The cost of production of the enterprise

The cost price of the enterprise's products, in fact, represents the entire amount of direct costs that are directly related to production, as well as all costs for the creation and sale of products.

The cost price of the enterprise's products includes direct costs for materials, salaries to employees and variable costs in the form of material costs, depreciation of fixed assets, salaries of primary and auxiliary personnel, as well as overheads arising from the needs of production and sales of products.

There are such types of cost as full and production.

The cost price of the enterprise's products is one of the most significant and important indicators of the firm's performance. It is used in financial planning in order to calculate profits, as well as the profitability of different types of products and the total volume of sales.

The total cost of all products, which is planned for release, is reflected in the cost estimate for production costs and sales of products. Thus the full cost price differs from the cost price of realized production. The difference that exists between these indicators is due to the fact that there are leftovers of some of the unrealized output, which remains at the beginning (end) of the target period.

In the event that the proceeds from sales appear on the receipt of funds to the account of the manufacturer (or to the cashier's office), the balances of products that were not sold at the beginning of the period include funds in settlements, goods in storage and finished goods in warehouses.

To determine the full cost price, these balances are recorded at the production cost for the reporting period in the amount of their actual availability.

The cost price of the enterprise's products in cash expresses the costs of the enterprise for the production of products. Therefore, the cost is divided into planned and actual costs.

When calculating the planned cost price, the maximum costs that are included in the plan are included in it. The actual cost of production corresponds to the amount of funds actually spent for production.

The profit of an enterprise depends not only on the quality of technologies and industrial processes, product excellence and the efficiency of managing production processes, but also on managing the level of costs. Therefore, accounting for the cost of production is the focus of attention of representatives of all accounting schools.

The development of the economy as a whole is determined by the development of its individual segments - industrial enterprises. Their work and efficiency are determined by management activities, thanks to which the enterprise receives economic independence and competitive position among other market participants.

The effectiveness of cost management is especially relevant in the context of the need to adapt to the rapidly changing environmental conditions.

The very concept of "cost management" today is not yet very widespread, as more attention is paid to accounting and accounting aspects.

Under the management of the cost of production is understood the process of its continuous accounting, planning, analysis and control, as a result of which management solutions are developed to optimize and reduce costs.

The cost management includes a system of measures to influence the individual aspects of the company's activities in order to increase its efficiency and maximize the possible increase in profits. The management process consists of planning, motivation, organization and control functions. These management functions are combined by the processes of communication, as well as the adoption of common solutions.