In the absence of a real idea of the material costs for the production of goods (cost), it is impossible to determine the profitability of production, which, in turn, is a fundamental characteristic for the development of business as a whole.
Instructions
Step 1
Become familiar with the three main methods for calculating material costs: boiler, custom and per-cut. Choose one of the methods, depending on the costing object. So, with the boiler method, such an object is production as a whole, in the case of the custom-made method, only a separate order or type of product, and with the transverse method, a separate segment (technological process) of production. Accordingly, all material costs are either not distributed, or correlated by products (orders), or by segments (processes) of production.
Step 2
Use different units of calculation when using each of the calculation methods (natural, conditional-natural, value, time and work units).
Step 3
When using the boiler calculation method, do not forget about its low information content. The information obtained as a result of calculations by the boiler method can be justified only in the case of accounting at single-product production facilities (for example, at oil production enterprises to calculate its cost). Material costs are calculated by dividing the total existing costs by the entire volume of production in physical terms (barrels of oil in this example).
Step 4
Use a per-piece order method for small batch or even one-off production. This method is also well suited for calculating the cost of large or technologically complex products, when it is physically impossible to calculate each segment of the production process. Material costs are calculated by dividing the total costs for each order by the number of items produced and delivered in accordance with that order. The result of calculating the cost price using this method is to obtain information about the financial results of the implementation of each order.
Step 5
Use the turn-by-turn method if you are calculating the cost price of mass production, characterized by the sequence of technological processes and the repeatability of separately performed operations. Material costs are calculated by dividing the sum of all costs for a certain period of time (or during the execution of each individual process or operation) by the number of units produced during this period (or during a process or operation) of products. The total cost of production is the sum of material costs for each of the technological processes.
