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The total cost of production includes expenses. Cost: calculation formula, types and types of cost, examples of calculations. What are the discounts when purchasing with cash?

Cost price products sold represents the total of the company's total direct costs at all stages of the production process and other costs at the time of sale.

When determining it, the following costs are considered:

The cost of materials used to produce products or perform work.
Remuneration of workers directly involved in the production process.
Non-production expenses.
Business expenses.

Cost expresses the total amount of use by the enterprise of various resources. Thanks to it it is possible to provide economic activity resources by determining part of the cost share for their reimbursement. As a result production process is permanent.

Cost dynamics for certain periods of time, as well as assessing its value after each sale of products, allows us to summarize the feasibility and rationality of procurement and expenditure of material and labor resources. In addition, the calculated cost indicators for different periods help to analyze the essence of the enterprise’s costs and develop marketing and economic methods to reduce their share of profits.

Calculation methods

The cost calculation method directly depends on the stage at which the finished product is located.

As a result, the following methods are considered:

Calculation of production costs by summing up all costs for economic elements and drawing a total.
Calculation of the cost of gross output by finding the difference between the sum of all production costs and non-production expenses, as well as deferred expenses.
Calculation of production costs by finding the difference between the cost of gross output and the change in work in progress balances, if they increase. When balances are reduced, their change, expressed in monetary terms, is summed up.
Calculation of the total cost by adding the production cost value and the cumulative total of non-production costs.
Calculation of the cost of goods sold by adding the total cost and selling expenses. But, the actual value of this cost indicator is obtained when the monetary value of the remaining unsold goods is subtracted from the resulting summation result. finished products.

How to calculate cost of goods sold

To calculate the cost of goods sold, you first need to total production costs. In other words, production cost data will be required.

As a result, it will be necessary to establish costs of a different nature incurred at each stage of production and meeting the following requirements:

related to commercial activities;
directly relate to the activities of the organization in question;
spent on finished products in the production and sales processes;
documented;
comply with the law;

The amount of costs is expressed in monetary terms and is taken into account for all types of products. Expenses included in the cost price are grouped according to elements of different economic significance.

As a result, five groups are considered:

Material costs.
Remuneration.
Social contributions.
Depreciation.
Other expenses.

These include costs:

for packaging;
for transportation;
for storage and creation of special conditions;
to pay various commissions;

The sum of production and non-production costs expresses the total cost. This indicator is necessary for further calculation of the cost of products sold. When finished products are sold, additional both planned and unforeseen costs may arise. For example, payment for advertising or marketing activities. Such expenses are usually called commercial expenses.

Summing up the total cost and selling expenses and reducing the total by the balance of products in the warehouse expresses the cost of goods sold indicator.

Formula

As a result, to derive the monetary value of the cost of goods sold, you will have to use the formula:

Srp = Sp + KR – Onp, Where

Sp– full cost;

KR– commercial expenses;

Onp– remains of unsold products.

In turn, the value of the total cost is calculated using the formula:

Sp = PR + VR, Where

PR– production costs,

VR– non-production expenses.

Calculation example

To illustrate the application of the methodology for calculating the cost of goods sold, consider concrete example. The company Posuda LLC produces various types of tableware. It is required to calculate the cost of production for July, when it is known that 70 saucepans and 50 teapots were produced, and 52 saucepans and 35 teapots were sold.

Cost calculations were also carried out, resulting in the following results:

Spent on pots:
- materials – 148,000 rubles;
- energy – 14,000 rubles;
- salary – 28,000 rubles;
- deductions – 8380 rubles;
- depreciation – 8,700 rubles;
- other expenses – 6,000 rubles;
Spent on teapots:
- materials – 98,000 rubles;
- energy – 8000 rubles;
- salary – 22,000 rubles;
- deductions – 6800 rubles;
- depreciation – 7100 rubles;
- other expenses – 4000 rubles;

We calculate the total costs for each type of product:

Total pots: 148000+14000+28000+8380+8700+6000 = 213080 rubles.
Total teapots: 98000+8000+22000+6800+7100+4000 = 145900 rubles.

