The cost price of a product is the aggregate of all costs that were required for the production of its next batch. Depending on how effectively the company optimizes these costs, it will receive more or less profit. Therefore, it is important to find the full cost of production within the framework of financial analysis.
Instructions
Step 1
To find the full cost of a product or service, it is necessary to take into account absolutely all types of enterprise costs for its production and sale: PS = PRS + RR.
Step 2
The production cost of goods (PRS) is determined based on the items of the main expenses directly related to production. These are material costs, wages, social security contributions, depreciation and other overhead costs. Selling costs (RR) are also referred to as commercial costs and include the costs of product packaging, storage, transportation and promotional purposes.
Step 3
Calculate the totality of material costs by summing up the cost of raw materials, semi-finished products, components, raw materials, equipment and the fuel and energy they consume. In the wage category, add the wages of the main production personnel, auxiliary workers, equipment maintenance, etc.
Step 4
Consider payments for intellectual developments, discoveries, patents, management staff, accountants, junior maintenance personnel (cleaners, etc.). Add in travel expenses, benefits package, contributions to pension funds, unemployment funds, social insurance, etc.
Step 5
Overhead costs are indirect costs that appear during the production cycle, but are not directly related to it. In other words, the volume of products produced does not depend on them, but they are no less important. This is the payment of interest on long-term and short-term obligations, taxes, rent, lighting and heating of premises, security, etc.
Step 6
Divide the total cost by the volume and you will find the average cost per unit. It is very important to conduct an in-depth analysis of the cost structure, examining the effect of its change on the price dynamics, which is the main source of profit. There are several statistical methods for this: grouping by balance sheet items, calculating average and relative indicators (index), graphical method, etc.
Step 7
The cost price shows how much money the enterprise costs a full cycle of production and sale. This value is the basis for the price calculation. The more efficiently the company optimizes production, the more mark-up it will be able to make, therefore, the more income will be.
