Error in cost calculation products sold can be costly for a business owner. Beginning entrepreneurs can set average market prices for the services or goods they produce. Practice shows that the cost of production is different for each owner.

Analysis of the cost of manufactured products or services is effective tool management of the competitiveness of any enterprise. It shows the profitability of production, helps optimize constant and variable costs. Calculating the cost helps determine the correct retail and wholesale prices, which is a kind of protection against unjustified reductions in product costs.

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The profit of an enterprise directly depends on the cost calculation. The lower the cost of production, the more income and vice versa. Therefore, manufacturers, in pursuit of increasing profits, forget about product quality. Calculation of product costs allows you to balance these processes and is the main tool for enterprise management.

Definition and types

Cost of products sold is the sum of fixed and variable costs of production, as well as sales of a unit of product. They include the employee’s salary, the cost of materials from which the products are made, transportation costs, rent of premises, etc.

Different types of product production require an individual approach to calculating the cost of manufacturing a unit of goods. In the science of economics, the following concepts of cost are distinguished: full and marginal.

The total cost of finished products is understood as the ratio of all costs to the total volume of goods produced. These are expenses for salaries, taxes, raw materials, depreciation, advertising and others. This approach is used in large enterprises.

Marginal costing is used to calculate all costs per unit of finished product. The actual cost of one copy of a product consists of the following expenses: materials, transport, wages, wear and tear, etc.

In addition to the main types of cost, there are also types:

General structure

The structure of the cost of finished goods is determined by costing items or cost elements:

Methods for calculating cost of goods sold

There are the following methods for calculating costs: process-by-process, normative, indicative, and incremental. The choice of calculation method depends on the state of readiness of the goods. In order to calculate the cost of goods sold, you need to have all the data about the product, how it is produced, where it is sold.

Algorithm for calculating the cost of goods sold

Specific types of manufactured products are subject to costing:

Basic formulas

Understanding the definition of cost is not difficult. Difficulties arise with formulas for calculating it. Product costing is regulated by law. However, in conditions of instability, certain risks associated with the production of products have to be factored into the total cost.

Costing formulas are used to determine the exact cost of producing a unit of product. The correctness of the calculation affects future profits, so it must be calculated accurately and correctly.

So, to determine economic efficiency use the total cost formula (hereinafter referred to as FP).

It looks like this:

PS = ∑ production costs + costs of selling products

The PS formula is the main one, all the others represent its individual parts. This indicator indicates what the planned cost of finished products will be.

If it is important to know not only the cost of manufactured products, but also the costs of their sale, use the formula for calculating the cost of products sold (hereinafter referred to as PSA):

PSA is equal to PS - cost of goods not sold

In addition to the basic formulas, special calculation formulas are used that take into account the cost of individual quantities. There are costs that affect how fixed costs, and variables. The total cost does not provide insight into the individual components of the entire system.

Fixed costs = salary permanent employees and contributions to state funds + maintenance of work premises + depreciation of fixed assets + tax on fixed assets + marketing expenses.

Variable costs = wages of temporary workers + variable cost Supplies+ electricity, gas + transportation + variable marketing costs. If desired, you can analyze changes in variable costs over a certain period of time and derive the coefficient of their increase or decrease.

The cost per unit of production is easily calculated using the arithmetic average method. All costs are allocated to the number of units produced.

Principle and example of finding the sum

The basic principle of cost calculation is consistency. We do everything step by step necessary calculations based on standards created for individual species production. Next, we apply the basic formulas and obtain the cost of products sold.

Example of calculation. For example, the Zvezdochka enterprise specializes in the production of pots and pans. It is necessary to calculate how much a unit of goods costs. During the reporting period, 30 frying pans and 13 pots were produced, 20 frying pans and 10 pots were sold. A cost estimate was made in advance.

As a result, 125 thousand rubles were spent on frying pans:

• materials 100 thousand rubles;
• electricity 15 thousand rubles;
• payment with deductions of 5 thousand rubles;
• depreciation 3 thousand rubles;
• other expenses – 2 thousand rubles.

Calculation of the full cost of production is necessary to analyze the activities of the enterprise, formulate price levels, control costs and operational regulation in case of deviation of actual costs from planned ones. The full cost price must take into account all the enterprise’s expenses for the production and sale of products.

