How to find the total cost

The cost of goods is the sum of all costs, which required the production of another of his party. Depending on how effectively the enterprise optimizes these costs, it will receive more or less profit. It is therefore important in conducting financial analysis to find the full cost of production.

Instruction

To find the full cost of goods or services, you must consider all of the costs of the enterprise for its production and realisation: PS = PRS + PP.

The production cost of goods (PRS) is determined on the basis of the main costs associated directly with production. This material costs, wages, social contributions, depreciation and other overhead costs. Implementation costs (RR), otherwise referred to as commercial and include the cost of packaging, storage, transportation and advertising purposes.

Calculate the total material costs sum of cost of raw materials, semi-finished products, components, raw materials, equipment and consumable fuel and energy. In the category of wages will add up the salaries of the main production staff, support staff, serving equipment, etc.

Please note payments for intellectual research, discoveries, patents, managerial staff, accountants, Junior staff (cleaners, etc.). Add travel expenses, social benefits, contributions to pension funds, unemployment funds, social insurance, etc.

Overhead costs are indirect costs that occur during the production cycle, but not refer to it directly. In other words, they are not dependent on the volume of production, but they are no less important. The payment of interest on long-term and short-term obligations, taxes, rent, lighting and heating of premises, protection, etc.

Divide the total cost by the volume of products, and you will find the average cost per unit of product. It is important to conduct a deep analysis of the cost structure, exploring the impact of its changes on the dynamics of prices, which is the main source of profit. There are several statistical methods: classification by balance sheet items, calculation of average and relative indicators (index), graphical method etc.

The cost shows how much money the company manages the full cycle of production and sales. This value is the basis for the calculation of the price. The more efficient the company optimizes production, the greater the margin we can do, therefore the more income.

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