How to calculate the total cost of goods sold. Formula for calculating the cost of production. What is required for independent cost calculation

From this article you will learn:

What does the calculation of the actual cost of finished products include?

Calculating the cost of finished products is necessary in various situations, including for pricing. This is an extremely important indicator. It reflects the total financial costs of manufacturing the product. Based on it, the optimal final price of the product is calculated. An analysis of production costs is necessary to ensure that the company does not incur losses due to inflated prices. Let's look at cost calculation methods and cost items that need to be taken into account to obtain a realistic result.

At what stage should you calculate the cost of finished products?

To create a successful enterprise, it is not enough to choose a direction and come up with an idea. The main thing is to draw up a reasonable business plan with a calculation of all expenses and expected revenues. Once clarity is achieved on these indicators, you can move on to its implementation.

The main part of the costs is the cost of finished products, to calculate which you need to have special knowledge and skills. Cost calculation is also necessary for existing businesses, especially when optimizing costs (after all, you need to know their composition and structure, understand what they affect). Different companies will have different costs. All costs are combined into items, but not every type of cost affects the cost of the finished product, and this has to be determined in each case individually.

Depending on the range of expenses, there are three types of costs: full, incomplete workshop and production. But it is not at all necessary that all of them will be involved in the calculations. Each businessman independently decides what costs and other indicators to include in his analysis. For example, the cost of finished products is not included in the calculation of taxes, since they do not depend on it.

However, the cost of goods must necessarily be reflected in the accounting reports, so all costs that affect it should be included in the accounting policy of the enterprise.

You can calculate both the total cost of production and the cost for one specific category of goods. In the second case, the resulting value will need to be divided by the number of units of finished products to determine the cost per product.

How to calculate the cost of finished products

To produce one copy of a product, the company will have to spend a certain amount of money on raw materials, equipment, consumables, fuel and other types of energy, taxes, pay employees and incur some costs associated with the sale of finished products. The sum of these costs will be the unit cost of the product.

In accounting practice, two methods are accepted for calculating the cost of finished products for the purposes of production planning and calculating the finished commodity mass:

Calculation of the cost of the entire mass of products based on economic elements of costs.
Calculation of the cost of one unit of goods through costing items.

All money spent by the company on the production of products (until the batch of finished products is placed in the warehouse) constitutes the net factory cost. However, it does not include the sale of goods, which should also be taken into account. Therefore, the full cost of finished products also includes the costs of loading and delivery to the customer - wages of loaders, crane rental, transportation costs.

Cost calculation shows how much money was spent directly on the production of the goods in the workshop, and how much was spent on its transportation after leaving the factory. The obtained cost values will be useful in the future, at other stages of cost accounting and analysis.

There are several types of product costs:

workshop;
production;
full;
individual;
industry average.

Having calculated each of them, we obtain material for analyzing all stages of the production cycle, which will help, for example, to find opportunities to reduce the cost of production without losing the quality of the product.

To calculate the cost per unit of finished products, all costs are combined into items. Indicators for each product item are recorded in a table and summarized.

Calculation of the cost of finished products taking into account costs

The industry specifics of production greatly influence the cost structure of the final product or service. Each industry has its own predominant production costs. These are the ones you need to pay special attention to when looking for ways to reduce costs and increase profitability.

Each type of expense present in the calculations has its own percentage share, indicating whether this type of expense is a priority or additional. All costs, grouped by item, form the cost structure, and their positions reflect their share of the total amount.

The share occupied by one or another type of cost in the total amount of expenses is influenced by:

place of production;
application of innovations;
the level of inflation in the country;
concentration of production;
change in the interest rate on loans;
other factors.

Obviously, the cost of finished products will constantly change, even if you produce the same product for many years in a row. This indicator must be carefully monitored, otherwise the company may go bankrupt. You can analyze the cost and quickly reduce production costs by estimating the costs listed in the costing items.

Typically, companies use a calculation method for calculating the cost of finished products, semi-finished products or services. This is a calculation per commodity unit manufactured at an industrial enterprise (for example, the cost of supplying one kW/h of electricity, one ton of rolled metal, one ton/km of freight transportation). The standard unit of measurement in physical terms is taken as the calculation unit.

To produce products, raw materials and additional materials, equipment, and the work of maintenance personnel, managers and other employees are required. Therefore, various expense items can be used in calculations. For example, you can calculate the workshop cost of production on the basis of direct costs alone; other indicators will not be involved in the analysis.