How to find the total cost

The cost is formed at each stage of production and, depending on the volume of production, technology, organization, and product range, can be calculated using various methods.

Depending on the calculation object, the following may be used:

• boiler room,
• custom,
• transverse,
• process-by-process methods.

Based on the object of calculation, that is, the production of the enterprise, the full cost of production is determined. Moreover, the object will be different for each enterprise. For factory or industrial production- a finished product, for transport - a flight or a ton-kilometer, for energy enterprises the finished product will be kilowatt-hours of electricity.

Production technology and the size of the enterprise also influence how the total cost of production is determined. In small enterprises or in the mass production of a single product, calculations can be made using the boiler method, that is, all expenses of the enterprise are charged to the finished product without division.

If an enterprise produces products on individual orders or in small quantities, then the full production cost of products is calculated for each order and the cost of each order is determined. If the technology of an enterprise involves going through a number of stages, at each of which the result will be a finished product or a semi-finished product, then this is a step-by-step method and calculations are made for each stage, determining the cost at each step. In the case of a process-by-process calculation method, the full cost formula is applied as a whole to the production process.

The total cost is the sum of production costs and sales costs, including costs for product promotion, storage, packaging, and transportation.

How is the total cost formed?

Direct and indirect costs are included in the full cost of products sold. Direct costs relate directly to the production of products, these are the costs of purchasing raw materials or materials, components, semi-finished products, wages of personnel, depreciation of fixed assets. Indirect costs, common to an enterprise or workshop, are also necessary for the production of products, for example, these are the costs of maintaining management personnel, the general costs of maintaining the building, and they are transferred proportionally to the cost of production. The full cost includes material costs, labor costs and wages, depreciation of fixed assets, and other costs.

Material costs are raw materials, materials, energy resources necessary for the production of products, payments to other organizations for work and services necessary for production.

Labor costs include all payments to employees, including additional payments, allowances, as well as bonuses and other incentive payments. Other costs - taxes, fees, training costs, entertainment expenses and other expenses.

In addition to the production cost, the total cost of production includes commercial expenses, that is, the cost of containers and packaging, the cost of delivering products, as well as the maintenance of personnel who ensure the operation of the product. For example, warranty repairs or technical support consumers.

Cost price represents the current expenditure of the organization, expressed in monetary form, which is aimed at the production and sale of goods.

Cost price is an economic category reflecting production and economic activity enterprise and showing the quantity financial resources, spent on the production and sale of products. Cost affects the profit of the enterprise, and the lower it is, the greater the profitability.

Cost formula

The cost price includes the sum of all expenses for the production of goods. To calculate using the cost formula, you need to sum up all the costs that were incurred during the production (sales) process:

The cost formula is as follows:

Full = Spr + Rreal

Here Full is the full cost,

Spr – production cost of a product, calculated by the sum of production costs (labor, depreciation, material costs, etc.),

Rreal – costs of selling products (storage, packaging, advertising, etc.).

If you need to determine the cost of a unit of production, then the formula for the cost of goods produced is calculated by simple calculation. In this case, the price of a unit of goods produced is determined by dividing the sum of all costs for the corresponding period by the quantity of goods produced during this time.

Cost structure

The cost formula includes the following components:

• Raw materials needed in production process;
• Energy calculations ( various types fuel).
• Expenses for equipment and machinery that are necessary for the operation of the enterprise.
• Salaries of company employees, including payment of all payments and taxes.
• General production expenses (office rent, advertising, etc.).
• Expenses for depreciation of fixed assets.
• Administrative expenses, etc.

Features of cost calculation

There are several various methods calculating the cost of goods. They can be applied according to the nature of the work, services or products produced. There are two types of product costs:

• Complete, including all expenses of the enterprise.
• Trimmed cost, which refers to the unit cost of variable costs.

Actual and standard costs are calculated based on the expenses incurred by the company. At the same time, standard cost helps control costs for various resources and, in the event of deviations from the norm, timely provision of all necessary measures. The actual cost per unit of output can be determined after calculating all costs.

