How to count prime cost

How to count prime cost

Prime cost is understood as all set of material inputs which was spent for production and product sales. The prime cost of finished goods allows to understand, any given production is how effective. When calculating prime cost 2 main methods are used.

It is required to you

  • - Knowledge of cost indexes of production of various articles.


1. Method 1. Use of calculation articles. Accounting - calculation of unit cost of finished goods, proceeding at the same time from various items of expenditure. Those articles allocate a little: 1) Materials; 2) Salary of the main production workers; 3) Bought from a product, semi-finished products and various services of production character; 4) Obligatory assignments and assignments on sots. needs; 5) Additional salary; 6) Service of the production equipment; 7) Expenses on development of just open productions, the salary of managers, engineering and technicians, and also the maintenance of rooms (6 previous points + the 7th form the shop prime cost of finished goods); 8) Costs of promotion of goods, of awarding of workers, travelers, etc. (7 previous points + 8 determine the manufacturing cost of finished goods); 9) Non-productive expenses: transportation, storage and bringing goods to the consumer (All 9 points make full product cost); 10) Costs of additional and auxiliary materials.

2. Method 2. Calculation of product cost according to economic elements. This method allows to make the general estimate of expenses on production, and from here the enterprise can conduct effective planning of the economic activity. For all types of the enterprises the uniform structure of elements is established: 1) The main raw materials, materials acquired from outside semi-finished products and also production sets; 2) Materials of auxiliary character; 3) Fuel, fuel; 4) Electric power; 5) Salary of all production personnel of personnel; 6) Social assignments; 7) Depreciation deductions; 8) Cash expenditures of other character.

Author: «MirrorInfo» Dream Team