To begin with, all existing expenses are grouped according to similar characteristics, which makes it possible to accurately determine the amount of production costs for one economic component. They can be grouped according to parameters such as:

The purpose of classifying cost items based on general characteristics is to identify specific objects or places where costs arise.

Grouping based on economic homogeneity is carried out in order to calculate the total costs per unit of output, which are made up of:

This list of economic elements is the same for all industrial sectors and is used everywhere, so we have the opportunity to compare the cost structure for the production of goods by different enterprises.

Calculation of the actual cost of finished products

In order to profitably sell your products, you need to accurately determine their cost. Finished products are goods that have passed all stages of technological processing and control checks (the rest are classified as work in progress).

There are two methods to calculate the actual cost of a product. In order to use the first one, you must:

take into account all direct costs and other costs;
evaluate the product.

Instructions for the first method:

Finished products are part of inventories intended for sale and are reflected in account 43 with a characteristic name. It can be assessed on the basis of cost - planned production or actual.

The costs included in the cost of finished products can be absolutely all costs that make up the production cost of the product, or only direct costs (this is relevant when indirect costs are written off from account 26 to account 90).

In practice, few people set the price for a product based on its actual production cost. This calculation method is practiced by small companies that produce a limited range of products. In other cases, it turns out to be too labor-intensive, because the actual cost of the consignment becomes known only at the end of the reporting month, and the products are sold during it. Therefore, a conditional valuation of products is usually used based on their selling price (not including VAT) or the planned cost.
You can calculate based on the selling price, but only if it does not change during the reporting month. In other situations, accounting is carried out according to the planned cost of finished products, which the planning department calculates based on the actual cost for the previous month, adjusted in accordance with the forecast of price dynamics (the accounting price is obtained).
Manufactured goods are written off from the credit of account 23 to the debit of account 26, and the cost of products already shipped to the buyer is written off from credit 26 to debit 901. After the actual production cost is calculated at the end of the month, the difference between it and the accounting price is calculated, and also deviations relating to the sale of goods.

When calculating cash costs, various factors should be taken into account, relying primarily on cost (the sum of the enterprise’s costs for producing products), since the amount of profit and the measures that should be taken to increase profitability directly depend on it.

Cost price represents the current expenditure of the organization, expressed in monetary form, which is aimed at the production and sale of goods.

Cost price is an economic category that reflects the production and economic activities of an enterprise and shows the amount of financial resources spent on the production and sale of products. Cost affects the profit of the enterprise, and the lower it is, the greater the profitability.

Cost formula

The cost price includes the sum of all expenses for the production of goods. To calculate using the cost formula, you need to sum up all the costs that were incurred during the production (sales) process:

The cost formula is as follows:

Full = Spr + Rreal

Here Full is the full cost,

Spr – production cost of a product, calculated by the sum of production costs (labor, depreciation, material costs, etc.),

Rreal – costs of selling products (storage, packaging, advertising, etc.).

If you need to determine the cost of a unit of production, then the formula for the cost of goods produced is calculated by simple calculation. In this case, the price of a unit of goods produced is determined by dividing the sum of all costs for the corresponding period by the quantity of goods produced during this time.

Cost structure

The cost formula includes the following components:

Raw materials needed in the production process;
Calculation of energy resources (various types of fuel).
Expenses for equipment and machinery that are necessary for the operation of the enterprise.
Salaries of company employees, including payment of all payments and taxes.
General production expenses (office rent, advertising, etc.).
Expenses for depreciation of fixed assets.
Administrative expenses, etc.

Features of cost calculation

There are several different methods for calculating the cost of a product. They can be applied according to the nature of the work, services or products produced. There are two types of product costs:

Complete, including all expenses of the enterprise.
Trimmed cost, which refers to the unit cost of variable costs.

Actual and standard costs are calculated based on the expenses incurred by the company. At the same time, standard cost helps control costs for various resources and, in the event of deviations from the norm, timely provision of all necessary measures. The actual cost per unit of output can be determined after calculating all costs.

Types of cost

Costs are of the following types:

Full (average) cost, implying the entire set of expenses, including commercial costs for the production of products and the purchase of equipment. The costs of creating a business are divided into periods during which they are repaid. Gradually, in equal parts, they are added to general production costs.
Marginal cost, which is directly dependent on the quantity of products produced and shows the cost of each additional unit of goods. This indicator reflects the effectiveness of subsequent expansion of production.

Also, the cost can be:

Shop cost, which includes the totality of costs of all departments of the enterprise that are aimed at producing new products;
Production cost, which makes up the workshop cost, including target and general expenses.
The full cost price, which includes not only production costs, but also expenses incurred by the company in the process of selling goods.
General business (indirect) cost, consisting of business management expenses and not directly related to the production process.