Types of cost

Costs are of the following types:

• Full (average) cost, implying the entire set of expenses, including commercial costs for the production of products and the purchase of equipment. The costs of creating a business are divided into periods during which they are repaid. Gradually, in equal parts, they are added to general production costs.
• Marginal cost, which is directly dependent on the quantity of products produced and shows the cost of each additional unit of goods. This indicator reflects the effectiveness of subsequent expansion of production.

Also, the cost can be:

• Shop cost, which includes the total costs of all departments of the enterprise that are aimed at production new products;
• Production cost, which makes up the workshop cost, including target and general expenses.
• The full cost price, which includes not only production costs, but also expenses incurred by the company in the process of selling goods.
• General business (indirect) cost, consisting of business management expenses and not directly related to the production process.

In the process of conducting accounting and analysis corresponding structural units of an economic entity, indicators are calculated that characterize the efficiency of the enterprise. The calculated indicators also characterize the level of management efficiency of the business entity, the ratio between the profit received and the costs incurred. One of these indicators is the cost of goods sold.

The concept of the cost of products sold

In a general sense, the cost of production is understood as the totality of all costs that are associated with the production and sale of products, and these costs are presented in monetary terms. In practice, cases arise when not all products that were produced during the reporting period are immediately sold in a given period of time. In this case, the cost of products sold is calculated as a set of costs relative to the products that were sold in this reporting period.

Formula for calculating the cost of products sold

In order to determine the cost of products sold during the reporting period, it is necessary to calculate:

• the full cost of manufactured products for the reporting period;
• carry-over balances of those products that have not yet been sold.

To determine the carry-over balances of products that have not yet been sold, find the difference between the balances of finished products at the beginning and end of the reporting period.

Cost of goods sold - formula:

C\C real. cont. = C\C floor. cont. + Per. ost. GP,

where C\C floor. cont. - indicator of the total cost of production, rub.;

Per. ost. GP - carryover balances of finished products, rub.

What is included in the total cost of products sold?

Business entities incur costs:

• for raw materials, materials necessary for the production of a specific type of product;
• for wages for those workers who are directly involved in the production of a certain type of product (with deductions for social needs);
• depreciation expenses;
• costs associated with the management and organization of both production units and the entire business entity;
• those costs associated with preparing for the production of new types of products;
• costs associated with the sale of finished products;
• other expenses of the business entity.

The total cost of products sold is the totality of all costs incurred by an economic entity for a specific period of time in the production of a given product and its sale, excluding the balance of products that were not sold during a certain reporting period. The calculated indicator is qualitative, characterizing the level of use of resources available to an economic entity in the production and sale of products.

Cost of sales: calculation example

Let us give an example of calculating the cost indicator, provided that the following initial data for the enterprise for the reporting period are given:

• the total cost of production is 678,589 thousand rubles;
• balances of finished products at the beginning of the reporting period - 56,435 thousand rubles, at the end of the period - 32,567 thousand rubles.

First of all, carry-over balances of finished products are calculated as the difference between the corresponding indicators at the beginning of the reporting period and at the end of the reporting period: 56,435 - 32,567 = 23,868 thousand rubles.

Then the cost of products that were sold during the reporting period is calculated using the above formula: 678,589 + 23,868 = 702,457 thousand rubles.

It can be concluded that business entities are interested in precise definition the cost of its products, the calculation of which has its own characteristics.

This indicator shows how efficient and profitable production is. Also, cost directly affects pricing. Now we will tell you in detail everything about this quality indicator and learn how to calculate it.

General concept of cost

In every economics textbook you can find a varied interpretation of the term “cost”. But no matter how the definition sounds, its essence does not change.

Product cost - Thisthe sum of all costs incurred by the enterprise for the manufacture of goods and its subsequent sale.

Costs are understood as expenses associated with the purchase of raw materials and materials necessary for production, remuneration of workers, transportation, storage and sale of finished products.

At first glance, it may seem that calculating the cost of production is quite simple, but this is not entirely true. At every enterprise, such an important process is entrusted only to qualified accountants.

It is necessary to calculate the cost of goods regularly. This is often done at certain intervals. Every quarter, 6 and 12 months.

Types and types of cost

Before you start calculating production costs, you need to study what types and types it is divided into.