Cost of one pan: 213080/70 = 3044 rubles.
Cost of one teapot: 145900/50 = 2918 rubles.

Now we calculate the cost of goods sold:

Cost of pots sold: 3044*52 = 158288 rubles.
Cost of teapots sold: 2918*35 = 102,130 rubles.

We summarize the total cost of sales for the enterprise as a whole: 158,288 + 102,130 = 260,418 rubles.

Total cost of goods sold

The indicator of the total cost of goods sold expresses the result obtained by adding or subtracting the change in the cost of product balances in the warehouse from the full cost of finished products. When balances increase relative to the beginning of the period, the monetary value of the increase is subtracted, and when they decrease, the difference is added.

The total cost always includes the sum of all direct and indirect costs. Initially, based on accounting documentation, production costs are derived for each economic element.

For the full cost of the sale, you need to take into account the funds spent in the process. Selling expenses are also calculated between types of products produced and sold. It is important to remember that the quantity of products produced is not always equal to the quantity sold. Accordingly, for the cost of sales, the remaining goods in the warehouse are not taken into account.

Cost of goods sold analysis

The main goal of analyzing the cost of products sold is to identify ways to improve the efficiency and rationality of using all types of resources at each stage of the production process and at the time of sale.

As a result of this, the analysis involves performing the following tasks:

assessment of changes in the cost value and its relation to planned indicators;
assessment of the validity of planned cost values;
identification of factors influencing the formation of the indicator and its changes, as well as deviations of the final value from the plan;
identification of lost opportunities and unused reserves;

Analysis of cost of goods sold considers the following areas:

Analytical calculations and conclusions on the composition, value of the total cost and its changes.
Analytical calculations and conclusions on the values of expenses per one ruble of product cost.

The analysis of the total cost is carried out in several stages:

The total cost is calculated.
Cost structuring is carried out.
Based on the results of comparing the current and similar previous periods, the value of the cost difference is derived.
For several types of products, the analysis is carried out in terms of its range.

The process of analyzing the costs incurred per ruble of the cost of goods is based on the following points:

Calculation of the value of costs incurred per ruble of product cost.
Comparison with the maximum value. The calculated value must always be below the standard level.
Comparison of value changes. The decrease in the indicator is a favorable trend.
Factor analysis.

The cost of products sold is of particular importance in the amount of profit received. Therefore, it requires constant calculation and analysis of the results obtained.

Moreover, the calculation financial significance cost of sales allows you to evaluate the consumption of resources at all stages of the production process, as it includes:

Production cost.
General production costs subject to calculation between types of products.
Production costs are above normal.

The cost of production is the enterprise's expenses for its production and sale, expressed in monetary terms. Calculation and analysis of product costs is the most important task of any enterprise and is included in the management accounting system, because It is cost that underlies most management decisions.

There are planned and actual costs. The planned cost of production includes only those costs that, given the level of technology and organization of production, are necessary for the enterprise. They are calculated on the basis of planned standards for the use of equipment, labor costs, and material consumption.

The reported cost is determined by the actual costs of manufacturing the product.

According to the sequence of formation, they distinguish between technological (operational) cost, shop cost, production cost and total cost. Technological cost is used for economic assessment options for new technology and choosing the most effective. It includes costs that are directly related to the performance of operations on a particular product. Shop cost has a wider range of costs: in addition to technological cost, it includes costs associated with organizing the work of the shop and managing it. Production cost includes the production costs of all workshops involved in the manufacture of products and the costs of general management enterprise. The total cost includes production cost and non-production (commercial) expenses.

The identification of such types of costs as individual and industry average allows you to create a basis for determining selling prices (wholesale). The total cost of an individual enterprise for the production and sale of products constitutes the individual cost. The average industry cost characterizes the cost of producing a given product on average for the industry.

