The total cost of sales is the balance sheet formula. How to calculate the cost of production

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

Analysis of the cost of manufactured products or services is an effective tool for managing the competitiveness of any enterprise. It shows the profitability of production, helps to optimize fixed and variable costs. The cost calculation helps to determine the correct retail and wholesale price, which is a kind of protection against unjustified reduction in the cost of products.

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

Definition and types

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

Different types of 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.

Under the total cost of finished products understand the ratio of all costs to the total volume of goods produced. These are the costs of wages, taxes, raw materials, depreciation, advertising and others. This approach is used in large enterprises.

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

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

General structure

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

Methods for calculating the cost of goods sold

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

Indicator	Calculation formula
Manufacturing costs	Materials + salary + depreciation + other expenses
Gross production value	Cost of manufacturing products - non-manufacturing costs - deferred payments
Production cost of finished products	Cost of gross output –\+ balances in warehouses
Total cost of production of finished goods	The sum of the production cost and the costs of transportation, fees, packaging
Cost of goods sold	Total cost of production plus advertising and marketing expenses minus goods not sold

Algorithm for calculating the cost of goods sold

Calculations are subject to specific types of manufactured products:

Normative	This method of calculation is based on data on the necessary costs for the commodity production of a unit of output. These can be flow charts, production instructions. Based on such data, an economist calculates the cost of producing a unit of a good or service. The main principles of this method: availability of calculation of the standard cost of manufactured products; control over changes in the norms of production of goods; monitoring how the actual cost of manufactured products changes over a certain period of time, for example, a month; clarification of the reasons for discrepancy with the norms; calculation of the new standard cost of production of a unit of goods, taking into account all deviations. With this method of accounting, the actual cost is the sum of the calculation of costs according to the norms and possible deviations from these standards. The company does not have the right to change the standards during the reporting period. They are analyzed, after which changes are made to the technological process.
per-process	What is the process method of calculation - can be understood from the accounting sequence diagram. Economists of the enterprise consider all direct and indirect costs of production for a certain period of time. Further, the amount received is divided by the total number of manufactured products and the cost is obtained. This method is widely used at enterprises of mass production of one or more types of products, while the total manufacturing costs can be calculated in million rubles. The technological process should take a little time. At the same time, work in progress at the enterprise should be absent. This method is called process-based because for its use the production process is divided into stages. There are several options for using the method in work: Allocation of costs between finished products and unfinished manufacturing process. The distribution of costs between certain types of goods. This method is used where there is no work in progress. At these enterprises, accounting is carried out by stages (processes). Stimulation of expenses by stages. This option is used in enterprises where building materials are produced. The essence of this method is the summation of costs for all production processes and are distributed to all manufactured goods.
Transverse	A feature of enterprises that use ready-made agricultural or industrial raw materials is the sequence of production stages. Such a process for the production of a finished product consists of several technological operations. The output is a semi-finished product. These stages are called repartitions, and the method used to calculate the cost of such goods is the repartitioning. The calculation of the cost is made by redistribution, and not by type of goods or processes, as with other methods. Several types of goods can be produced in one stage. Cost calculation is carried out for the entire group of goods, in some cases it is possible to divide products into types or groups.
custom	The basis for calculating the cost of manufactured products is the availability of an order. The main costs are calculated according to the list of goods that need to be manufactured and shipped to the customer. All further costs are accounted for as they are incurred. As a result, the buyer's bill in the production process may increase. The calculation algorithm is as follows: Managers take orders, register and assign numbers to them. These numbers are order codes. A copy of the notice of acceptance of the order for work is sent to the accounting department, where the calculation is carried out. The accountant draws up a card for accounting for the costs of manufacturing the ordered products. It reflects the preliminary amount of costs. After the production of products, the order is closed, wages are paid to employees, and the shipment of materials is stopped. The buyer receives invoices for payment. The custom method is convenient to use in small enterprises where there is no prepayment. This is a calculation of the cost of finished products after the order is made. The total cost is divided by the volume of finished products.

