Under the cost of production understand the monetary expression of all costs incurred by the company in its production. The calculation of this value is necessary for the formation of prices for finished goods and managerial decisions aimed at increasing the profitability of the business entity. Cost can be planned and actual.
The first type of costs includes the maximum possible costs of the enterprise for the manufacture of goods. They are calculated based on plans drawn up for upcoming periods. Actual cost is the monetary value of the funds actually spent on manufactured goods.
Inclusion in the accounting of inventories involved in technological processes is carried out on the basis of the actual financial resources spent on their acquisition . The actual cost of working capital is the monetary expression of the costs incurred by the organization for their acquisition. These include:
- Amounts paid for material assets in accordance with the concluded agreements;
- the amount spent by the organization for services of information and consultation type, the provision of which is associated with the acquisition of material and production stocks;
- duties paid for customs clearance;
- the amount of non-refundable taxes, the payment of which is included in the value of material assets;
- the monetary equivalent of the services of intermediary organizations;
-the costs incurred in the procurement and transportation of stocks (material and production) to the place of their use;
- the costs incurred by the organization for the processing of current assets, for their adoption of the condition necessary when used in technological processes (packaging, sorting);
- expenses of a general economic nature that are directly related to the acquisition of stocks;
- other costs associated with the purchase of inventories.
The actual cost of the organization’s output is the inventory held for sale. Accounting and determination of costs incurred during the technological cycle, the business entity is based on the procedure that is established to identify the amounts of costs for certain types of goods. Thus, the actual cost of products ready for sale is a valuation of raw materials and materials, natural and labor resources, fixed assets and energy that the organization spent during the production process.
The enterprise can produce accounting for released goods in two ways. The criterion for the reflection of finished products in the first of them is the actual production cost. According to the second method, the goods are accepted for accounting at planned or regulatory costs.
The actual cost of production (finished) in the first method of reflection in the accounting registers goes to the debit of account 43 “Finished goods”, in correspondence with the credit of account 20 “Main production”. Organizations this method of accounting for manufactured products is used most often.
Actual costs incurred by the business entity for the manufacture of goods can only be calculated after the end of the reporting month, when both direct and indirect costs are determined . In this regard, the cost of production sold in the same period cannot be calculated. In order to avoid this inconvenience, there are certain ways to write off finished products:
- at the cost of one unit;
- at average cost;
- using the FIFO method;
- using the LIFO method.