How to calculate the volume of production
Video: Fixed Overhead Production Volume Variance 2024, July
An accurate calculation of the volume of production is an integral part of the planning of the work of any reputable company engaged not only in production, but also in sales and purchase of goods. How to make such a calculation?
Instruction manual
1
The easiest way to determine the volume of production is to borrow statistical data taken from a report compiled by the accounting department. Take volume indicators from this document, if such information is available to you.
2
If you can’t take the information from the statistical reporting, calculate in money the amount of finished products taken at the beginning and end of the reporting period.
3
Subtract the amount of the balance of manufactured products from the total number of manufactured products for the reporting period. This monetary expression will mean the volume of output you need.
4
To make the calculation more accurate, add the resulting difference to the revenue that was generated from the output.
5
To further refine the volume of finished products, index the amount received by a percentage equal to the percentage that the organization’s pricing policy for the reporting period was subject to change. As a result of these calculations, you will get the indexed volume of finished products.
6
To track the dynamics of volumes of output, compare the rate of change in revenue.
7
To compare the level of revenue, take the data from reporting form 2 for several (at least two) reporting periods.
8
Unify the process of calculating the volume of output using the following formula: VGP = IOGP + ORGP - VhOGP, in which VGP is the output of finished goods, expressed in pieces.
IOGP is the outgoing balances of finished products, in pieces.
ORGP - the volume of sales of finished products, in pieces.
VHOGP - this is the incoming volume of finished products at the beginning of the reporting period, also expressed in units.
9
Properly and accurately performed calculation will allow the company to plan the sale of finished products through the existing network of distributors or make a timely decision on the expansion of this network.