Basic Formulas

Understanding the definition of cost is not difficult. Difficulties arise with formulas for its calculation. The calculation of the cost of products is regulated by law. Nevertheless, in conditions of instability, it is necessary to include certain risks associated with the release of products into the total amount of costs.

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

So, to determine the economic efficiency, the full cost formula (hereinafter referred to as PS) is used.

It looks like this:

PS = ∑ production costs + sales costs

The PS formula is the main one, all the rest represent its separate parts. This indicator indicates what the planned cost of the finished product will be.

If it is important to know not only the cost of manufactured products, but also the costs of its implementation, use the formula for calculating the cost of goods sold (hereinafter PSA):

PSA equals 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 are affected by both fixed and variable costs. The total amount of costs does not give an understanding of the individual components of the entire system.

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

Variable Costs = Wages for Temporary Workers + Variable Cost of Consumables + 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 growth or decrease.

The cost of a unit of production is easily calculated by the arithmetic mean method. All costs are paid on the number of units produced.

Principle and example of finding the sum

The basic principle of costing is consistency. Step by step we make all the necessary calculations based on the standards created for certain types of production. Next, we apply the basic formulas and get the cost of goods sold.

Calculation example. For example, the Zvyozdochka 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 pans and 13 pans were produced, 20 pans and 10 pots were sold. The costs have been calculated in advance.

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

materials 100 thousand rubles;
electricity 15 thousand rubles;
a salary with deductions of 5 thousand rubles;
depreciation 3 thousand rubles;
other expenses - 2 thousand rubles.

For pans 61 thousand rubles:

materials 50 thousand rubles;
electricity 5 thousand rubles;
a salary with deductions of 2.5 thousand rubles;
depreciation 1.5 thousand rubles;
other expenses - 2 thousand rubles.

Analysis of the results

Analysis of the results of the calculation of the actual cost is carried out in order to identify the inefficiency in the use of resources. In the process of analysis, specialists can identify missed opportunities, find keys to reduce costs. An analysis of the results is also necessary to identify errors in previous calculations, because the cost of goods sold is reflected in and written off by posting.

This procedure is carried out in stages. The formula calculates the total cost of production. Next, its structure is studied.

The analysis is carried out for several reporting periods. It can be month, year, etc. The results obtained are compared, the magnitude of the deviations is determined. In order to comply, the analysis is carried out on the entire range of products.

The statement of financial results is defined in paragraphs 18, 19 of PBU 10/99 and paragraphs 16, 23 of PBU 2/2008. In particular: - Expenses are recognized taking into account their connection with receipts (for example, the cost of performing work is recognized simultaneously with the recognition of proceeds from their sale as part of income); - if the expenses cause the receipt of income during several reporting periods and the relationship between income and expenses cannot be clearly determined or is determined indirectly, then they are recognized in the Statement of Financial Performance by their reasonable distribution between the reporting periods; - if a small business organization recognizes proceeds from the sale of products and goods not as the transfer of ownership, use and disposal of the delivered products, goods sold, but after receipt of payment, then expenses are recognized after the debt is paid off.

Cost of goods sold

It should be noted that the cost of purchasing goods includes not only the cost of these goods, but also all costs associated with the purchase, such as transportation costs, insurance, customs duties, etc. Collectively, these costs are known as direct costs.

When determining the cost of goods sold, only net purchases are taken into account, that is, the cost of returned goods and the amount of direct costs associated with them are not taken into account. Formula The methodology for calculating the cost of goods sold for a manufacturing enterprise differs from that for a trading company.

For a trading company, the formula is as follows: In this case, the net purchase of goods is calculated by subtracting the cost of returned goods and discounts (for example, for early payment or for quality) from the gross purchase.

Cost of goods sold: formula, methodology and calculation example

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Management Accounting
Cost classification

Definition Cost of Goods Sold (COGS) is the sum of the cost of producing products that were sold during an accounting period.

Cost of sales. line 2120

Nevertheless, in conditions of instability, it is necessary to include certain risks associated with the release of products into the total amount of costs. Costing formulas are used to determine the exact cost of manufacturing a unit of output.

The correctness of the calculation affects future profits, so it must be calculated accurately and correctly. So, to determine the economic efficiency, the full cost formula (hereinafter referred to as PS) is used.

