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What does the cost show? See what “Cost” is in other dictionaries

The price of any product depends on its initial cost, calculated using a special formula when taking into account certain costs.

The total cost formula is the sum of all costs, including selling costs.

In accordance with the full volume of production costs, the cost can be:

Shop cost, consisting of all types of costs at each stage of the production cycle;
Production cost, which is determined by summing up the workshop and general costs of the enterprise;
Full cost, taking into account not only production costs, but also the costs of selling and transporting goods.

There are many types of cost in accordance with the characteristics of production and methods of selling products.

Total cost formula

The full cost formula is most often used when assessing the performance of a company. It includes all the costs of producing a product, as well as subsequent costs of its transportation and sale. IN general view The total cost formula is as follows:

Full=PZ+RZ

Here Full is the total cost of production,

PP – production costs,

РЗ – costs of selling products.

All other types of cost are part of the total cost, since it includes a more complete composition of production costs and business expenses of the company.

The production cost of a product is the amount spent on its production. This amount includes:

Natural resources,
materials and raw materials,
depreciation of fixed assets,
energy and fuel,
remuneration of personnel (including deductions), etc.

What does the full cost show?

Cost is a cost indicator that reflects what costs an enterprise incurs for the production of a certain volume of products or the production of a unit of product. The management of any enterprise, using the total cost formula, can identify the most expensive type of product, as well as reduce production costs.

When analyzing the full cost, one can draw conclusions about the unprofitability or profitability of manufactured or sold products, as well as the possibility of their production in the future.

The advantages of full cost include:

full compliance with current regulations taxation and financial accounting,
correct assessment of inventory value finished products.

The disadvantages of the full cost calculation method are:

inclusion of costs that are not associated with the production of products, as a result of which the profitability indicator is distorted;
It is impossible to analyze, control and plan costs due to inattention to the nature of their behavior depending on production volumes.

Examples of problem solving

EXAMPLE 1

EXAMPLE 2

Exercise

Calculate the cost of production if the following indicators are given:

The cost of basic materials is 125,000,000 rubles,

Price additional materials– 26,000,000 rubles,

Energy costs – 5,658 rubles,

Workers' wages – 69,000,000 rubles,

Workshop expenses – 15,000,000 rubles,

Non-production expenses – 2,000,000 rubles,

Costs for selling products – 6,000,000 rubles.

Solution

We calculate the total cost by summing up all the expenses of the enterprise. The total cost formula looks like this:

Full=PZ+RZ

PP – production costs,

РЗ – costs of sale (sales).

With full = 125,000,000 + 26,000,000 + 56,000 + 69,000,000 + 15,000,000 + 2,000,000 + 6,000,000 = 243,056,000 rubles.

Answer

243,056,000 rubles.

Report on financial results defined in clauses 18, 19 PBU 10/99 and clauses 16, 23 PBU 2/2008. In particular: - expenses are recognized taking into account their connection with revenues (for example, the cost of performing work is recognized simultaneously with the recognition of revenue from their sale as income); - if expenses determine the receipt of income over several reporting periods and the relationship between income and expenses cannot be clearly defined or is determined indirectly, then they are recognized in the Statement of Financial Results by reasonably distributing them between reporting periods; - if an organization - a small business entity, revenue from the sale of products and goods is recognized not as the rights of ownership, use and disposal for the delivered products or goods sold are transferred, but after receipt of payment, then expenses are recognized after the debt is repaid.

Cost of goods sold

It should be noted that the cost of purchasing goods includes not only the cost of these goods, but also all expenses associated with the purchase, such as transportation costs, insurance, customs duties etc. Collectively, these costs are known as direct costs.

When determining the cost products sold Only net purchases are taken into account, that is, the cost of returned goods and the amount of direct costs associated with them are not taken into account. Formula Methodology for calculating the cost of goods sold for manufacturing enterprise differs from the method for trading company.

For a trading company, the formula is as follows: In this case, the net purchase of goods is calculated by subtracting the cost of returned goods and discounts (for example, for early payment or for quality) from the gross purchase.

