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Product cost, product cost classification, production cost relationship and product cost.
Viewing: What is the cost?
1. Product cost
Product cost is the monetary expression of all expenditures on living labor and materialized labor related to the volume of work, products and services completed in the period.
All costs incurred (incurred in the period, carried forward in the previous period) and accrued expenses related to the volume of products and services completed in the period will form the product cost target. .
2. Price classification
In order to meet the requirements of cost management, accounting and planning as well as the requirements for the construction of commodity prices, prices are considered and classified under many different angles and calculation ranges. There are the following classifications:
2.1. Divided by time of calculation and data source to calculate cost:
In this way, the cost is divided into the planned cost, the standard cost and the actual cost:
+ Planned cost: The planned cost is determined before entering business on the basis of the actual cost of the previous period and the norms and cost estimates of the planning period.
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+ Standard cost: The standard cost is also determined before the start of production of the product, but it is built on the basis of advanced average norms and does not change throughout the planning period. The average advanced norm is based on current cost norms at a certain time in the planning period (usually the first day of the month), so the normed price always changes in line with the changes of cost norms achieved during the production of the product.
+ Actual cost: is the norm determined after the end of product production on the basis of actual costs incurred in the process of product production.
2.2. Breakdown by scope of expenses:
In this way, cost is divided into cost of production and cost of consumption:
+ Production cost (factory cost): Reflecting all costs incurred related to the production and manufacturing of products within the workshop, production department, including the cost of raw materials direct materials, direct labor, and manufacturing overhead.
+ Total cost (consumption cost or full cost): Is the indicator reflecting all costs incurred in connection with the production and consumption of products. Consumption cost is determined:
– According to Circular 200/2014/TT-BTC, determined as follows:
– According to Circular 133/2016/TT-BTC, determined as follows:
3. The relationship between production costs and product prices:
Production cost is calculated according to the following formula:
Thus we see:
– In the product cost, only costs involved directly or indirectly in the production and consumption process related to finished products in the period do not include all costs incurred in the period.
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– When the value of work in progress (production in progress) at the beginning and at the end of the period are equal, or the manufacturing industry has no work in progress, the total cost of products is equal to the total production costs incurred in the period. .
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