It looks like this: PS = ∑ production costs + sales costs The PS formula is the main one, all the rest represent its separate parts. This indicator indicates what the planned cost of the finished product will be.

What is the profit of the enterprise and its types

The vast majority of companies engaged in the production of various products always take into account tax deductions in the process of forming a single price. The only exception may be the presence of any tax privileges or tax holidays for a certain time interval.

back to contents Conclusion The cost of waste is one of the most accurate and effective tools for analyzing the entire production cycle of a company, regardless of whether products are created or a certain set of services is provided. One of the distinguishing features of the cost formula is its temporal universality.
The calculation can be made in any convenient time frame, which gives ample opportunities to determine the profitability of the development strategy followed, taking into account the seasonal factor.

Cost of sales - concept and calculation method

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

materials 100 thousand rubles;
electricity 15 thousand rubles;
a salary with deductions of 5 thousand rubles;
depreciation 3 thousand rubles;
other expenses - 2 thousand rubles.

For pans 61 thousand rubles:

materials 50 thousand rubles;
electricity 5 thousand rubles;
a salary with deductions of 2.5 thousand rubles;
depreciation 1.5 thousand rubles;
other expenses - 2 thousand rubles.

The cost of a frying pan is 4 thousand rubles. (125/30), pans - 4.6 thousand rubles. (61/13). As a result of the sale, the company sold all the pans and pots. The total cost of goods sold is equal to the sum of the costs of producing all goods, i.e. 186 thousand rubles Analysis of the results Analysis of the results of the calculation of the actual cost is carried out in order to identify inefficiency in the use of resources.

Calculation of the cost of goods sold

The above formula is generalized and understandable to those who have already encountered product costing. If you don’t know what the terms are made up of, check out the detailed formula, which looks like this: Full cost price = CMP + PF + FER + ZOP + ZAP + A + SV + PPR + SR + TR + RPS, where: CMP - material - raw material costs; PF - semi-finished products spent in production; FER - fuel and energy costs; ZOP - the salary of the personnel of the main and auxiliary productions; ZAUP - the salary of the administrative and managerial personnel of the company; A - the accrued value of depreciation of the fixed assets used; CB - the amount of accrued insurance premiums; PPR - the value of all other production costs; SR - the amount of marketing expenses; TR - transportation costs; RPS - the amount of other marketing expenses.

The total cost of production is determined ...

These numbers are order codes.

A copy of the notice of acceptance of the order for work is sent to the accounting department, where the calculation is carried out.
The accountant draws up a card for accounting for the costs of manufacturing the ordered products. It reflects the preliminary amount of costs.
After the production of products, the order is closed, wages are paid to employees, and the shipment of materials is stopped.
The buyer receives invoices for payment.

The custom method is convenient to use in small enterprises where there is no prepayment.

This is a calculation of the cost of finished products after the order is made. The total cost is divided by the volume of finished products.

Basic formulas Understanding the definition of cost is not difficult. Difficulties arise with formulas for its calculation. The calculation of the cost of products is regulated by law.

Waste sorting and logistics of the final product - five percent of the production cost.
Waste of a general economic nature - twenty percent of the wages of production workers.
Wage line expenses - forty percent of the payment of the main production workers;
General production expenses - ten percent.
Purchase of electricity and fuel for technological purposes - 1.5 thousand rubles.
Purchase of materials, as well as raw materials used in the production process - three thousand rubles;
The salary of the main workers is two thousand rubles.

The task is to determine the level of the manufacturer's cost per unit of production, as well as the amount of income from its sale, in the case of an acceptable level of profitability within 15 percent.

Cost of sales balance calculation formula

Tax accounting involves the correct formation of the tax base for the calculation of corporate income tax. According to the tax code (Chapter 25), in order to find the tax base, the amount of an enterprise's income can be reduced by the amount of expenses, with the exception of the list of expenses presented in Art. 270.

Attention

Management and statistical types of accounting Management cost accounting is used for the purposes of the head of the enterprise. Depending on the tasks of management, cost samples, cost accounting criteria, and cost formation parameters change.

