Why count? The cost of sales is calculated to set the price for a product or service. The data obtained will tell you how much it will cost to sell the product and whether it makes sense to produce it at all.
How? Two simple formulas are used for calculation. For an in-depth analysis of the cost of sales, more complex methods are required: process-by-process, order-by-order, direct costing or ABC. Accountants are required to reflect the resulting result in the financial results report.
The article explains:
What is cost of sales
The difference between job seekers data package cost of sales and production cost
Components of cost of sales
Formula for calculating the cost of sales
Methods of Cost of Sales Analysis
Calculating the cost of sales to set the retail price
Accounting for cost of sales
How to Reflect Cost of Sales in the Income Statement
Frequently Asked Questions About Cost of Sales
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What is cost of sales
Cost of sales is understood as the total cost of producing a unit of output during the reporting period. Expenses include the acquisition of material and technical assets necessary for production, and logistics costs, wages, marketing research, advertising campaigns and many other items.
In simple terms, cost of sales is what it costs to manufacture a product or provide a service.
This indicator is actively used in the analysis of profitability and marginality of a business process. The assessment is made by comparing the cost of sales with income. The results are reflected in the mandatory reporting documents of the organization and provide the necessary material for forecasting and developing a strategy for the development of the enterprise.
Cost of sales
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Let's take a closer look at the example of the company OOO Angstrem, which produces furniture for offices.
During the working shift, the company manufactured and subsequently sold 10 tables in its workshop. The total cost of materials was 40.5 thousand rubles. The workers' wages were 10 thousand rubles. The costs of marketing, rent of premises and services of the manager-consultant totaled 20 thousand rubles. The sales amount of 10 units of furniture was 70 thousand rubles. Therefore, we get:
Cost of production: 50,500 rubles (40,500 rubles + 10,000 rubles).
Cost of sales – 75,500 rubles (50,500 rubles + 20,000 rubles).
Loss from sales – 500 rubles (75,000 rubles - 75,500 rubles).
If we take into account only the cost of production without taking into account other expenses, then the businessman receives a good profit. But in reality, everything is not so.
Another situation. The initial data is the same, but nine tables were sold during the shift.
Cost of production: 50,500 rubles (40,500 rubles + 10,000 rubles).
Cost of sales – 75,500 rubles (50,500 rubles + 20,000 rubles).
Loss from sales – 7,500 rubles (50,500 rubles - 63,000 rubles).
That is, the costs in this case amounted to 7,000 rubles. If the product can be sold without additional costs (advertising), then in the end there may even be some profit. When calculating the actual revenue of the company, all cost items must be taken into account (logistics, electricity, machine repair, etc.)