If the definition of cost itself seems intuitive, then the formulas for its calculation are already strict mathematical expressions. To understand them, it is necessary to study the analysis methodology used in each specific case.

The first stage cost calculation always involves determining the costs of producing a product or service. This process is designated by the economic term: “product costing.” Costing can be planned, standard or actual. The first and second express an idea of how the economic process should be structured. The actual calculation is made based on real data.

Calculation of product costs in the Republic of Belarus is a process regulated by many legislative and industry standards. This happens due to the practice of setting prices based on the value of the declared cost. In many cases, instead of market price changes, enterprises have to resort to regulating the cost calculation system through the redistribution of costs from one type of product to another in order to have the legal opportunity to raise/lower the price.

After determining the amount of costs and their distribution among expense items, it is time to calculate their specific value. Cost calculation formulas are used precisely for this purpose.

Costing is a universal procedure for any economic process. Such calculations are most difficult when analyzing industrial production. The largest number of different types of cost calculation formulas are used here. These formulas can be adapted for other economic processes.

Total cost formula

To generally assess the economic efficiency of an enterprise, the full cost formula is often used. In its simplest form it looks like this:

Total cost = sum of production costs + sales costs.

The full cost shows the largest amount of planned or actual expenses. The results of all other cost formulas are parts of this total value.

What is of great importance is not just the products produced, but the products sold. Therefore, the cost formula takes the following form:

Cost of goods sold = total cost - cost of unsold goods.

An example of calculating the full cost in expanded form, i.e. with individual elements selected, it will look something like this:

Total cost = Costs of raw materials and supplies + Energy costs + Depreciation charges + Salaries of key personnel + Salaries of management and support personnel + Deductions from wages + Sales and sales service costs + Transportation costs + Other costs.

Special formulas for calculating costs

Knowing the total cost of producing and selling a product or service does not provide sufficient information to understand and evaluate the individual elements of this system. Thus, the total cost does not show the cost per unit of production. The costs of an individual process remain uncertain. For this purpose, many specific cost formulas have been developed that calculate individual quantities.

Given that some costs depend on production volume, and some do not, it is customary to distinguish between variable and fixed costs.

The size of fixed costs is calculated by summing up the values of some unavoidable costs of the enterprise. Calculation example:

Fixed costs = Fixed part of the salary + Expenses for rent and maintenance of premises + Depreciation deductions + Property taxes + Advertising expenses.

The methodology for calculating variable costs in general can be represented by the following formula:

Variable costs = Variable part of wages + Cost of raw materials and supplies + Cost of energy resources + Costs of transporting products + Variable part of business expenses.

The cost per unit of production in general can be found by simply dividing the sum of costs by the volume of output in physical terms:

Unit cost = Total costs/Number of units.

For the realities of a commercial organization, a more complex version of the same formula is more suitable:

Unit cost = Manufacturing costs/No. of units produced + Selling costs/No. of units sold.

There are many other formulas for calculating cost. Their exact number is difficult to determine, because... each of them is formed according to the requirements of the accepted calculation methodology.

Cost: what is it?

Calculating the cost of manufactured goods is a very difficult task that requires certain knowledge and skills. In companies, this indicator is calculated by the company, which calculates future income taking into account all available production costs.

What is included in the concept of cost and what is the formula for calculating this indicator, we will try to figure it out below.

Product cost is the total costs of an enterprise for the production of a particular product expressed in monetary form.

Cost is an economic category that reflects the amount of funds spent by an enterprise on production of products. The size of the net company directly depends on the cost value; the lower this indicator, the more efficiently the company operates.

Types of cost

Cost is divided into full and marginal.

Total (average) is the totality of all the company’s expenses for manufacturing, this also includes the costs of manufacturing products, as well as the cost of commercial equipment.

How production costs are formed

The most common method of calculating cost is costing. Using this simple method, you can easily calculate the cost per unit of output. It is most effective to calculate this value using the comparable controlled price method, which is fixed based on the cost of services provided by competitors.

Costing is the calculation of total expenses in monetary terms for the production of a unit or batch of units of products. Costing allows you to calculate both the actual and planned cost of a particular object and is the basis for determining their price for sale in retail outlets.

Spending classification

Depending on the impact on the manufacturing process, all expenses are usually divided into:

direct - these are expenses for raw materials and materials used in the manufacturing process of products, personnel involved in the manufacturing process;
indirect are overhead costs that do not directly affect production activities, but relate to the object of calculation by the distribution method in the order accepted at the enterprise.