By economic essence costs of production and sales of products are divided into costs by economic elements and costing items.

The following economic elements are distinguished:

material costs(minus returnable waste);
labor costs;
deduction for social needs;
depreciation of fixed assets;
other costs.

Material costs include:

the cost of raw materials purchased from outside;
cost of purchased materials;
the cost of purchased components and semi-finished products;
the cost of production work and services paid to third parties;
cost of natural raw materials;
the cost of fuel of all types purchased from outside, used for technological purposes, production of all types of energy, heating of buildings, transport work;
the cost of purchased energy of all types, spent on technological, energy, motor and other needs.

The cost of material resources included in the cost of production excludes the cost of sold waste.

Industrial waste refers to the remains of raw materials, materials, semi-finished products, coolants and other types of material resources generated during the production process, which have lost completely or partially the consumer qualities of the original resource. They are sold at a reduced or full price material resource, depending on their use.

Labor costs include the cost of remunerating key production personnel, including bonuses, incentives and compensation payments. Contributions for social needs include mandatory contributions to social insurance, employment fund, pension fund, and health insurance.

Depreciation of fixed assets is the amount of depreciation charges for the complete restoration of fixed assets.

Other costs - taxes, fees, deductions to extra-budgetary funds, loan payments within the limits of rates, business travel costs, training and retraining of personnel, rent, depreciation of intangible assets, repair fund, payments for compulsory property insurance, etc. .

Based on the classification of costs by economic elements, it is impossible to determine the costs directly related to the production of a specific product; therefore, costs are grouped according to costing items.

The following cultural articles are distinguished:

Raw materials and supplies, minus sold waste.
Purchased semi-finished products and components.
Fuel and energy for technological purposes.
Basic wage for production workers.
Additional wages for production workers.
Contributions for social needs.
Wear of tools and fixtures intended purpose and other special expenses.
Expenses for the maintenance and operation of technological equipment.
________________________
Total technological cost
Shop expenses.
________________________
Total workshop cost
Factory overhead production costs. Total production cost
Non-production expenses.
________________________
Total total cost

When forming the actual cost, they take into account the costs of warranty repairs and warranty service of products for which a warranty period is established, losses from downtime due to internal production reasons, shortages of material assets in production and warehouses in the absence of guilty persons, benefits due to loss of ability to work due to industrial injuries, paid on the basis of court decisions, payments to employees released from enterprises and organizations due to their reorganization, reduction in the number of employees and staff, as well as losses from marriage.

The classification of costs by costing items underlies other classifications of costs included in the cost of production.

The following classification criteria are distinguished when subdividing costs:

attitude to the production process;
attribution to cost;
dependence on production volume.

In relation to the production process, costs can be basic and overhead; by attribution to cost - direct and indirect. Depending on the volume of production, expenses can be conditionally variable (proportional) and conditionally constant (non-proportional).

Product cost calculation

Costing is one of the main tasks of management accounting in an enterprise. In cost calculations, material costs of fuel and energy, purchased semi-finished products and components are direct costs and are included according to current consumption standards and product prices.

Basic wages for production workers include wages for a product, calculated according to labor intensity or time worked, prices and tariff rates. Additional wages take into account payment for time not worked.

Social contributions include social insurance, pension fund, employment fund, compulsory health insurance and is carried out in accordance with current legislation.

Wear and tear of tools and special-purpose devices and other special expenses are included in the cost of production on a monthly basis depending on the standard service life of the tool and equipment.

The costs of maintaining and operating equipment are complex costs, they include:

costs of maintaining equipment and paying workers, busy servicing equipment, mandatory deductions, repair costs and depreciation;
compensation for wear and tear of low-value and fast-wearing instruments and costs for their restoration;
other expenses.

