Which of the following formula is used to compute cost of production

Correct option is B

Cost of production is calculated by adjusting total cost with the value of by-products obtained during production. The value of by-products is deducted from Cost C3 because it represents additional income reducing net cost. The adjusted cost is then divided by total quantity of output produced to get per unit cost. Thus, the correct formula is (Cost C3 − Value of by-product) / Production.
Information booster: Cost C3 includes all paid-out costs, imputed costs, and managerial cost of the farmer. By-products like straw or husk contribute to reducing effective cost of main product. Accurate computation of cost of production helps in price fixation and profitability analysis. This concept is widely used by CACP for recommending Minimum Support Prices.
Why other options are incorrect: (a) Adding by-product value increases cost incorrectly instead of reducing it. (c) Multiplying cost with by-product value has no economic meaning in cost calculation. (d) Dividing cost by by-product value and production gives an illogical and incorrect result.