What is the cost price and what is included in its composition?

Any enterprise that produces any goods or provides any services has a business plan. This is an annual program, which contains a description of the firm's activities, the planned volume of products, revenues, profits and costs. In turn, it is costs that give a person an idea of what the cost of production is.

Introducing new technologies, using the work of machinery and equipment, burning fuel and consuming materials, the company spends huge funds on production. They are the basis of the cost - the main indicator on which the economic efficiency of the firm's work is based.

Analysis of this indicator allows you to find the volume of production, in which the output will be profitable. The basis of the cost price is a constant (in no way depend on the volume of output) and the variables (may vary depending on the volume indicators of output) costs. So what is the cost price and what is included in its composition?

This indicator is considered in the context of the costing articles, as well as the costs used for production. The calculation of the full cost price is based on the following costs:

- material costs, including the cost of components such as raw materials and materials, parts, components, etc .;

- depreciation of basic equipment and fixed assets;

- wages of employees involved in the production process;

- deductions from the accrued wages: the so-called pension, social and insurance contributions;

- other costs.

A more complete picture, telling what the cost is, is represented by the company's branch departments. Each department or workshop involved in the production of products has its own highly specialized costs. So, they include expenses for general and general production needs, for defective products and returnable waste, for labor remuneration and deductions from employees, for purchased component parts and services of third-party organizations, as well as other expenses. All these components are included in the structure of such a concept as the shop cost price.

Each department, each shop and every subsidiary production, directly or indirectly involved in the production of products, affects the underlying cost of the product cost. Therefore, the effective work of each participant in the production process allows you to minimize the cost of sales, increase revenue and, as a result, net income. The profitable work of the company depends on these factors.

What is the cost of sales? All costs incurred by the enterprise in selling products, including services of third-party organizations, transport and others, are included in this indicator. The realized production gives one more such indicator as the cost price of the sold production. The basis of this indicator is the cost of producing goods, marketing and management.

Thus, the cost price is a cost expression of the sum of all costs that the enterprise incurs in the production, storage and marketing of products. And net profit is the main and main indicator of the organization's activity, to which it affects.