Expenses for the maintenance and operation of equipment (RSEO) can be included in the cost in proportion to the basic wages of the main production workers (OPW) or using the method of estimated (standard) rates calculated on the basis of machine-hour coefficients. The estimated rate is the amount of costs for the maintenance and operation of equipment per hour of operation of the equipment on which the product is manufactured.

The calculation is carried out in the following order. For each workshop, technological equipment is united into homogeneous groups. Based on them, the amount of operating costs per hour of equipment operation is established. For each product (part, unit), the time spent on processing (operations) is standardized. this species technological equipment. In accordance with this time, the cost of maintaining and operating technological equipment for this product is included in the calculation.

Shop expenses include:

wage fund for shop personnel with deductions;
maintenance of buildings, structures and equipment for workshop purposes, including property insurance, repairs and depreciation;
expenses for rationalization and inventive work;
labor protection costs;
compensation for wear and tear of low-value and rapidly wearing equipment; other expenses.

Shop costs are included in the unit cost of production in proportion to the amount of the basic salary of the main production workers and the costs of maintaining and operating the equipment.

General production expenses include:

costs associated with production management, including wages fund management personnel with deductions, travel costs, maintenance and servicing technical means and management (CC, communication centers, alarm systems), payment for consulting, information and audit services, bank services, entertainment expenses;
expenses for training and retraining of personnel;
expenses for tests, experiments, research, maintenance of general plant laboratories;
labor protection costs;
expenses for maintaining fire, paramilitary and security guards;
general business expenses - insurance, maintenance, current repairs and depreciation of fixed assets for general plant purposes;
taxes, fees and other mandatory deductions.

General production expenses include the cost of paying interest on bank loans within the rate established by law, as well as depreciation on intangible assets, including patents, licenses, know-how, and software products.

Commercial (non-production) expenses include costs for containers and packaging, costs for delivering products to the departure station, as well as maintaining personnel to ensure normal operation at the consumer within the established period.

Commercial non-production expenses are calculated as a percentage of production costs (3-7%).

Calculation methods

Calculation methods - method of calculation depending on the calculation unit. There are 2 groups of cost calculation methods: preliminary calculation methods and production calculation methods.

The first group of methods includes:

unit cost method;
aggregate method;
point method;
parametric method.

Second group of methods:

custom;
transverse;
normative.

Unit cost method. For a significant number of types of engineering products, there is a relationship (linear, power law) between one of the parameters of the machines and the costs of their production.

where Syi is the specific cost of the existing structure per unit of parameter, rub.; ni is the value of the defining parameter of the new design.

In mechanical engineering, specific costs per unit mass of the structure have been developed to the greatest extent (metal-cutting machines, steam turbines); in the electrical industry - on technical parameters (power of electrical machines, etc.).

Aggregate method. On its basis, the cost is determined as the sum of costs for the production of individual structural parts and assemblies, the value of which is known. A unified system of automation tools - GSP - was created on a similar principle.

The scoring method consists of assessing, using points, each technical and economic indicator of the product, which is associated with certain consumer properties of the new design. This assessment is performed using special rating scales, in which the number of points depends on the level of a particular product quality indicator.

The parametric method allows you to find the cost based on the relationship between the value of a set of technical parameters of similar products and the costs of their production. Such dependencies make it possible to build correlation models that establish corresponding connections in mathematical form.

The custom costing method is used primarily in individual and small-scale production at mechanical engineering and instrument making enterprises that produce non-repeating items or small batches of products. The essence of the order-by-order method is that production costs are taken into account for individual orders. The actual cost of an order is determined upon completion of the manufacture of products or work related to this order by summing up all costs. To calculate the cost per unit of production, the total cost of the order is divided by the number of products produced. The method has a drawback: the execution of the order usually does not coincide in time with the calendar periods adopted in the plan, and this causes significant fluctuations in the cost of products of the same name released in different months.