Cost of products sold: formula, methodology and calculation example

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Management Accounting
Cost classification

Definition Cost of Goods Sold (COGS) is the sum of the costs of producing products that were sold during the reporting period.

Cost of sales. line 2120

However, in conditions of instability, certain risks associated with the production of products have to be factored into the total cost. Costing formulas are used to determine the exact cost of producing a unit of product.

The correctness of the calculation affects future profits, so it must be calculated accurately and correctly. So, to determine economic efficiency use the total cost formula (hereinafter referred to as FP).

It looks like this: PS = ∑ production costs + costs of selling products The PS formula is the main one, all the others represent its individual parts. This indicator indicates what the planned cost of finished products will be.

What is enterprise profit and its types

The overwhelming number of companies engaged in the production of various products always take into account tax deductions in the process of forming a single price. The only exception may be the presence of any tax privileges or tax holidays for a certain time interval.

to contents Conclusion The cost of waste is one of the most accurate and effective tools analysis of the entire production cycle of the company, regardless of whether products are created or a certain set of services is provided. One of distinctive features The cost formula is its temporal universality.
The calculation can be made in any convenient time frame, which provides ample opportunities to determine the profitability of the following development strategy, taking into account the seasonal factor.

Cost of sales - concept and calculation method

As a result, 125 thousand rubles were spent on frying pans:

materials 100 thousand rubles;
electricity 15 thousand rubles;
payment with deductions of 5 thousand rubles;
depreciation 3 thousand rubles;
other expenses – 2 thousand rubles.

For pots 61 thousand rubles:

materials 50 thousand rubles;
electricity 5 thousand rubles;
payment with deductions of 2.5 thousand rubles;
depreciation 1.5 thousand rubles;
other expenses – 2 thousand rubles.

The cost of a frying pan is 4 thousand rubles. (125/30), pots - 4.6 thousand rubles. (61/13). As a result of the sale, the company sold all the frying pans and pots. The final cost of goods sold is equal to the sum of the costs of production of all goods, i.e. 186 thousand rubles. Analysis of the results Analysis of the results of calculating the actual cost is carried out in order to identify inefficiency in the use of resources.

Calculation of cost of goods sold

The given formula is generalized and understandable to those who have already encountered product calculation. If you don’t know what the components are made of, check out the detailed formula, which looks like this: Total cost = construction and installation work + PF + TER + ZOP + ZAP + A + SV + PPR + SR + TR + PSR, where: construction and installation work – material - raw materials costs; PF – semi-finished products spent in production; FER – fuel and energy costs; PDO – salaries of personnel of main and auxiliary production; ZAUP – salary of the company’s administrative and management personnel; A is the accrued amount of depreciation of the fixed assets used; SV – the amount of accrued insurance premiums; PPR – the value of all other production costs; SR – the amount of sales expenses; TR – transport costs; RSP – the amount of other sales expenses.

The total cost of production is determined...

These numbers are order codes.

A copy of the notification of acceptance of the order for work is sent to the accounting department, where the calculation is carried out.
The accountant draws up a card for recording the costs of producing the ordered products. It reflects the preliminary amount of costs.
After the products are manufactured, the order is closed, employees are paid, and the shipment of materials stops.
The buyer receives invoices for payment.

The custom method is convenient to use on small businesses, where there is no prepayment.

This represents the calculation of the cost of finished goods after an order has been made. The total cost is divided by the volume of finished products.

Basic formulas Understanding the definition of cost is not difficult. Difficulties arise with formulas for calculating it. Product costing is regulated by law.

Waste sorting and logistics final product– five percent of production cost.
General economic waste - twenty percent of the wages of production workers.
Waste by line wages– forty percent to pay the main production workers;
General production waste – ten percent.
Purchase of electricity and fuel for technological goals– 1.5 thousand rubles.
Purchase of materials, as well as raw materials used in the production process - three thousand rubles;
The salary of the main workers is two thousand rubles.

The task lies in the need to determine the level of cost of the manufacturer per unit of product, as well as the amount of income from its sale, in the case of an acceptable level of profitability within 15 percent.

