How To Calculate Costs

Table of contents:

How To Calculate Costs
How To Calculate Costs

Video: How To Calculate Costs

Video: How To Calculate Costs
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Any novice entrepreneur is interested in how much it will cost him to open a business, especially if it is associated with the release and production of products. The further activity of the enterprise will depend on how accurately the production costs will be calculated.

How to calculate costs
How to calculate costs

Instructions

Step 1

First, decide how much you will provide services or produce products. You should clearly know that this month you will produce, for example, 200 pieces of goods or provide a service to 200 people.

Step 2

Now calculate the variable costs (costs that change based on the volume of service or product output), for this you need:

Calculate the cost of materials (the cost of raw materials that you will buy to manufacture products). The cost of raw materials required for the release of a unit of goods must be multiplied by the volume of the planned output. If you provide a service, then in this case you will not have any costs at this point.

Step 3

Labor costs. Decide how many people will work for you to fulfill the work plan or service plan, and how much you will pay them in wages.

Step 4

Social contributions. As a rule, these are contributions to the social security fund and the compulsory insurance fund. Specify the percentage of deductions based on the legislation.

Step 5

Now you need to calculate the fixed costs (they are not related to the volume of services or production of goods). They consist of general production and general business equipment and fixed assets, and so on), commercial expenses (advertising costs and delivery of goods to the consumer - if any).

Step 6

All amounts, variable and fixed costs must be added. These will be your expenses for the release and production of products.

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