Indirect costs are divided into:

general production,
general economic,
commercial.

In relation to the amount of products produced, expenses are divided into:

constants - independent of the quantity of products, which are indicated per unit of product and tend to change along with fluctuations in business activity;
variables - change with the quantity of products produced.

Depending on the business qualities of management, the costs are:

relevant, that is, depending on management decisions
irrelevant - expenses that are not affected by the activity and actions of management

There are several different ways to calculate the cost of goods produced. Each economist, depending on the type of work and technological features, chooses a method that is suitable specifically for him.

Cost calculation formula

Currently, the following calculation methods are used:

normative,
process-by-process
transverse,
ostentatious.

The first method of counting is used in companies that engage in mass serial production of products. The purpose of this accounting method is to timely identify and prevent inefficient use of various types of resources. At its core, this method contains economically justified average expenditures required to operate resources per unit of manufactured product. The standards established by calculation indicate the efficiency of management and organization of the company’s work and affect its profitability and further development.

The standard method of calculation is carried out in the following sequence:

the estimated standard price for each type of goods is calculated;
amplitude norms are determined over a certain period for fluctuations in the calculated cost value;
all costs are calculated during one period in relation to the rates of their change;
the reasons for fluctuations in indicators are determined;
the result of the total cost is determined, which consists of the standard value, fluctuations in standards and their deviations.

The main condition for using this method is the constant determination of deviations from the planned norms at the end of each period.

The magnitude of deviations reflects compliance with production technologies, compliance with standards for the use of material resources, as well as the effective use of working time. Such deviations are divided into positive (cost savings) and negative (additional expenses).

The formula for the standard method of accounting for cost (actual) looks like this:
Fs = Ns ± He ± In,
where Нс – standard cost;
In – change in standard;
He is a deviation from the norm.

The step-by-step method is used in large companies, where products are manufactured in large quantities in short periods of time, when there are no leftovers or defects. The calculation is made based on the summation of all cost items used to produce the entire batch of goods.

Unit cost is calculated by dividing all expenses for a batch of goods by the quantity of finished goods. To make it easier to control expenses, the entire manufacturing process is divided into stages or processes.

The redistribution method is used to account for production costs in industries in which reprocessing costs are calculated. These are all types of processing of materials or raw materials, regardless of its specifics.

The indicative method is used when calculating cost by summing up direct expenses broken down individually for the manufacture of products of different types. The cost of a unit of a certain product is calculated by calculating the quotient of the total expenses and the number of units of goods in a certain contract.

The total cost of manufactured products is calculated taking into account the following expenses:

Material costs (MR):

raw materials and supplies,
energy costs,
general production expenses.

Salary (OT):

salaries of workers in production,
service staff salaries,
employees,
payment for administration work,
social payments (SP).
depreciation (A),
other (D).

Thus, the basic formula for accounting for total cost is as follows:
PS = MR + OT + SP + A + D.

The cost of goods sold reflects its price based on the calculation of expenses for its production. Therefore, you first need to calculate the costs, which vary depending on the manufacturing process. That is, they calculate the amount of variable expenses per unit of goods produced. Then the amount of additional costs is added to the resulting value.

The formula for calculating the cost of goods sold looks like this:
SBrp = SB pr + UPt,
where СБрп – cost of goods sold, СБрп – cost of goods sold, based on variable expenses, УПр – conditional fixed expenses.

One of the most important elements of planning is the calculation of the planned cost, which is carried out to determine the amount of expenses for the future. This calculation is carried out mainly at the beginning of the calendar year, and the results obtained are reported quarterly.

To calculate the planned cost, the following data is needed:

production plan,
direct expenses incurred by the company to prepare for work,
norms for the consumption of material resources,
energy consumption standards,
price.

The cost price combines a number of costs for manufacturing products.

The formula for calculating the planned cost has the same form as for calculating the actual cost, but instead of the actual cost indicator, it is necessary to substitute the planned cost values.

Calculating the cost of manufactured or sold products is necessary for the most accurate planning of the enterprise’s work and obtaining the expected results from such activities.

At different enterprises and stages of production, different types of cost are calculated, but the essence of this indicator is absolutely identical, because it reflects the amount of expenses incurred.

The cost indicator needs to be known not only for effective planning, but also for analyzing the effectiveness of the costs incurred and the work as a whole. By analyzing the cost of production, companies can take steps to reduce it in order to make more profit.

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