What Is a Factory Cost?

Factory costs are also called "industrial product production costs." The sum of all costs incurred by an industrial enterprise to produce a certain type and quantity of products. It is usually calculated and listed according to cost items such as raw materials, fuel and power, wages and benefits of production workers, workshop funds and enterprise management costs. It is the most important part of the total cost of industrial products. The factory cost of the sold product plus the sales expenses that should be borne is the cost of sales of the product. The factory cost minus the enterprise management fee is the workshop cost. Factory cost is a comprehensive indicator that reflects the internal work quality and various expenditure levels of industrial enterprises. Through the factory cost, you can understand the manpower and material consumption of the enterprise during the production process, and analyze the composition of the factory cost, which can clearly reduce the direction of product costs, and promote the continuous improvement of business management and work efficiency. ^[1]

Factory cost

Factory costs are also called "industrial product production costs." The sum of all costs incurred by an industrial enterprise to produce a certain type and quantity of products. It is usually calculated and listed according to cost items such as raw materials, fuel and power, wages and benefits of production workers, workshop funds and enterprise management costs. It is the most important part of the total cost of industrial products. The factory cost of the sold product plus the sales expenses that should be borne is the cost of sales of the product. The factory cost minus the enterprise management fee is the workshop cost. Factory cost is a comprehensive indicator that reflects the internal work quality and various expenditure levels of industrial enterprises. Through the factory cost, you can understand the manpower and material consumption of the enterprise during the production process, and analyze the composition of the factory cost, which can clearly reduce the direction of product costs, and promote the continuous improvement of business management and work efficiency. ^[1]

Factory cost is a reflection

Factory cost =

(I) Cut staff costs

(Two), reduction

There are eight main types of waste that are most common in factories, namely: defective, wasted repairs, wasted processing, wasted motion, wasted transportation, wasted inventory, over-manufactured? Premature waste, waiting waste and management waste. The following specifically analyzes various types of waste phenomena.

1. Bad, wasteful repair

The so-called defective and wasted repairs refer to the waste of time, manpower, and material resources required for disposal due to defective products appearing in the factory, and the related losses caused by them. This type of waste specifically includes: loss of materials, defective products becoming waste products; loss of equipment, personnel, and man-hours; loss of additional repairs, identification, and additional inspections; sometimes it is necessary to reduce the price to process the product, or the factory credit due to delayed shipment Decline.

2. Waste of processing

The waste of processing is also called the waste of excessive processing, which mainly contains two meanings: the first is excess processing and excessively accurate processing, such as actual

The key to cost control is to control the impact of costs. Of course, the cost incurred must still be effectively constrained within the range that affects costs. In the value chain, different cost management tools should be used for the different costs and impacts of different process products;

In the research and development process, the target cost method is used to set the target cost of the product, the standard cost method is used in the procurement stage, and the standard cost method or ABC method is used as the cost control tool in the manufacturing stage.

Cost accounting still uses the standard cost method or ABC for actual cost collection and allocation. However, the above methods can be used for performance evaluation, evaluation impact cost, and control the cost of product costs to achieve the ultimate goal of cost control.