In this article, we will touch upon a rather complicated settlement procedure, which is vital for the entire diversity of enterprises. This is a calculation of the cost of the product. Performing it is the prerogative of the accounting department, since it is necessary to have professional knowledge and training for such an operation. The specialist must calculate all the expected revenues of the company, while taking into account all the planned costs. In the article we will consider what is the cost, its types, structure. Let's analyze the calculation methods, formulas and examples of calculations on them.
What is it?
Cost of goods - current expenses of the company, which are presented in monetary terms. Costs that are aimed both at production and sale of products.
Cost is also called the economic category, which reflects the economic and production activities of the company. It demonstrates how much financial costs are needed for the manufacture and sale of a product.
It is easy to guess that the profitability of the enterprise directly depends on this value. Reducing the cost of production increases the profitability of the company.
Main types
What is it like? When an accountant is required to calculate the cost of production, first of all, it is determined with its type:
- The full cost price. The totality of all costs of production and sale. They take into account commercial costs not only for manufacturing, but also for the purchase of equipment for it. At the same time, the costs of starting a business here are divided into periods during which losses should pay off. In equal shares, they are gradually added to the total mass of production costs. So the formation of the average cost of the product.
- Marginal cost. This value is directly dependent on the quantity of goods produced. Designed to reflect the price of each of the additional units of production. Demonstrates how effective a planned expansion of production can be.
The main types
When calculating the cost of production, it is no less important to determine its type. It depends on what area of activity the accountant wants to explore:
- Shop. The total costs of all production structures of the company, aimed at manufacturing a new type of product.
- Production. For accounting, the workshop cost is important here. They also pay attention to both general and target losses.
- Complete. In this case, not only production costs will be summarized, but also the costs that were required for the sale of products, products.
- Indirect (general business). Calculations are made in order to find out how much the company’s business management structure costs, separately from production costs.
Structure
What are the components of cost? The following are mainly highlighted:
- Raw materials needed for production.
- Fuel volume, energy consumption for the release of any product.
- Costs of machinery and equipment that determines the activities of the enterprise.
- Salaries of employees, making all necessary payments on bills, paying off debts.
- Overhead costs. From paying office rent to advertising and promotion costs.
- The cost of organizing social events.
- Costs that will be associated with depreciation of fixed capital.
- Payment for services, work provided by third parties.
- Administrative expenses.
This clearly shows that the calculation of the cost of production is a complex and time-consuming procedure. But still try to deal with it.
Cost formula
Costing is best understood with a simple life example.
So, the cost is always directly dependent on the volume of goods produced. Here is an example: you need to buy 4 packages of coffee. Its price in the nearest store is 100 rubles. The road to the grocery store will take you 30 minutes. You take time off from work, where the hour of your work time is estimated at 200 rubles. Spend 20 rubles on travel.
Now the formula for calculating the cost of production:
Cost = (total price of goods + expenses) / (volume of goods produced (purchased)).
Let's go back to the example. Four packs of coffee will cost 400 rubles. The road to the store and back is 60 minutes (30 + 30). This is minus 200 rubles that you could get by staying at work. Round trip - 40 rubles (20 + 20). There is everything to substitute in the formula.
(400 + 200 + 40) / 4 = 160.
From here we see that the cost of each package of coffee in your case is 160 rubles. And not 100 rubles, according to which the product is sold in a store. It's so simple to find out how costing is done. Now back to the work of an accountant.
Full and truncated
Of course, in the previous heading we gave for example the simplest formula for calculating the cost of production. Specialists accountants turn to complex calculations. Consider their main methods.
Given the completeness of adding costs to the cost of production. From here there will be two of its types:
- The full cost price. The accountant will take into account absolutely all expenses and expenses of the enterprise. Costs are affected by both fixed and variable costs. The price of the product is calculated by adding the profitability necessary here to the cost of the product.
- Truncated cost. The cost of a single product of variable costs. At the same time, a constant share of both overhead costs and other expenses is written off to reduce revenues at the end of the established time period. Distribution of manufactured products is not performed.
Actual and regulatory
The calculation of the unit cost of production is carried out on the basis of expenses that the company incurred:
- Regulatory cost. It makes it possible to control the costs of various resources. In case of deviation from the set norm, it allows you to quickly return the situation to its previous course.
- Actual cost. It is calculated per unit of output. It is determined after accounting for all costs. From this method is fraught with its low efficiency.