The cross-cutting method of calculation is used at enterprises of the metallurgical, chemical, oil, textile, paper and other industries (in industries with repeating products that are homogeneous in terms of source material and processing technology). Redistribution - part technological process. The cost is determined by individual stages of the technological process. Progressive costing is especially necessary in cases where the products of individual processing stages (semi-finished products) are supplied to other enterprises. The standard calculation method is used mainly in enterprises with mass and serial production in mechanical engineering and instrument making.

Standard calculations are based on reasonable consumption rates for all calculation items, actual cost determined on the basis of deviations from the norm. The method is used in all industries both for calculation purposes and for ongoing cost control.

Product price. Profit

Price is monetary value unit cost of goods. The price performs 4 main functions:

accounting;
distribution;
stimulating;
regulating

The accounting function of price is implemented in measuring the cost of goods, the distribution function is in the distribution of national income, the stimulating function is in stimulating scientific and technological progress and production development, and the regulating function is in regulating supply and demand. In practice, several price classifications are bottled:

turnover maintenance;
by area of operation;
by duration of action;
by the degree of freedom from state influence in their determination;
on the distribution of transport costs.

Based on turnover servicing, a distinction is made between wholesale prices of enterprises, selling prices of manufacturing enterprises, retail prices, purchase prices, tariffs. Wholesale price enterprise includes full cost and profit.

The selling price is formed on the basis of the wholesale price, taking into account VAT (value added tax) and excise tax (on excisable goods).

Retail price is the selling price taking into account trade markups (margins), which include costs trade organizations, profit and value added tax on trade services. Diagram 1 shows the formation of the retail price.

Full cost
+
_______Profit_______
Enterprise wholesale price
+
VAT
+
______[Excise tax]______
Selling price of the enterprise
+
___________Trading markup__________
Retail price

Purchasing prices are the prices (wholesale) at which agricultural products are regulated by collective farms, state farms, farmers and the population. Prices are negotiable; their difference from holiday and retail prices is that they include VAT and excise tax, because they are not included in the cost of purchased agriculture material and technical resources. Tariffs are divided into freight and passenger transport And paid services to the population.

The classification of prices by territory of coverage distinguishes between unified (zone) and regional (zonal) prices. Uniform prices are established and regulated federal authorities(gas, electricity). Regional prices are regulated local authorities self-government ( public utilities, purchase prices, tariffs for paid services to the population.

Classification of prices according to the duration of action divides them into constant (relative to a certain period of time), temporary, seasonal, stepwise, “for a period”. Currently in the domestic economy constant prices no, because the longest period of their validity is determined by the level of inflation. Temporary prices are set for the development period new products, seasonal prices are used in industries that process agricultural products. Stepped prices are associated with stages life cycle goods reach extremely high values during the period of growth and sharp rise in demand for a new, “pioneer” product. Prices “for a period of time” currently act as contract prices, if there is a contract for the sale of any product. Concluding a contract for the next term involves changing them. A type of contract prices are negotiated prices.

The degree of freedom of prices from the influence of the state when determining them distinguishes between free prices, price regulation and fixed prices. Free prices are formed on the market under the influence of supply and demand, regulated prices are also formed as a result of fluctuations in market conditions, but the state either directly limits them or regulates profitability. Fixed prices are set by federal authorities for a limited range of goods.

The classification of prices according to the distribution of transport costs is called the franking system (“free” - free from payment). The essence of the system is that the costs of transporting products to the destination specified in “free” are borne by the supplier of the products, and the rest by the buyer.

Cost of products sold ( English Cost of Goods Sold, COGS) represents the amount of production costs that were sold during the reporting period. For trading company This is the amount of expenses for the acquisition of goods for further resale that were sold during the reporting period. The cost of goods sold is calculated as the balance of finished products at the beginning of the accounting period plus the cost of products sold during the accounting period, minus the balance of finished products at the end of the accounting period. Theses are expired costs, and thus actual expenses per year.