Cost can be of 2 types:

• Full or medium– includes absolutely all expenses of the enterprise. All costs associated with the purchase of equipment, tools, materials, transportation of goods, etc. are taken into account. The indicator is averaged;
• Limit – depends on the quantity of products produced and reflects the cost of all additional manufactured units of goods. Thanks to the obtained value, it is possible to calculate the efficiency of further expansion of production.

The cost is also divided into several types:

• Workshop cost– consists of the costs of all enterprise structures whose activities are aimed at producing new products;
• Production cost– represents the sum of shop costs, target and general expenses;
• Full cost– includes production costs and costs associated with the sale of finished products;
• Indirect or general business cost– consists of costs that are not directly related to the production process. These are management expenses.

Cost can be actual or standard.

When calculating the actual cost, real data is taken, i.e. Based on actual costs, the price of the product is formed. It is very inconvenient to make such a calculation, because Often it is necessary to find out the cost of a product before it is sold. The profitability of the business depends on this.

When calculating standard cost, data is taken in accordance with production standards. Thanks to this, it is possible to strictly control the consumption of materials, which minimizes the occurrence of unjustified costs.

Product cost structure

All enterprises that produce products or provide services are different from each other. For example , The technological processes of an ice cream manufacturing plant and a soft toy sewing factory are completely different.

Therefore, each production individually calculates the cost of finished products. This becomes possible thanks to a flexible cost structure.

Cost is the amount of expenses. They can be divided into the following categories:

1. Expenses on raw materials and materials necessary for production;
2. Energy costs. Some industries take into account the costs associated with using a certain type of fuel;
3. Costs of machinery and equipment through which production is carried out;
4. Pay wages employees. This item also includes payments related to taxes and social services. payments;
5. Production expenses (premises rental, advertising campaigns etc.);
6. Expenses for social events;
7. Depreciation deductions;
8. Administrative costs;
9. Payment for services of third parties.

All costs and expenses represent percentage. Thanks to this, it is easier for the head of the enterprise to find the “weak” aspects of production.

The cost price is not constant. It is influenced by factors such as:

• Inflation;
• Loan rates (if the company has any);
• Geographical location of production;
• Number of competitors;
• Usage modern equipment etc.

In order for the enterprise not to go bankrupt, it is necessary to timely calculate the cost of the product.

Formation of production costs

When calculating production costs, the costs required to produce products are summed up. This indicator does not take into account the costs of selling products.

The formation of the cost price at the enterprise occurs before the products are sold, because the price of the product depends on the value of this indicator.

It can be calculated in several ways, but the most common is cost calculation. Thanks to it you can calculate how much is spent Money to produce 1 unit of product.

Classification of production costs

As we said earlier, production costs (product cost) are different at each enterprise, but they are grouped according to individual characteristics, which makes it easier to make calculations.

Costs, depending on the method of their inclusion in the cost, are:

• Direct - those that relate directly to the production of products. That is, costs associated with the purchase of material or raw materials, payment of workers who participate in the production process, etc.;
• Indirect costs are those costs that cannot be attributed directly to production. These include commercial, general and general production costs. For example, executive salaries.

In relation to the entire production volume, costs are:

• Constant - those that do not depend on production volumes. These include rent of premises, depreciation charges, etc.;
• Variables are costs that directly depend on the volume of products produced. For example, costs associated with the purchase of raw materials and materials.

Depending on the importance of a specific manager’s decision, costs are:

• Irrelevant - costs that do not depend on the decision of the manager.
• Relevant – dependent on management decisions.

For better understanding, consider the following example. The company has an empty premises at its disposal. Certain funds are allocated for the maintenance of this structure. Their value does not depend on whether some process is being performed there. The manager plans to expand production and use this premises. In this case, he will need to purchase new equipment and create workplaces.

There are two ways to calculate the cost of production in production. These are the costing method and the tiering method. The first method is most often used, since it allows you to more accurately and quickly determine the cost of production. We will look at it in detail.

Cost calculation - This is a calculation of the amount of costs and expenses that fall on a unit of production. In this case, costs are grouped by item, due to which calculations are made.