Alternate and process method
It is calculated depending on the object of cost accounting. In this classification, the following examples of calculating the cost of production are highlighted:
- Alternate. It is more typical for enterprises that are characterized by continuous production and mass production, when the products go through a whole series of processing steps.
- Processor The method is used in companies engaged in the mining industry.
The need for calculation
The calculation of the cost of production is necessary in the following cases:
- In continuation of activities aimed at finding reserves. This helps to significantly reduce costs.
- In the formation of the value of new manufactured products.
- When conducting an analysis, with the help of which it is necessary to find out the efficiency of a particular business entity. For example, after the introduction of innovative technologies. Or after the decision to expand the product range.
- When evaluating the indicators of the purchase planned value, while exercising control over its dynamic change.
- During self-financing.
- When calculating the profitability of a company.
- When determining the specific profit of the enterprise for certain categories of manufactured goods.
Variety selection
The calculation of the cost of production may be different depending on for which business entity it is produced - large, medium or small. When determining the type of cost, it is important to pay attention to the following criteria:
- Volume of production. It is necessary to determine the selling value of both one unit of production and a wholesale batch of manufactured goods.
- Production stages. The initial price of products will be considered in the context of the goods that were produced, prepared for sale, shipped and already sold out.
- The amount of losses incurred. Here consider the full and reduced purchase price.
- Analytical operations. In the course of their activities, business entities may be faced with the normative, actual and planned cost of products.
- Accounting for production costs. What are they paying attention to here? Full, factory and production price.
Costing
As we have said more than once, calculating the cost of production in production is the prerogative of the accounting department. In this important and complex process, one of the specialist’s main tasks is to divide all the company's expenses into indirect and direct.
The difficulty is that part of the costs in accounting is considered direct, and in tax - already indirect. But at the same time, all the costs that go into the manufacture and sale of products are usually attributed to the cost of the product. Those that are related to taxation are usually standardized.
To prepare an accounting report, a specialist first of all groups the company's expenses into the following categories - economic elements:
- Material costs.
- Social payments.
- Salary to employees.
- Other expenses. For example, deductions to an insurance fund, payment of debts of an enterprise, etc.
Next, there is a gradation of all costs incurred already according to costing items. Thanks to this, it becomes possible to calculate how much a unit of output will be produced. The groups here are as follows:
- Costs of production materials, work and services.
- Salary of employees.
- Costs aimed at preparing production for operation.
- General and general production costs.
- Direct production costs.
- Other expenses (for example, deductions to insurance funds).
Calculating the costing, the accountant uses the cost-sharing for specific costing items. Because of this, it becomes possible to find out how much a unit of production will cost.
Calculation of the full variety
The full cost is the sum of all the costs of manufacturing one product. In order to know it, it is necessary to summarize all the costs in which the manufacture and sale of a unit of production is involved.
The following formula is used here:
C n = ORS + PP.
The decoding is as follows:
- With p - the full cost.
- ORS - this includes all production costs - salaries, depreciation, expenses for the purchase of materials and raw materials, social benefits, etc.
- PP - the cost of sales. From packaging, transportation and storage of goods in a warehouse to its advertising.
Calculation of the planned variety
The calculation of the planned cost is needed for representatives of all categories of business - large, medium and small. A formula is used that is identical to the formula for calculating the real, actual cost of production. Only indicators here will be replaced by planned ones.
The following data are important for calculating this category of factory value:
- Loss rates of the material plan.
- Production direct costs.
- Norms of costs for energy resources.
- Production plan.
The necessary estimates are made at the beginning of the reporting fiscal year. Then the results in certain proportions are "scattered" in quarters.
Excel help
Time does not stand still - today an accountant does not have to manually calculate the cost. In business, various electronic programs significantly help. It is enough to choose the appropriate formula for calculating the cost of production, substitute the numbers in it correctly, after which the system itself will carry out the necessary mathematical operations and in a split second will produce the result.
Experts highlight the following positive aspects of working with Excel:
- The program can work both in automatic and in manual modes.
- Possibility to include “Returnable Waste”
- The program options allow you to use it not only in small but also in medium business.
At the same time, negative aspects are noted:
- The amount of information processed is limited.
- Only a single specification of a variety of resources is supported.
It is important to know the cost of manufactured products to any manufacturer - from small to large. This indicator helps to correctly distribute the income and expenses of the company, to identify weaknesses, unprofitability of the manufacture of certain goods. Calculations are made by the accounting department, using special electronic programs.