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 of goods 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 methodology for a 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. In turn, examples of direct costs are: costs for internal logistics, insurance, customs duties, excise taxes, etc.

For a manufacturing enterprise, the cost of goods sold is calculated as follows.

Familiarize yourself with the methodology for calculating the cost of manufactured products ( English Cost of Goods Manufactured, COGM) can be accessed by following this link.

Methods for estimating inventory costs

The cost of goods sold to some extent depends on the policy chosen by the enterprise for accounting for the cost of inventories (both raw materials and finished products):

FIFO method ( English First-in, First-out, FIFO);
LIFO method ( English Last-in, Last-out, LIFO);
average cost method.

Also, its value will depend on the selected inventory accounting system:

continuous inventory accounting system;
periodic inventory accounting system.

Examples of calculating cost of goods sold

Example 1

Below are data on the costs of a trading company in the accounting period.

The net purchase of goods for further sale amounted to CU 8,120 thousand, and direct costs amounted to CU 1,140 thousand.

Net purchase of goods = 8,500-170-210 = 8,120 thousand.

Direct costs = 450+900+90 = 1,140 thousand.

Thus:

Cost of products sold = 8,120+1,140+280-320 = 9,520 thousand.

Example 2

The calculation of the cost of sales of products of a manufacturing enterprise is given in the table.

As a rule, the calculation of the cost of goods sold for a manufacturing enterprise consists of five sections.

Direct costs of raw materials and supplies.
Direct labor costs.
Manufacturing overhead.
Work in progress.
Finished products.

In this case, direct costs for raw materials are calculated as the sum of their balance in the warehouse at the beginning of the accounting period and net purchases (gross purchase minus returns and discounts) in the accounting period minus their balance at the end of the accounting period. For the conditions of the above example, they amount to 14,050 thousand USD (2800+14750-3500).

In turn, the cost of manufactured products is calculated using the following formula.

For the above conditions, it is 22,220 thousand. (14050+5300+3700+5450-6280).

Thus:

Cost of products sold = 22,220+1,750-4,150 = 19,820 thousand.

PRODUCT COST

PRODUCT COST - the cost price of natural resources, raw materials, materials, fuel, energy, fixed assets, labor resources used in the production process of products (works, services), as well as other costs for its production and sale. In the Russian Federation, the composition of costs included in the cost of products (works, services) is established by the Regulations on the composition of costs for the production and sale of products (works, services), and on the procedure for forming financial results taken into account when taxing profits.

Dictionary of financial terms.

Product cost

Product cost is the totality of direct costs associated with the production of a product; all types of costs incurred in the production and sale of a certain type of product.
Cost includes:
- costs of materials;
- direct labor costs;
- variable costs: material costs, depreciation of fixed assets, wages of main and support personnel, overhead costs directly related to production and sales.
There are production costs and full costs.

In English: Cost of product

Synonyms: Basic costs

English synonyms: Product costs

Finam Financial Dictionary.

Product cost

total costs of production and sales of products.

Terminological dictionary of banking and financial terms. 2011 .

See what “PRODUCT COST” is in other dictionaries:

production cost- Expressed in monetary form, the costs of an enterprise or organization for the production and sale of products, construction installation work[Terminological dictionary of construction in 12 languages (VNIIIS Gosstroy USSR)] cost... ... Technical Translator's Guide

Product cost- enterprise costs for production and sales of products. In Russian economic practice, the cost of total production is calculated (according to economic elements of costs) and the cost of a unit of production (according to costing items). They also differ... Economic and mathematical dictionary

Modern encyclopedia

Product cost- PRODUCT COST, economic indicator, including the costs of consumed means of production and wages. The so-called full cost of production includes current costs not only for production, but also for sales... ... Illustrated Encyclopedic Dictionary

An economic indicator that includes the costs of consumed means of production and wages. T.n. the full cost includes current costs not only for production, but also for the sale of products. Economic analogue of cost... ... Big Encyclopedic Dictionary