Workshop.

In the process of accounting and analysis, the relevant structural divisions of an economic entity calculate indicators that characterize the efficiency of the enterprise. The calculated indicators also characterize the level of efficiency of managing an economic 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 that are sold

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

The formula for calculating the cost of products that are 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-overs of those products that have not yet been sold.

To determine the carry-over balances of products that have not yet been sold, they 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. prod. \u003d C \ C floor. prod. + Per. rest. GP,

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

Per. rest. GP - carry-over balances of finished products, rub.

What is included in the total cost of products sold

Business entities incur costs:

on raw materials, materials necessary for the production of a particular type of product;
to pay wages to 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 the preparation for the production of new types of products;
costs associated with the sale of finished products;
other expenses of an economic entity.

The total cost of goods sold is a set of all costs incurred by an economic entity for a specific period of time in the production of this product and its sale, excluding the balance of products that are not sold for a certain reporting period. The calculated indicator is qualitative, characterizing the level of use of the resources available to the 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 sold during the reporting period is calculated according to the above formula: 678589 + 23,868 = 702,457 thousand rubles.

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

Hello! Many people ask the question: what is the cost of goods or products? For the production of any goods, a number of various resources are spent: natural, energy, land, financial, labor, etc. The sum of all costs incurred will be the cost of production. We will consider this issue in more detail in this article!

What is the cost of goods

First, let's look at the definition of the cost of goods.

Product cost - this is a monetary assessment of the current costs of the enterprise for the manufacture and sale of goods, as well as the actual cost of labor and financial resources.

In fact, the cost price is an indicator of the production and economic activity of the company, reflecting the financial costs of the organization for the production of products. The price of the goods directly depends on the cost price. The lower the cost of finished products, the higher the profitability of the enterprise.

How to determine the cost of goods

Depending on the method of keeping records of expenses, several methods for calculating the cost of goods have been formed: normative, process-by-process, per-order, per-order. In turn, the cost is also divided into several types: gross, commodity and realized.

What is included in the cost of goods

Surely every novice entrepreneur at least once wondered: why do we need a cost price? And it is needed in order to objectively assess the profitability of the enterprise, determine the wholesale and retail price of the goods, and give an objective assessment of the efficiency of spending and using resources.

The cost of goods takes into account many indicators, depending on what exactly needs to be controlled.

The cost of a unit of goods directly depends on the quantity of goods produced or purchased. To understand this, it is enough to consider a simple example:

Let's say you went to the store to buy a pack of tea worth 100 rubles. Then the cost calculation will take the following form:

Suppose you spent 1 hour on a trip (with an estimated cost of a working hour of 100 rubles);
Estimated depreciation of the car was 15 rubles.

Therefore, the cost of goods includes: The cost of a consignment of goods (in this case, packs of tea) + Costs) / Quantity = 215 rubles.

The picture will change significantly if you purchase not one pack of tea, but, let's say, five:

Cost price \u003d ((5 * 100) + 100 + 15) / 5 \u003d 123 rubles.

The example clearly shows that it directly depends on the purchased quantity of products - the more you purchase (or produce), the cheaper each unit costs you. No company is interested in increasing the cost of goods.

Types of production costs

In fact, the cost price is the sum of all costs attributed to the production and release of goods. The cost price can be calculated both for the entire manufactured product, and for a separate commodity unit.

Strictly speaking, there are several types of cost, and, depending on which area of activity the entrepreneur wants to control, the following indicators can be calculated:

Workshop, containing the costs of all departments of the organization aimed at manufacturing products;
Production, including the shop cost, as well as general and target costs;
Full, consisting of production costs and expenses for the sale of products;
General business, which includes expenses that are not directly related to the production process, but are aimed at doing business.

Production cost contains all the resources spent at the production stage, namely:

The cost of purchasing raw materials and basic materials for the manufacture of products;
Costs for fuel and energy supply of production;
Remuneration of employees of the enterprise;
Costs for internal movement of raw materials and materials;
Maintenance, current repair and maintenance of fixed assets of the enterprise;
Depreciation of equipment and fixed assets.

