How to calculate production cost

When calculating the cost of production resort to calculation. It is a system of economic calculations of cost, the most important process of production management, which is the final stage of the account of expenses for production and sales.

There are several methods of calculation. The simple direct method is used in companies and non-production areas where the products are manufactured of the same species do not occur in large volume stocks of semi-finished and finished goods inventory. The essence of this method lies in the fact that the accounting object coincides with the object, which is used to calculate the cost. Production cost in this case is determined as follows:PS = PMZ + PTZ + ODA, where PMZ – direct material costs, PTZ – direct labor costs, ODA – overhead costs of the organization.The cost of a single unit of production is calculated as the ratio of the magnitude of production costs to volume of output.

Simple two-step method of calculation used in enterprises, where the cost centers. It allows you to define the stocks and finished products at production cost and include the cost in its entirety on the number of issued products. In this case, the cost is calculated as follows:- is determined by the production cost per unit of output, equal to the ratio of all costs on the number of issued products;
- is determined by the ratio of total management costs to the volume of produced goods;
- determined the cost per unit of output as the sum of the two previous relations.

Job order costing a method of costing used in the manufacture of a specific order. The cost of ordering in this method includes several components (more simple products). Custom method is used in the construction, sewing, etc.

When poperedelnogo method, the cost is calculated for each production phase (redistribution). Expenses are accounted for not by product and by stage of production.