cost?
Calculate the overall production costs and then divide by your total number of products made to determine the per-product production cost. Sometimes in a very small business where it's a one man show, typical of our type of industry, this is something over looked or plain and simply omitted.
Now that you have this figured out, you will want to add the production cost and the labor cost together to come up with the actual cost to make your product.