Depending on the production activity and its costs, calculation can be carried out using several methods:

• Direct costing. This is a production accounting system that arose and developed in a market economy. This is how the limited cost is calculated. That is, only direct costs are used in the calculation. Indirect are written off to the sales account;
• Custom method. Used to calculate the manufacturing cost of each unit of production. It is used in enterprises that produce unique equipment. For complex and labor-intensive orders, it is rational to calculate costs for each product. For example, on shipyard where several vessels are produced per year, it is rational to calculate the cost of each individually;
• Transverse method. This method is used by enterprises that carry out mass production, and the manufacturing process consists of several stages. The cost is calculated for each stage of production. For example, in a bakery, products are produced in several stages. In one workshop the dough is kneaded, in another bakery products are baked, in a third they are packaged, etc. In this case, the cost of each process is calculated separately;
• Process method. It is used by mining industry enterprises, or companies with simple technological process(for example, in the production of asphalt).

How to calculate cost

Depending on the type and type, there may be several variations of cost calculation formulas. We will look at simplified and expanded ones. Thanks to the first, every person who does not have an economic education will understand how this indicator is calculated. Using the second, you can make a real calculation of production costs.

A simplified version of the formula for calculating the total cost of a product looks like this:

Total cost = Production cost of the product + Selling costs

You can calculate the cost of sales using the expanded formula:

PST = PF + MO + MV + T + E + RS + A + ZO + NR + ZD + OSS + CR

• PF – expenses for the purchase of semi-finished products;
• MO – costs associated with the purchase of basic materials;
• MV - related materials;
• TR – transport costs;
• E – costs of paying for energy resources;
• РС – expenses associated with the sale of finished products;
• A – depreciation expenses;
• ZO – remuneration of the main workers;
• HP – non-production costs;
• ZD – allowances for workers;
• ZR – factory expenses;
• OSS – insurance contributions;
• CR – shop expenses.

To make it clear to everyone how to make calculations, we will give an example of cost calculation and step-by-step instructions

Before you start with the numbers, you need to do the following:

1. Sum up all the costs associated with the purchase of raw materials and materials necessary for production;
2. Calculate how much money was spent on energy resources;
3. Add up all the expenses associated with paying salaries. Don't forget to add 12% for additional work and 38% on social. deduction and health insurance;
4. Add deductions for depreciation costs with other expenses that are associated with the maintenance of devices and equipment;
5. Calculate the costs associated with selling products;
6. Analyze and take into account other production costs.

Based on the initial data and cost calculation items, we make calculations:

Components of cost - what does this indicator depend on?

As has already become known, the cost consists of the costs of the enterprise. It can be divided into different types and classes. This is the main factor that must be taken into account when calculating the cost of an enterprise.

Different costs imply the presence of completely different components. For example, when calculating workshop costs, we do not take into account the costs of selling products. Therefore, every accountant is faced with the task of calculating exactly the indicator that will most accurately show the efficiency of a given enterprise.

The cost per unit of production depends on how well the production is organized. If each department of the enterprise “lives its own life”, employees are not interested in quickly and efficiently performing their duties, etc., then with great confidence, we can say that such an enterprise is suffering losses and has no future.

By reducing the cost of production, the company receives greater profits. That is why every manager is faced with the task of establishing the production process.

Cost reduction methods

Before you start reducing costs, you need to understand that the quality of the product should not suffer in any way. Otherwise, the savings will be unjustified.

There are many methods to reduce costs. We tried to collect some of the most popular and effective methods:

1. Increase labor productivity;
2. Automate workplaces, purchase and install new modern equipment;
3. Engage in consolidation of the enterprise, think about cooperation;
4. Expand the range, specificity and volume of products;
5. Introduce a savings regime throughout the enterprise;
6. Use energy resources wisely and use energy-saving equipment;
7. Carry out a careful selection of partners, suppliers, etc.;
8. Minimize the appearance of defective products;
9. Reduce the cost of maintaining the management apparatus;
10. Conduct market research regularly.

Conclusion

Cost is one of the most important quality indicators of any enterprise. It is not a constant value. The cost tends to change. Therefore, it is very important to periodically calculate it. Thanks to this, it will be possible to adjust the market value of the goods, which will avoid unjustified expenses.