How to calculate the cost of goods

The calculation of the cost of production is a mandatory step in the analysis of the activities of any enterprise. Based on such calculations, conclusions are drawn on the efficiency of the production process, on the level of costs, on the number of fixed and variable costs.

You will need

• calculator

• notebook and pen

• full list of costs of the enterprise with the specified amount of costs

• report on the activities of the enterprise indicating the number of manufactured products

Instruction manual

1

Calculate the variable costs of the enterprise, which depend on the volume of output and are calculated as the sum of all costs of a variable nature (wages to workers, which depends on the volume of products sold, the cost of materials, components, electricity). Variable costs should be calculated per unit of output, so the sum of all costs of a variable nature should be divided by the volume of output. Let the company produce spare parts for cars. The cost of materials will amount to 5.1 million rubles, the salary of workers - 10.6 million rubles, the cost of electricity - 0.3 million rubles. During the reporting period, the company produced 3, 500 million spare parts. Then the variable costs are equal to:

VC = (5.1 + 10.6 + 0.3) / 3500 = 4500 rubles per unit of output.

2

Calculate the fixed costs of the enterprise, which do not depend on the final indicator of the volume of production and are payable without fail. Thus, fixed costs include salaries for management personnel, transportation costs, accounts payable, settlements with suppliers, and the tax inspectorate. In order to calculate the cost price it is necessary to express constant costs in terms of unit of production. For this, the sum of all fixed costs must be divided by the volume of output. Let the company have a staff salary of 6.9 million rubles, accounts payable - 7.8 million rubles, taxes and other payments - 1.3 million rubles. Then the fixed costs are equal to:

FC = (7.8 + 6.9 + 1.3) / 3500 = 4571 rubles.

3

Calculate the cost of production equal to the sum of costs of a constant nature and costs of a variable nature (in terms of unit of production). Then the cost of production is expressed as follows:

SS = 4500 + 4571 = 9071 rubles.

Useful advice

Costing is a very complex and lengthy process, the main task of which is to correctly rank all the costs of the enterprise.

• Calculation of the cost of production
• how to determine the cost of goods