Final answer:
Carriage inwards, a term related to the cost of production, is adjusted in factory on cost, which is used to calculate the appropriate cost of production for assessing a company's profitability.
Step-by-step explanation:
Carriage inwards is associated with the cost of production as it refers to the cost of bringing materials into a factory or warehouse, hence it is adjusted in option (a) Factory on cost. This term is specifically relevant when calculating the appropriate cost of production, which includes both fixed and variable costs and is critical for determining the total cost. This calculation is an important part of managerial accounting and is used to assess a company's efficiency and profitability.
Furthermore, the cost structure of a firm, such as the expenses related to carriage inwards, can influence the profit-maximizing quantity to produce and the price to charge. These costs are often a blend of art and science, especially in scenarios where market structures and government regulations affect the true cost of production and impose additional trade barriers such as tariffs or quotas.