Realized cost implies the costs of the enterprise at the stage of the sale of goods, namely:

The cost of packing / packaging / preservation of products;
The cost of transporting goods to the distributor's warehouse or to the direct buyer;
Product advertising costs.

The total cost of a product is the sum of the cost of production and the cost of sales. Also, this indicator takes into account the cost of purchasing equipment.

It is customary to divide the costs of doing business into certain periods during which these costs should pay for themselves. Such costs are added in equal shares to the total costs of production and sales of products and are included in the concept of total cost.

There is also a planned cost, this is the average estimated cost of products manufactured in the planning period (for example, per year). Such prime cost is calculated in the presence of consumption rates for the use of materials, energy resources, equipment, etc.

To determine the cost of one unit of finished products, a concept such as marginal cost is used. This indicator directly depends on the amount of products produced and reflects the efficiency of further expansion of production.

In addition to the cost of production, there is also

The cost structure is classified by cost items and cost elements.

According to the calculation items:

Raw materials, materials, components, semi-finished products, aggregates, etc., necessary for the production of goods;
Fuel and energy resources spent on production;
Depreciation of fixed assets of the enterprise or fixed assets (equipment, tooling, machinery, etc.), the cost of their maintenance and maintenance;
Remuneration of labor to key personnel (salary or tariff);
Additional remuneration to personnel (bonuses, additional payments, allowances paid in accordance with the law);
Contributions to various non-budgetary funds (for example, a pension fund, a social insurance fund, etc.);
Production costs in general (sales costs, transportation costs, payroll for employees of the enterprise, etc.);
Travel expenses (tickets, hotel fees, daily allowances);
Payment for the work of third parties;
The cost of maintaining the administrative apparatus.

By cost elements:

Costs for materials (raw materials, parts, components, fuel and energy resources, overhead costs, etc.);
Employee wage costs (wages of workers, auxiliary workers, for example, maintenance of equipment, wages of engineers, employees, i.e. managers, managers, accountants, etc., junior service personnel);
Contributions to social institutions;
Depreciation of fixed assets of the enterprise;
Other expenses related to advertising, sales, marketing, etc.).

Under general production costs, it is customary to understand the organization's expenses for paying salaries to management staff, payment for security, travel expenses, as well as remuneration for the management department. This item also includes depreciation and maintenance of buildings and structures, labor protection, training and education of specialists.

The figure shows the approximate cost items of the enterprise for the production of products.

Theory of Constraints

According to this theory, there are certain significant costs that do not depend on the quantity of output. Such costs include loan payments, rent payments and payroll for permanent employees. In the presence of such fixed costs, the use of production costs as an indicator becomes a constraint on the economic policy of the enterprise, which can lead to illogical decisions. For example, a product that sells below cost is withdrawn from production, which in turn raises the cost of other manufactured goods.

Methods for calculating the cost of goods

There is no single method for calculating the cost price as such. This indicator can be calculated in completely different ways, depending on the type of product, the method and technology of its production, and many other factors.

As a rule, in order to calculate the cost of production, you need to consider the following factors:

The sum of all expenses for the production and sale of products;
Producer costs to operate as an entrepreneur;
Costs associated with the preparation of product documentation.

It is necessary to keep records of the cost of goods directly for a certain production cycle of products. In order to determine the price of the goods, you need to make a cost estimate. It is compiled based on the number of products produced (in pieces, meters, tons, etc.). The calculation should reflect absolutely all costs associated with production. (Which articles are included in the calculation is described in the paragraph “Cost structure”).

Method #1

Full addition of expenses to the cost price. The cost price is full and truncated. At full cost, all expenses of the enterprise are taken into account. When truncated - the cost of a unit of production at variable costs. A constant share of overhead costs is attributed to the reduction of profit at the end of the specified period and is not distributed to the goods produced.

With this method of determining the cost, this indicator is influenced by both variable and fixed costs. When adding the necessary profitability to the cost price, the price of the product is determined.

Method #2

In this method, actual and standard costs are calculated based on the costs incurred by the enterprise. The standard cost allows you to control the cost of raw materials and materials, and, in case of deviation from the norms, take appropriate measures. This method is very labor intensive.