Cost of sales formula for calculating balance sheet

Tax accounting involves the correct formation of the tax base for calculating the corporate income tax. According to the Tax Code (Chapter 25), in order to find the tax base, the amount of income of an enterprise can be reduced by the amount of expenses, with the exception of the list of expenses presented in Art. 270.

Attention

Managerial and statistical types of accounting Managerial cost accounting is used for the purposes of the head of the enterprise. Depending on the tasks of management, cost samples, cost accounting criteria, and cost formation parameters change.

management accounting

further production

Workshop.

To put it simply, you can define the cost of production as the combination of expressed in monetary equivalent costs aimed at the production and sale of manufactured goods or services. However, there are many concepts of cost, since different stages production and management it increases. The topic of this article is production cost, and we will look at this concept in more detail.

Production cost of production: definition

The work of companies is always focused on the production of goods. At the same time, the company incurs costs by investing raw materials, labor and energetic resources, i.e. expenses called production costs.

To find out what expenses make up the production cost of a product, we will learn about the main types of cost. As costs increase and fit into the price of the goods produced, a distinction is made between workshop, production and full cost.

Shop costs are the costs incurred by the company's production structures involved in the process of creating products. The production cost is formed by the workshop cost, supplemented by general and target expenses. The full cost is understood as the production cost plus the costs of transportation and delivery of goods to the market.

So, production cost is the totality of all costs of producing a product and does not include costs associated with sales.

Classification of costs for creating a product

The production cost of products includes the costs:

materials;
shop staff salaries;
contributions to funds;
wear and tear of fixed assets and intangible materials;
others.

The cost is calculated according to cost items aimed at the production and subsequent sale of products by calculating its cost. A standard grouping of costs is used, which makes it possible to most accurately calculate the cost of a costing object, for example, the type of product produced. All costs are distributed according to costing items:

raw materials and materials, minus useful returnable balances;
purchased and produced semi-finished products;
fuel, heat and electricity;
depreciation of fixed assets/intangible assets;
remuneration of production workers;
contributions to funds;
organization of the production process and its development;
general production and general business expenses;
losses from marriage;
other production costs;
selling expenses.

Production cost: formula

The summation of expenses allocated to all of the listed items, except for costs associated with sales, forms the production cost of manufactured products. A simplified formula for calculating production costs may look like this: C = M + A + Z + P, where M is materials, A is depreciation, Z is wages, P is other expenses.

Other costs in this formula are understood as target, general production and general industry costs.

Depending on the company’s field of activity, the production cost of a product may also include other industry-specific costs, which often predominate over others. Economists rely on them when they work to reduce costs and increase the profitability of a product. These studies are another purpose of calculating the production cost of a product.

Since in the cost structure, expenses are grouped item by item, each indicator included in the calculation has a corresponding percentage part, and the cost items determine the ratio of the group of expenses to the total amount, specifying the priority of some and the possibility of reducing others. Since the share cost indicator is influenced by a variety of external and internal economic factors, a constant cost value cannot be achieved even among manufacturers of identical products. Therefore, the concept of actual production cost was introduced, i.e., calculated for a given point in time.

Calculation of production costs is important for the enterprise and has a direct impact on the development of the company's development strategy, its position in the industry, and competent analysis allows the use of production resources in the creation of goods most effectively.

Cost is an indicator of the quality of the production process. Gives an idea of the strengths and weaknesses companies. The cost price is formed on the basis of many factors: quality of goods, production volumes, equipment included in the company’s assets.

What is cost?

Cost is the totality of all costs for the production and sale of goods.

The indicator is necessary for managers to fully manage the company. It is a mandatory component of management accounting. Based on the cost price, decisions regarding pricing are made. The indicator affects the following points:

company profitability;
profit of the organization.

IMPORTANT! A low cost price with a high markup is the guarantor of the company’s profit, its successful development. But it's not that simple. If the markup is too high, demand for the product will plummet. The organization cannot compete with other companies, since the latter offer attractive prices. Another problem is reducing costs in the production of goods. Reducing costs is often accompanied by a decrease in product quality, which is unacceptable.

