How to calculate product or production cost? Types of cost & Formula of various costs. Selling price depends which cost?

Types of cost:

There are three types of cost:

♦         Manufacturing cost.

♦         Selling cost.

♦         Marketing cost.

     Product cost:

              Product cost consists of the following costs:

                          ** Cost of raw material:

♦         L/C price

♦         C & F value

♦         Landing cost

♦         Transport cost

♦         Carrying, Loading& Unloading cost.

                      ** Conversion cost:

♦         Bale management cost.

♦         Wastage cost.

♦         Machine cost.

♦         Machine depreciation change.

♦         Fuel cost.

♦         Lubricant cost.

♦         Electricity cost.

♦         Spares cost.

♦         Manpower cost.

♦         Salary & Wages.

♦         Bank interest.

♦         Establishment cost.

                ** Packing cost:

♦         Paper cone.

♦         H.D.P.E bag (High density poly ethylene).

♦         P.P bag / Hosiery bag/ Cartoon.

♦         Lebel.

♦         Jute twine / wrapping.

                **Carrying charges / cost.

  Formula of various costs:

           Marketing cost   = (Manufacturing cost +Selling cost + Distribution cost.)

Selling cost          = (Manufacturing cost + certain amount of profit.)

Gross profit         = (Selling cost – Manufacturing cost.)

Net profit             = Gross profit – (Bank charge + All sorts of Taxes.)

     Selling price:

               Selling price depends on the following costs:

♦         ( 60- 70)% Raw material cost.

♦         ( 2- 2.5)% Spares cost.

♦         ( 12- 17)% financial charge.

♦         ( 3- 10)% Wages cost.

♦         ( 3- 4)% Electricity cost.

♦         ( 1.3- 2)% Packing cost.

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