Method #3

The forward method. It is convenient for use in enterprises with serial or mass production, while the products go through several stages of processing.

Method #4

The processor method is mainly used in mining enterprises.

So, to calculate the total cost of production, we use the following algorithm:

We calculate variable costs for the production of one unit of output, taking into account costs;
From general factory costs, we single out exactly those that relate to this type of product.
We summarize all costs that are not directly related to the production process.

The resulting value will be the cost of the finished product.

Since there are several types of cost, then one calculation formula is not enough here.

Production costs:

C \u003d MZ + A + Tr + other expenses

Where C is the cost of expenses;

MZ - material costs of the organization;

A - depreciation deductions;

Tr - waste on wages to employees of the company.

To get the total cost of the finished product, you need to add together all the costs of its production:

Where PS - full cost;

PRS - the production cost of the goods, which is calculated on the basis of production costs (costs for materials and raw materials, depreciation of production assets, social and other deductions);

PP - the cost of selling goods (packaging, storage, transportation, advertising).

The cost of goods sold is calculated by the formula:

Where PS is the total cost,

KR - costs associated with the commercial activities of the enterprise,

OP - the remains of unsold products.

Gross cost is defined as:

C \u003d Production costs - non-manufacturing costs - future costs

If an enterprise produces only one type of product, then its cost and price can be determined using the costing method. In this case, the price of a unit of goods is obtained by dividing the sum of all costs spent on production by the quantity of goods produced. It is worth remembering that all calculations are made for a certain set period.

Calculation and analysis of the cost of goods manufactured by a large enterprise is a very complex and time-consuming process that requires certain knowledge, so an accountant solves such problems. It is customary to divide costs into direct and indirect.

The most common way to determine the price of a product is to calculate the cost of production, since this method allows you to calculate the costs of producing a single unit of output.

Cost classification

Depending on what task you want to implement, the costs are classified as follows:

There are two types of costs that are usually added to the cost of the finished product. These are direct costs (these costs are added to the cost of finished products in an exact or single way) and indirect costs (costs added to the subject of calculation according to the methodology established by the enterprise). Indirect include general business, general production and commercial costs;
Depending on the quantity or volume of products produced, the costs are:

Constant (not dependent on the volume of goods produced), indicated per unit of output;
Variables (depending on the volume of production or sales);

There are also costs that are significant for a particular case. Such as relevant (depending on the decisions made) and irrelevant (not related to the decisions made).

All of the above indicators of costs and expenses to a large extent affect the formation of the price of goods. But there is another important indicator - tax deductions.

The concept of "enterprise costs" is closely related to the concept of "cost". The cost price plays a leading role in the general system of indicators characterizing the efficiency of the economic activity of the enterprise and its structural divisions.

The cost price is a general indicator of the use of all types of enterprise resources. The cost price also provides for the replacement of these resources, which is necessary to continue the production process. The level and dynamics of the cost allow assessing the feasibility and rationality of the use of resources that are at the disposal of the enterprise. The cost of production reflects the technical level and organization of production, economic efficiency as a whole. According to NP (C) BU No. 16, for goods and services involved in the economic turnover at the enterprise, three types of cost can be distinguished:

1. cost of goods;

2. cost of goods sold;

3. production cost.

The cost of goods is determined in accordance with NP(S)BU 9 "Stocks".

The production cost of products (works, services) sold during the reporting period includes only direct costs. Thus, the production cost of production includes only those overhead costs that can be distributed among all types of products (works, services).

The cost of goods sold includes:

production cost;

Excess costs;

unallocated overhead costs.

The cost of production represents the current costs of enterprises for the production and sale of products (works, services) expressed in monetary terms.

The cost of production is a qualitative indicator, since it characterizes the level of use of all resources at the disposal of the enterprise.

The cost of production of a particular enterprise is determined by the conditions in which it operates. This cost is called individual.

If, on the basis of the individual cost of enterprises, we determine the weighted average of the costs for the industry, such a cost will be called the industry average. The average industry cost is closer to socially necessary labor costs.