- (a. production costs; n. Betriebskosten, Selbstkosten; f. prix de revient industriel, cout de production; i. precio de coste de production) costs of an enterprise for the production and sale of products, expressed in monetary form. The value of C. p ... Geological encyclopedia

- (works, services) the costs of an enterprise expressed in monetary terms for the production and sale of products (works, services). In the Russian Federation, the need for a uniform definition of S.p. at enterprises various forms property appeared in 1990 in connection with... ... Legal Dictionary

Accounting Key Concepts Accountant Accounting Trial Balance General Ledger Debit Cost Double Entry Standard Methods Cash and Cumulative Methods RAS/IFRS Financial statements Boo... Wikipedia

An economic indicator that includes the costs of consumed means of production and wages. The so-called total cost of production includes current costs not only for production, but also for the sale of products. Economic... ... Encyclopedic Dictionary

PRODUCT COST- current costs of an enterprise or organization for the production and sale of products (works and services) expressed in monetary form. Includes material costs, depreciation of fixed assets, wages of main and support personnel,... ... Great Accounting Dictionary

Books

Accelerated Product Development, Fiore Clifford. For everyone who works in production sector, Clifford Fiore suggests finished project improvements at every stage of product development. This is the first book in which they have proven their...
Economics of production. Cost, profit, profitability, Oleg Yuzov. The manual discusses the issues of calculating the cost of production, assessing the influence of various factors on the cost of production, calculating the most important indicators of enterprise performance...

One of the most popular and necessary in economics and business is the formula for calculating the total cost of a company’s products, i.e., the combined cost of the costs of creating and selling a service or product. Full cost – this is the volume of all company costs, including commercial ones, aimed at the production process. It’s about this indicator we'll talk in this article.

Full cost of production: concept

The term “cost” is multifaceted and includes many definitions within one enterprise. For example, the cost can be workshop (including costs incurred exclusively by the workshop where the product is produced), production (i.e., supplemented by costs incurred by all enterprise structures involved in the process of creating the product).

But the concept of full cost, in addition to the listed costs of the company, includes the costs of organizing the completed process of producing a product/service and its subsequent sale. Those. production costs include the costs of transportation and delivery of the product to the end consumer.

Total cost: formula

Summarizing the above information, the formula for total cost (C p) can be represented as follows:

C p = C pr + R p, where C pr is the production cost, and P p are the expenses incurred by the enterprise for organizing sales, transportation and other commercial needs.

Thus, the total cost of the enterprise's products is equal to the sum of the costs associated with its creation and sale.

In turn, production cost is formed by summing up production costs without taking into account selling costs:

C pr = Z main + Z n, where Z main is direct costs, and Z n is overhead costs.

Let's consider the structure of costs that make up production costs as the most important component of the indicator under consideration. These include the cost of inventory, labor, and overhead invested in the process of creating a product. Moreover, this indicator includes the costs of all departments involved in manufacturing, as well as administrative expenses.

There are the following cost items that make up the cost of production:

Raw materials and goods and materials, minus sold waste;
Purchased components and semi-finished products;
Fuel, heat and electricity for production purposes;
Salaries of shop workers – basic and additional;
Insurance premiums for the wages of workshop workers;
Tool depreciation, equipment maintenance and other specific expenses;
Shop and general plant costs.

The cost of production does not include sales and distribution costs, which are taken into account separately and combined by the second component of the formula - sales costs.

So, the total cost of production is defined as the sum of all production and sales costs. At the same time, dividing them into direct/indirect, as well as constant/variable, does not play a role. But we will look at the cost structure that is taken into account in the total cost indicator. Direct costs are:

Materials used in production;
For the salaries of shop staff.

Indirect include general production and general business expenses accumulated in separate accounts, which are closed at the end of the period, proportionally included in the cost of all types of products. Proportions are built according to a specific distribution algorithm adopted by the company.