Unfortunately, not everyone thinks about pricing. Meanwhile, in the modern world, being economically illiterate comes out to be more expensive. Knowledge in the formation of the value of the final product or service is necessary because we all use services and purchase goods. Below is a list of what you need to know about how the formation of the final cost of the product occurs, from which the cost, profit and how to distinguish VAT 18 from the amount.
Costing
There are 2 methods for calculating cost:
- The calculation of the total cost.
- The calculation is carried out at the cost spent on production.
The difference between them is fundamental. When the formation of the full cost is in progress, it includes absolutely all expenses that arise from the moment the product is created until the moment it arrives at the warehouse. Production costs are formed by costs associated only with the production process.
Calculation takes place using a method called costing. The next step after calculating the cost is the calculation of profit and VAT (may be 0%, 18% and 10%). Next, we consider how profit is considered, and how to allocate VAT 18 from the amount.
Profit generation
Profit is the ultimate goal, the financial result of the entire production process. This is the difference between the cash received for the sale and all costs of production. To ensure a certain revenue, the company needs to lay it at the selling price.
For example, an enterprise plans to profit 5,000 rubles by producing 200 parts with a cost of 30 rubles. What margin should be added to the enterprise?
First comes the cost calculation: 30 p. × 200 pcs. = 6000 p. Then the profit is put in the estimated revenue: 6000 p. + 5000 p. = 11000 p. We consider the price at which the product should "exit" from production: 11000 p. / 200 pcs. = 55 p.
This is the easiest way that is created to understand the principle.
VAT in the price: where and why?
Deciphering VAT (“value added tax”) may not explain to everyone the meaning. It is clear that this is a tax, but for what and why - not always. The price of products increased by VAT is called the selling price. The question of how to allocate VAT 18 from the amount is solved simply. By the way, VAT can be laid in the amount of not only 18%, but also 10%. It depends on the type of activity of the enterprise.
How to allocate VAT? The formula, if VAT = 18%, is as follows:
The purchase price of the product / 1.18 * 0.18.
Accordingly, if value added tax = 10%, the formula will change to:
The cost of the purchase of products / 1.10 * 0.10.
Thus, a certain percentage is deducted from the state budget from each sale.
A modern person should understand the pricing process, know how to allocate VAT 18 from the amount, and how profit is laid.