The actual cost

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2020-07-02 23:18:07

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Under the cost of production understand the monetary value of all costs incurred by an enterprise during its production. The calculation of this quantity is necessary for the formation of prices for finished products and making management decisions aimed at increase of profitability of work of a business entity. Cost can be planned and actual.

The First type of cost involves the maximum possible costs of the enterprise for manufacture of the goods. They are calculated on the basis of plans drawn up for the coming periods. The actual cost – is the monetary expression of the resources spent actually on the released goods.

The inclusion in the accounting of inventories involved in manufacturing processes carried out on the basis of actually spent on their acquisition of financial resources. The actual cost of current assets is the monetary expression of the costs incurred by the organization to purchase them. These include:

- the amount paid for tangible assets in accordance with the concluded contracts;

- the sums expended by the organization for services of information and consultation type, the provision of which is associated with acquisition of material and production stocks;

- fees paid for customs clearance;

- the non-refundable amounts of taxes, the payment of which is included in the cost of material values;

- the cash equivalent of the services of intermediary organizations;

-expenses incurred for preparation and transportation of stock (material and production) to the place of their use;

- expenses incurred by the organization to the processing of current assets, to take their state required when used in industrial processes (packing, sorting);

- expenses of General nature, relevant to the acquisition of inventories;

- other expenses related to the purchase of inventories.

The Actual cost of manufactured products of the organization is material and production stock, which is for sale. Accounting and the determination of the cost incurred during the process cycle, the business entity conducts on the basis of the procedure established to identify the amounts of the costs of certain types of goods. Thus, the actual cost of goods available for sale is the valuation of raw materials, natural resources and labour, fixed assets and energy that the organization spent during the production process.

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Accounting of produced goods the company can produce in two ways. Criterion reflections of the finished product when the first of them is the actual production cost. In the second method, the goods are taken to account on the plan or target costs.

The Actual cost of production (ready) in the first method the reflection in the accounting registers goes to the debit of account 43 "Finished goods", in correspondence with the credit of accounts 20 "Primary production". Organizations this method of accounting of output used most frequently.

The Actual costs incurred by the entity in the manufacture of goods, can be counted only at the end of the month, when it is determined, both direct and indirect costs. In this regard, cost of goods sold in the same period, calculated to be. In order to avoid this inconvenience, there are certain ways of writing off the finished product:

- at cost one unit;

- at average cost;

- using the FIFO method;

- using the LIFO method.


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Alin Trodden - author of the article, editor
"Hi, I'm Alin Trodden. I write texts, read books, and look for impressions. And I'm not bad at telling you about it. I am always happy to participate in interesting projects."

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