Types of cost

Types of cost are classified depending on the sources of costs:

Shop. Combines the costs of the workshop and other production structures during production.
Production. Determined based on the totality of workshop costs and target manufacturing costs.
Full. Includes all costs, including production costs, target factors, and sales.

The workshop cost, as is obvious, will be the lowest. It is advisable to identify all types, as they give an idea of the costs at all stages of manufacturing a product.

Cost components

The cost is formed from the following costs:

Material. Includes the cost of material for production and energy.
Wage. It includes wages for all employees of the enterprise, and not just the workers who directly manufacture the goods.
Contributions for social needs. Includes expenses for pension contributions, social insurance And so on.
Depreciation of fixed assets. This category includes deductions related to equipment wear and tear.
Other costs. Costs of selling goods, transporting them, marketing costs.

Expenses can be classified depending on the purpose of the costs and their sources. The list includes:

Raw materials.
Fuel, production consumed.
Deductions for wear and tear of equipment.
Basic and additional part of the salary.
Business trips.
Expenses incurred in connection with the work of third parties.
General production expenses.
Expenses for social procedures.
Administrative costs.

Sources of cost formation may vary depending on the type of production.

Cost calculation

Let's consider the main components of the calculations:

Cost of the product batch.
Product unit cost.
Expenses per ruble of goods.

The components can be taken from income and expense reports, cost estimates for the manufacture of goods, and appendices to the accounting report. Let's look at the tools used in calculus:

Conditional variables. Spending is constant. They include depreciation charges, salaries, expenses for renting retail and industrial premises.
Variables. May vary depending on product release.

The calculation will depend on the tool used.

Example of calculating total cost

To calculate the full cost it is required

business creation costs ( authorized capital etc.) divided into the billing period;
then add general production expenses to expenses.

Based on these calculations, you can obtain data on the average cost per unit of goods.

EXAMPLE. A million rubles were spent on opening the organization. The full payback period is 60 months. Monthly expenses amount to 16,667 rubles. Total monthly expenses, which include salaries, rent, and legal support, are equal to 150 thousand rubles. The company produces 1,000 units of products per month. Average monthly production expenses are 500,000 rubles. The calculations will be as follows:

16,667 + 150 thousand + 500 thousand / quantity of products in units. Calculation result is 667 per unit of production.

Why do you need to plan your cost?

Planning and studying cost is necessary for the following purposes:

Improving company profitability by identifying areas where costs can be reduced.
For example, a company needs the services of a lawyer. The specialist worked on the company's staff, which entailed high costs. However, it was decided to enter into an agreement for legal support with the company.
Increase in on-farm savings.
Increase in production volumes.

It makes sense to analyze cost indicators for different periods. Indicators should be viewed in the context of product quality. Cost reduction is not always good. If this process accompanied by a decrease in the quality of goods, this is a negative sign.

What is required to independently calculate the cost?

When making calculations, you need to remember the following nuances:

It is important to keep records of UTII and simplified tax system. This is necessary not only for calculating taxes, but also for analyzing economic activities.
Cost accounting must be carried out in blocks. It is required to separately record costs for basic activities and management costs.
After calculating expenses, it is necessary to transfer indicators in the context of goods sold or produced. This measure is necessary to analyze actual profitability.

What will it give correct management calculations? This will allow you to find indicators of the real profitability of the enterprise.

Are cost indicators and production volume related?

It is difficult to give a definite answer to this question. The relationship will be determined by specific gravity indicators. These are costs that are not directly related to production. Let's consider a household example. A person grows cucumbers on his own plot of land. There is no need to pay taxes. Indicators of general business costs are minimal, and therefore the volume of goods and cost will not influence each other.

Summarizing
Cost is extremely important indicator, directly affecting the quality of business management. This indicator affects pricing and profitability. The cost price is determined based on accounting documentation. That's why it's so important to keep records. This is needed not for the tax and regulatory authorities, but for managers. Objective indicators allow us to determine objective profitability and profitability. The manager’s task is to reduce costs, but not reduce the quality of the product.