The main document that guides the formation of the cost of production at the enterprise is the Regulation on the composition of costs for the production and sale of products (works, services) and on the procedure for the formation of financial results taken into account when taxing profits.

In order to analyze, record and plan the whole variety of costs included in the cost of production, two complementary classifications are used: element-by-element and costing.

When grouping costs by elements, the costs of the enterprise as a whole are determined, without taking into account its internal structure and without highlighting the types of products. The document, which presents the cost of the elements, is an estimate of the costs of production. The cost estimate is compiled to calculate the total need of the enterprise for material and monetary resources. The cost amount for each item is determined based on vendor invoices, payroll and depreciation records.

Cost elements are the costs of all services and workshops that are homogeneous in nature for production and economic needs.

The costs that form the cost of products (works, services) are grouped according to their economic content according to the following elements:

Material costs (minus the cost of returnable waste);

Labor costs;

Deductions for social needs;

Depreciation of fixed assets;

Other costs.

Material costs reflect the cost of raw materials and materials purchased from the outside; the cost of purchased materials; the cost of purchased components and semi-finished products; the cost of works and services of an industrial nature paid to third parties; the cost of natural raw materials; the cost of all types of fuel purchased from the outside, spent for technological purposes, production of all types of energy, heating of buildings, transport work; the cost of purchased energy of all types, spent on technological, energy, motor and other needs.

The cost of sold waste is excluded from the costs of material resources included in the cost of production.

Production waste refers to the remains of raw materials, materials, semi-finished products, heat carriers and other types of material resources formed during the production process that have lost all or part of the consumer qualities of the original resource. They are sold at a reduced or full price of a material resource, depending on their use.

Labor costs reflect the costs of wages for the main production personnel of the enterprise, including bonuses to workers and employees for production results, incentive and compensatory payments.

Until recently, contributions for social needs reflected mandatory deductions from the cost of paying employees, included in the cost of products (works, services). These deductions were made in accordance with the norms established by law to the bodies of state social insurance, the Pension Fund, the state fund for employment and medical insurance.

From 1 Jan. 2001 all contributions to social non-budgetary funds were replaced by a single social tax.

Depreciation of fixed assets reflects the amount of depreciation deductions for the full restoration of fixed assets.

Other costs are taxes, fees, deductions to extra-budgetary funds, payments on loans within rates, travel expenses, training and retraining costs, rent, depreciation on intangible assets, a repair fund, payments for compulsory property insurance, etc. d.

Grouping costs by economic elements does not allow accounting for individual departments and types of products; this requires accounting for costing items.

Calculation is the calculation of the unit cost of a product or service by item of expenditure. Unlike the elements of the cost estimate, costing items combine costs, taking into account their specific purpose and place of formation.

There is a standard nomenclature of costs for costing items, but ministries and departments can make changes to it depending on industry specifics.

The typical nomenclature includes the following articles:

1. Raw materials and materials.

2. Returnable waste (deductible).

3. Purchased products, semi-finished products and production services of third-party enterprises and organizations.

4. Fuel and energy for technological purposes.

5. Wages of production workers.

6. Deductions for social needs.

7. Costs for the preparation and development of production.

8. General production costs

9. General business expenses.

10. Loss from marriage.

11. Other operating expenses.

12. Selling expenses.

The total of the first 9 articles forms the shop cost, the total of 11 articles - the production cost, the total of all 12 articles - the total cost.

Shop cost represents the costs of the production unit of the enterprise for the production of products.

The production cost, in addition to the costs of workshops, includes the general costs of the enterprise.

The total cost includes the costs of both production and sales of products.

General production costs are the costs of maintaining and managing production. They include the cost of maintenance and operation of equipment and workshop costs.

General business expenses are the costs associated with the management of the enterprise as a whole: administrative and managerial, general business, taxes, mandatory payments, etc.

Selling expenses include costs for tare and packaging, transportation costs, advertising costs, and other distribution costs.

Cost items included in the calculation are divided into simple and complex. Simple ones consist of one economic element (wages). Complex items include several cost elements and can be decomposed into simple components (general production, general business expenses ...).

Cost accounting is necessary to determine the financial results of the enterprise.

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