How to determine the actual cost of production

The cost of production is determined by a number of important indicators. All costs of the enterprise for its production and sale should be included. Naturally, they are planned in advance, but very often it happens that the actual costs differ from the planned costs. How to determine the actual cost of production?

Instruction manual

1

Calculate material costs. Summarize the cost of materials, semi-finished products and components that are purchased, the payment of fees to third parties involved in the production, the cost of natural raw materials, the cost of energy, space heating, transportation and the purchase of all types of fuel.

2

Calculate the cost of labor. Summarize the basic salary of workers who are engaged in the production of products, all bonuses and other payments, including stimulating and compensating.

3

Conduct costing when deducting for social needs. These will be the amounts that go to all funds and to health insurance.

4

Calculate the cost of depreciation of fixed assets. Fixed assets are the same machines, buildings, i.e. tangible assets that have been operated for more than one year. Naturally, they wear out in the process. Old fixed assets need to be replaced with new funds. But it’s one thing to buy a calculator or a desk, and another thing is to purchase expensive equipment. So depreciation is a kind of piggy bank helping out at the right time.

5

Calculate other costs. This list can be very long. But the main points are: taxes, expenses on non-budget funds, rent, travel, training, etc.

6

Also take into account losses from downtime due to domestic production, losses from shortages in which no perpetrators were found, payments by court decisions and losses from defective products.

7

Summarize all costs and get the actual cost of production. If you need the actual cost of one unit of production, then determine it by simply dividing the sum of all costs by the number of units of goods produced.