The main concepts that economic science operates with, with a certain degree of simplification, are income and expenses. Their relationship forms other economic categories. For example, for a single product, production and sales costs form the actual cost, which is included in the price of the product along with the desired profit. Relative to the total turnover of products sold, it reduces the income received by the enterprise, leaving it at its disposal gross profit. Now let’s move from simplification to specifics: let’s deal with such a multifaceted concept as cost.

The concept of cost in accounting policies

IN Russian practice There are 4 types of cost accounting in an enterprise, which differ in purpose and specificity of the formation of an analytical cost base, namely:

accounting;
tax;
managerial;
statistical.

They are carried out at the enterprise simultaneously, so there is no point in prioritizing them. Although, according to the criterion of punishment for improper execution, the most strictly regulated types of accounting are tax and accounting.

Accounting and tax types of accounting

Within accounting Based on the PBU, the actual goal is formed - accurate accounting of costs included in the balance sheet. If accounting contains the concept of “full cost of products sold,” then tax accounting replaces it with a simple summation of the enterprise’s expenses. Tax accounting involves the correct formation of the tax base for calculating the corporate income tax. According to the Tax Code (Chapter 25), in order to find the tax base, the amount of income of an enterprise can be reduced by the amount of expenses, with the exception of the list of expenses presented in Art. 270.

Managerial and statistical types of accounting

Management cost accounting is used for the purposes of the head of the enterprise. Depending on the tasks of management, cost samples, cost accounting criteria, and cost formation parameters change. For example, within the framework of management accounting, you can track the cost of a new product in order to make a decision on the advisability of its further production and sale, you can monitor the work of a specific service in terms of the ratio of costs and income, or calculate the planned cost of a proposed project. In this case, the cost of products sold, the formula for calculating it and the method of determination will vary greatly.

Statistical accounting is necessary to study trends economic development By certain species activities, it is based on accounting analytics and TEP reports of the enterprise’s activities.

and their relationship with cost

Expenses represent the resources used in the activities of the enterprise, the cost of which is expressed in monetary terms. They may be classified as expenses if realized in the reporting period.

In accordance with the tax code expenses- these are documented costs of the enterprise incurred in the reporting period; they lead to a decrease in the organization’s income from core and other activities.

Costs- this concept economic theory, very close to costs. Costs are the costs of production and/or distribution, presented in monetary terms. The summation of production and distribution costs forms the cost of goods sold, the formula for calculating which will be discussed below.

Linking expenses to the reporting period and their connection with income makes them the basis for the formation of cost. Therefore, we will continue to operate with the concept of “expenses,” allowing the use of other concepts as synonyms.

Cost by economic elements

The formation of cost by economic elements is an enlarged grouping of homogeneous expenses, more indivisible and independent of the place of their origin. These include the following expense groups:

material (RM);
remuneration (ROT);
social contributions (R SO);
depreciation (A);
others (R PR).

When summing up expenses by economic elements, the cost price is formed. The calculation formula will be: C RP = R M + R OT + R CO + A + R PR.

By specific gravity of one or another group of expenses in the overall structure, one can draw a conclusion about the nature of production. For example, with a high share of labor costs and related social contributions, the enterprise is engaged in a labor-intensive activity.

Cost by cost item

Structuring expenses by item involves taking into account heterogeneous costs, while a separate costing item may include several economic elements. The typical nomenclature consists of the following consumable items:

1. Shop costs (S C), which form the shop cost (S C):

Materials and raw materials.
Payroll of key workers.
Social contributions for payroll.
Expenses for operation and maintenance (repair) of equipment.
Energy and fuel for technological purposes.
Expenses for preparation of production, its development.
Mandatory property insurance.
Depreciation.
Other workshop expenses.

2. General production expenses (P OP), which are summed up with shop expenses. As a result, the production cost of goods sold (with PP) is formed:

Marriage losses.
Others

3. Non-production expenses (R VP):

Costs for containers and packaging.
Delivery.
Scientific and technical developments.
Personnel training.
Other non-production expenses.

4. Selling expenses (R K).

Based on the specified costing items, the cost is formed. The calculation formula will be: C RP = R C + R OP + R VP + R K.

Types of cost

Based on costs, there are several types of costs.

