The calculation of the cost of production is the definition of all costs for the production and sale of finished products and their grouping by expense.
Cost accounting and calculating the cost of production is a very important part of the economic policy of the enterprise, which allows to determine with maximum accuracy the reasons that affect the final and intermediate cost per unit of production and, if necessary, adjust them. Costing is a clear detailed calculation that allows the manager or owner to form their opinion on the cost of production.
There are three types of costing:
- regulatory - compiled in accordance with factory and industry standards. It is necessary in order to determine the technically and economically justified amount of expenses that will be needed to produce products (works, services);
- planned - this calculation is planned for a certain period for budgeting. It is necessary in order to determine the need for working capital and profit planning;
- reporting - the one that really took place at the end of the reporting period.
In an economic analysis, planned and budgetary costing of production costs are compared with each other in order to determine the deviation and find out its causes. Also, such a comparison allows you to control the expenditure of resources and the efficiency of production units.
The calculation of the cost of production can be carried out according to the following main items:
- materials and all types of raw materials;
- returnable waste and packaging (these costs are deducted from the calculation amount, since they are subsequently returned to the balance sheet of the enterprise) ;
- fuel and energy (for technological purposes and production)
- remuneration, including bonuses for production workers;
- social deductions from the wage fund;
- operating costs of production equipment and premises.
All these costs form the technological cost. It is necessary for estimating costs directly on the production process.
- overhead costs (for the maintenance of certain workshops and the costs of their management, are calculated in proportion to the amount of the salary of all production workers and personnel directly involved in production);
- general business expenses (these are the costs of managing and servicing the enterprise as a whole);
- loss from marriage;
- other household expenses.
All of the above costs create production costs. It is needed to evaluate the costs of the production process, including its management and maintenance.
- non-manufacturing costs (shipping, storage, marketing).
All these costs create the full cost. It is this cost that is the basis for determining the price of goods by the cost method.
The cost structure is the proportion of all the components of the costing items.
The cost structure is influenced by the nature of the products, environmental conditions and the level of technical and general organization of the enterprise.
If necessary, each costing article can be divided into sub-items related to the particularity of the activity in order to obtain more detailed information.
The calculation of the cost of a unit of production is an internal document of the enterprise, which details all the costs of 1 unit of manufactured products, it is often a trade secret.
Costing of production costs is most often assigned to the economic department, accounting, as well as the production and standardization department of the enterprise. Costing is a very important point in budgeting an enterprise.