How to determine the value added

Added value of products – value that reflects the contribution of the enterprise in the sold goods. In other words, all costs incurred by the organization in the production of the goods, minus the cost of goods and services purchased from vendors. The formula of calculation of value added suggests several options for its calculation depending on your existing information.

You will need

• calculator;
• - information on the income and expenditures of the company.

Instruction

1. If you are aware of the gross profit of the company (BB), the amount of material costs on production (M) and the depreciation amount (A), calculate the added cost (DS) formula DS = VV – (M + A).
2. Material costs for production (M) includes raw materials, materials, fuel, electricity and overhead costs for repair and maintenance of equipment.
3. The gross revenue of the company (BB) is equal to the sum of production costs and the company's profit before tax (SB + P). So if you have these data you can calculate the added value by the formula DS = (SB + P) – (M + A).
4. Imaginethe cost of goods manufactured (SB) is equal to the sum of all material costs (M) of wages subject to charges in social funds (RFP) depreciation (A) and other overhead costs, such as rent or advertising (PR). In itselfthe cost of production can also be included interest payments on loans and borrowings (%).
5. Expand the formula specified in the second paragraph: DS = ( M + SN + AND + PR + % + P) – (M + A), i.e., DS = (SN + P + PR + %). Thus you can determine the added value by the simple addition of gross wages, the company's profit before taxation and interest paid on the loan. If the organization bears the costs of renting space, don't forget to include them in the added cost.
6. The company's profit before tax (P) is equal to the difference between the gross revenue of the company itself andthe costof production, P = (BB – SB).