Workshop cost calculates all workshop costs associated with the production of products, namely wages with deductions, costs of maintaining equipment, materials and energy, and administrative workshop expenses.
Production cost represents the summation of the costs of producing products of a given type, taking into account shop costs and general production costs.
Commercial (full) cost- this is the cost of finished products sold, including all possible costs for the full life cycle goods for production and sales.

Cost calculation method

There are several methods for cost accounting and cost formation.

Cost accounting actual cost- it is based on an accurate accounting of existing actual costs enterprises.
Cost accounting standard cost- the method is relevant for mass and serial production, which are characterized by homogeneous repeating operations; the cost is formed in accordance with the standards and norms adopted by the enterprise. An analogue of this method is the foreign “standard-cost”.
Cost accounting planned cost- used for planning, based on forecasted figures, which are calculated based on actual data using forecast coefficients, supplier proposals, and expert assessment results.

Cost in formulas

A) Let’s determine the cost of goods sold, the formula for calculating it is as follows:

S RP = S PP + R VP + R K − O NP, where all indicators are in value terms:

With RP - cost of goods sold;
With PP - full production cost;
R VP - non-production expenses;
R K - commercial expenses;
About NP - unsold products.

B) Taking into account the volume of products sold (About RP), you can find the cost per unit of goods. To do this, you need to divide the entire cost by volume (Task No. 1):

S ED = S RP: O RP.

C) Used for analytical purposes relative indicators(Task No. 2):

Marginal profit rate(N MP), which shows the ratio of variable and fixed costs in an enterprise, it is calculated using the formula:

N MP = (P M / V) ´ 100%, where

P M - marginal profit;
B - revenue from the sale of goods.

Cost of goods sold ratio(refers to operating costs), shows the share of costs in revenue and allows you to assess the reasons for the decrease in profit from the sale of goods, it is determined by the formula:

K PSA = (C RP / B) ´ 100%.

Profitability threshold(or break-even production) shows at what volume of production the costs pay off, it is calculated as follows:

TB = R POST / (C - R PER. UNIT), where

TB - break-even point;
R POST - constant costs for the entire production volume;
R PER.ED - variable costs per unit of production;
P is the price of the product.

Task No. 1 to determine the production cost of a unit of goods

Let's calculate the total production cost of a liter of juice. For the calculation we will use the following data.

1. Direct costs, thousand rubles:

material (concentrate) - 2500,
labor - 70.

2. Production overhead costs, thousand rubles. − 2600.

3. For reporting period juice concentrate was used, thousand liters - 130.

4. Juice production technology assumes a loss of concentrate of up to 3%, while the share of concentrate in the finished product is no more than 20%.

Solution progress:

1. Summing up all expenses, we get the cost of products sold, thousand rubles:

2500 + 70 + 2600 = 5170.

2. Find the volume of finished juice in in kind taking into account technological losses, thousand liters:

130,0 − 3% = 126,1

126,1*100% / 20% = 630,5.

3. Let’s calculate the cost of producing a liter of juice, rub.:

5170 / 630,5 = 8,2.

Task No. 2 to calculate the break-even point, profit margin and operating costs

The table presents data on the formation of profit of an individual enterprise, thousand rubles. During the reporting period, the volume of products sold amounted to 400 units.

For each additional unit sold, the contribution margin will gradually cover fixed costs. If one unit of goods is sold, fixed costs will decrease by 200 rubles. and will amount to 69.8 thousand rubles. etc. To fully cover fixed costs and reach the break-even point, the company needs to sell 350 units of goods based on the following calculation data: 70,000 / (500 − 300).

To determine operating costs, the full cost of goods sold is used, the calculation formula is as follows: (120000+70000)*100% / 200000 = 95%.

The marginal profit rate will be 40% according to the calculation: 80000*100% / 200000 = 40%. It shows how marginal profit will change when revenue changes, for example, an increase in revenue by 1 ruble will lead to an increase in profit by 40 kopecks, provided the same fixed costs.

The ability to calculate the cost of production, vary income and expense transactions, analyze the economic situation in each specific period in any context of data is the key to the successful operation of an enterprise.