The price of any products on the market is a consequence of the interaction of supply and demand. The effect of pricing laws on the market, when free competition is in effect, leads to the fact that the price of products cannot be formed at the request of the manufacturer or buyer, the cost is automatically equalized. But the costs that form the cost of production - this is a completely different matter. These indicators can increase or decrease and this depends on a number of objective and subjective factors. Thus, the manufacturer has many leverage to reduce costs. Skillful managers use these levers, but for this a basis is needed - costing production costs.
To date, the costing of production costs can be formed according to one of four calculation systems, which will be discussed below. The formation of cost, thus, depends on four characteristics.
1. The calculation of the cost of production for the period of compilation. Such calculations include calculations presented as preliminary (planned, forecasted, design, estimated and normative) and reporting. The meaning of such a calculation is forecasting calculations that form the budget, and ultimately affect the capital, or rather its value. The calculation based on the data obtained in fact has a “post-mortem” character, that is, the longer the period for which the calculation is made, the less the cognitive value of such a calculation will be.
2. Calculation of the cost of finished goods, carried out in relation to the object of calculations. This feature allows you to form the cost in three calculation options:
- for each unit of finished products or for each service provided. This approach is the most common: the total costs incurred by the manufacturer are divided by the number of units of finished products or the number of services rendered;
- for each responsibility center and / or cost center . This approach is possible due to the fact that costs do not arise independently, but are born at the will of those people who manage finances. Thus, the calculation is not subject to the cost of the finished product, but to those costs that are carried out by authorized persons;
- for each production function. This approach to costing is the newest and is called "ABC". Here it is supposed to calculate the costs that entailed the implementation of each management function: manufacturing, storage, moving, selling, etc.
3. The calculation of the cost of production depending on the behavior of costs associated with changes in production volume. Here usually distinguish such systems of calculation, which include in the cost of either all costs or only those that change.
4. The calculation of the cost of finished goods by the calculation method. This feature determines the emergence of two approaches - the calculation of historical (actual) or preliminary (planned, normative) cost. The first approach involves the formation of cost on the basis of documented data talking about the costs actually incurred, and the second - according to the norms that were drawn up in advance. These norms turn out to be valid only in rare cases - life always makes its own adjustments, but on the other hand, indicate to the employee what to strive for. Successful work is considered 80% compliance, and overfulfilment of such standards is quite problematic.
Do not forget that in a market economy, cost cannot be considered as the basis for calculating the sale price. In modern realities, demand dictates the price, and the actual cost of finished products, calculated for these purposes, loses its meaning for several reasons.