Costing is the calculation of the costs of production or sale of a unit of product (group of units, work, services), determined in cost form. In order for the company to work efficiently, it is necessary to seriously approach the pricing process.
At the same time, costing is perhaps its main element and the most important stage in calculating the financial result of an enterprise.
A well-formed costing will help to determine an important figure - the break-even point. This, in turn, will bring some clarity about how competitive the product is on the market, as well as provide an opportunity to navigate profitability, margins and calculate estimated profits.
Compiling such a document at an enterprise producing homogeneous products is quite simple. Moreover, if semi-finished products are not used in the manufacturing process and there is no work in progress at the end of the period, it is enough to collect all production costs. The calculation of the cost of a unit of production in this case includes costs calculated by simply dividing all costs by the total number of products.
In general, the general positions of the statement are as follows: basic materials and raw materials, semi-finished products of their production, auxiliary materials, expenses for fuel and energy, expenses for the wages of production workers, deductions from the wage bill for social needs, expenses for the development of production, expenses for the operation of machines , equipment, as well as general manufacturing expenses. This is an example of what workshop costing involves.
If we add general economic and other production costs and recorded losses from marriage to them, the production cost of production is obtained. The costing, which includes business expenses, fully reflects the list of costs in cash. All figures are included in the statement based on accounting data.
It is worth noting that documents of this purpose may include preliminary and factual data.
Depending on this, the calculation of the cost of services (products) can be planned, normative and actual.
Planned - this is the basis for calculating the price of products, which lay the costs of production and sales expected in a certain future period. It is based on progressive norms of using the organization’s resources, and the planned costing remains unchanged for the entire specified period of time.
Regulatory costing is based on current standards. It helps to control the production process by detecting deviations.
Actual - is a reflection of the actual cost of production. Only in it you can see the real costs, expenses and losses that cannot be taken into account in preliminary calculations. That is why it is impossible to imagine the activities of an enterprise without drawing up an actual cost estimate.