How to determine product costing for manufacturing company

Product Cost Determination
Cost Components: Credit Google

Product costing is a crucial aspect of managing a manufacturing concern, as it allows businesses to determine the total cost of producing a product. Knowing the total cost of production is important because it helps in setting a selling price that ensures profitability. In this blog, we will discuss how to do product costing for a manufacturing concern.

Step 1: Determine the direct material cost:
Direct material cost is the cost of raw materials that are used to produce a product. To determine the direct material cost, you need to identify the raw materials used in production and their cost per unit. Once you have identified the raw materials used, multiply the quantity of each material used by their respective cost per unit.
Direct material cost = Cost per unit of raw material X Quantity of raw material used

Material Cost: Credit Google

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