Total cost based on the historical acquisition cost of the factors of
production used to produce a given amount of output. This usually does not relate to
the current market prices for the factors used, but rather to the costs that
prevailed when the factors were actually purchased. It does, however, take
account of the return of and return on invested capital (i.e., amortization and
interest on debt plus normal profit) as well as any applicable operations,
maintenance, administrative, general or overhead costs, including labor and materials.
It is usually calculated by traditional utility cost-of-service methods.