How to calculate the cost of production in an enterprise

The calculation of the cost of production and the cost of services is a necessary attribute for any enterprise in analytical reports. One of the most important indicators, the correct calculation of which affects the efficiency of the entire work of the enterprise, is the cost of goods or services. Such economic calculations are made not only before the start of the new enterprise for the proper conduct of business, but also in the production process to improve efficiency and identify opportunities to reduce costs. In connection with the significance of this indicator, there is a lot of special literature on how to calculate Cost of production. A private entrepreneur who opens a business produces this work, most often, independently. He collects all data on the cost of material necessary for production, calculates the costs of equipment maintenance, electricity, predicts the possible costs of transportation and storage, before calculating the cost of production and correctly plan further work. How to calculate the cost of goods produced A large enterprise, the decision is made by the financial manager depending on the required result. There are two methods that show how to calculate the cost of production. This is the calculation of the cost of production by articles and by economic elements.

The first method for carrying out the necessary calculations involves the use of accounting data for various expenditure items. Moreover, the calculation is carried out in several stages. So, before calculating the cost price of the goods at the shop level, the accounting records for the items of expenditure are collected. Then, the following articles are calculated: the cost of materials spent for production, the wages of all the main workers and engineering personnel, the cost of goods delivered for the production of semi-finished products and various services, social contributions, maintenance costs and equipment maintenance. Determination of the cost price of the goods at the factory level is made by adding to the previous calculation the calculation of the cost of travel of employees, promotion of goods, bonuses of workers. In order to determine the total cost of goods by the enterprise, the calculation of costs for transportation, storage and delivery of the finished goods to the consumer is added to the results. This method is that such a calculation allows you to accurately determine the value of a unit of finished goods.

The second method helps to calculate the cost of goods on economic elements. Carrying out of such calculation allows to define the full sum of expenses for manufacture of a batch of production. Regardless of the type of goods produced by the enterprise, the data of certain articles are used. This is the cost of basic raw materials, materials, semi-finished products, auxiliary materials, fuel costs, electricity, wages for all employees, the amount of deductions for depreciation and social benefits. Then, the value of the secondary raw materials returned to production is deducted, which is then used in the production of products. Based on these calculations, it is possible to more accurately plan the effective operation of the enterprise and find ways to reduce the cost of the goods. Before calculating the cost of production by any of the methods, , That when summarizing the final results, it is necessary to take into account the cost of production waste.

Carrying out calculations to determine the cost of services is not much different from the calculation of the cost of goods. For calculation by the financial manager of the enterprise, the same accounting items are used. A private entrepreneur, before calculating the cost price of his business, conducts the same collection of raw data.