Geopolitical situation. In some cases, the cost of production is also affected by sanctions or the prices of the necessary materials/consumables/equipment, which are inflated due to difficulties with purchasing within the country.
New laws. If the state introduces concessions for business or, Climate and calendar conditions on the contrary, new taxes, fees, the cost price changes along with this, either up or down.
Geographical location of production. If the workshop is inconveniently located, more money will need to be spent on transporting first the raw materials, and then the finished goods.
Market conditions. The behavior of competitors in a niche or an increase/decrease in demand for goods or services may force a business to reconsider costs.
Climate and calendar conditions. Demand for goods and services changes at different times of the year, which forces changes in production workload. In addition, heating costs increase in cold weather, and electricity costs increase in hot weather.
Development of science and technology. Progress can make some materials and consumables cheaper, making equipment more accessible. At the same time, outdated technologies can become more expensive over time – there are fewer specialists capable of servicing them, as well as fewer parts and consumables.
Internal reasonsClimate and calendar conditions
Implementation of new technologies. Timely and reasonable modernization of production will reduce costs in the long term if new equipment will save effort, materials and time. But if you implement it just for the sake of the fact of implementation, there is a high risk of increasing the cost price – new machines need to be paid off.
Increasing production capacity. The more units of goods the production facility can produce in a period of time, the lower their cost price will be. Therefore, if there is demand, it makes sense to load the line to the fullest. But if you buy new machines without the corresponding demand for the products, they will be idle.
Cost control. If production seeks to reduce production costs, the cost price naturally decreases. Without control, costs will sooner or later begin to rise, including due to employee negligence or even theft.
Employee efficiency. Productivity depends on it: the higher it is, the more goods will be produced and the lower the cost price will be in the presence of fixed costs for a certain period (rent, salaries, etc.).
Quality of tools, equipment. Good machines with kenya business email list consumables reduce the amount of defects, increase the speed of production.
The degree of workload of the production line. If the amount of work is proportionate to the capabilities of workers and machines (no less and no more), this allows not to increase the cost of production. With excessive workload, the number of defective products, machine breakdowns or sick leaves among workers may increase.
Production cycle length. The longer a product spends on the line, the more time and effort it takes, which increases its price.
How to calculate cost priceClimate and calendar conditions
The calculation procedure and the variables included problems will arise at every phase in it vary depending on the field of activity – for example, it differs for goods and services. Here are several formulas by which you can calculate the cost price in different fields.
Calculation of the cost of production of goodsClimate and calendar conditions
The simplest cost calculation is based only shops 9177 on direct costs, which can be easily tracked:
Partial cost = Material and labor costs / Quantity of goods
For example, you produced 200 wooden shelves, spending 20,000 rubles on materials and packaging. You also paid the employee who made these shelves all month another 35,000 rubles, taking into account all taxes and fees. In total, your expenses amounted to 55,000 rubles, and the partial cost of one shelf was 275 rubles: