The concepts included in the cost of sales

Under the cost price it is necessary to understand the expenses directed on performance of various works, manufacture of production or rendering of concrete services. Usually this term includes the costs associated with the production of the goods produced. Sometimes this indicator is calculated taking into account the commercial and managerial costs that are allocated to each unit of output.

Thus, the prime cost consists of various indicators: the expense on payment to workers, on amortization of the basic means and so forth.

What is the sale of products at cost?

The cost of sales is an important indicator of financial statements, which goes after the proceeds. The financial results from sales also include other management costs.

So, this concept is based on the costs incurred by the firm in selling its products. It also includes transport and other services of organizations from outside. In addition, the sold goods give one more indicator, presented in the form of the cost price of the sold products. It consists of the costs of the production of goods, its sale, as well as management.

That is why every entrepreneur is interested in the question related to how you can calculate the cost of sales. The formula used to calculate this concept is as follows: the cost of raw materials, materials, components + direct labor costs .

The tasks and value of managing the cost of sales

Managing the cost of sales is an important management process. It is influenced by factors such as the structure of output, the volume of production, the distribution of costs, accounting costs, the quality of the product and so on.

An analysis of the cost of production is an important criterion that characterizes the economic efficiency of the production process.

Analysis tasks

The cost of sales allows you to accurately calculate not only the future profit of each enterprise, but also determine what the profitability of the organization will be.

An important role for the analysis of this concept is played in the financial statement of costs, their research, planning and control.

Thus, the analysis of the cost of sales provides the company's CFO with all the necessary information related to the costs of the enterprise and management personnel.

In addition, this indicator allows us to identify opportunities to increase the effectiveness of the use of labor, material and monetary resources during the production, supply, and marketing of products.

Management and analysis of this process consists of the following stages:

• Cost planning;
• Cost control.

Since the cost of sales is an important micro- and macro-indicator, for its calculation, economists take into account all the costs of the firm. After all, only the minimum costs and the maximum revenue will ensure the company a high net profit, therefore, make the enterprise profitable.