List of Information required for Product Costing

 

This is in continuation of my previous blog of Product costing. Today we are going to know what are the essential information required for product costing. Please note that this list is illustrative and we tried to incorporate all the elements however the list can be modified and depends upon circumstances and nature of business. Depending on the complexity of your manufacturing processes and industry, you may need additional information to perform comprehensive product costing.

 

1.    Bill of Materials (BOM):

 

·        List of all raw materials, components, and sub-assemblies required to manufacture the product.

·        Quantity and unit cost of each material/component. Any specifications or technical data related to the materials.

 

2.    Routing or Process Flow:

 

·        Detailed step-by-step description of the manufacturing process.

·        Time required for each operation or step.

·        Information about equipment, machinery, or labor involved at each stage.

 

3.    Direct Material Costs:

 

·        Cost of all raw materials and components used in the production.

a)       Raw Material (Description (self-manufacture/ domestic purchases /Imported & HSN Code Wise): Opening stock, purchase, issue and closing stock (All in both Qty. & Value) Valuation of Raw Material stock Product wise.

b)     Work in Progress (WIP): Opening stock, Direct purchase) and Closing stock (All in both Qty. & Value). Pls provide WIP details Product wise.

c)      Final Product/Production (Description & Code Wise): Product wise opening stock, Production and closing stock of finished goods (Qty. & Value).

·        Supplier information and purchase order details.

·        Any discounts, shipping costs, or taxes associated with materials.

 

4.    Direct Labor Costs:

 

·        Labor hours required for each operation in the manufacturing process.

·        Hourly wage rates for different job roles or labor categories.

·        Overtime or special labor costs, if applicable.

·        Labor

 

 

5.    Other Direct Expenses

·        Other Direct expenses details such as Patent and licensing fees, packaging cost etc.

 

 

6.    Overhead Costs:

 

·        Indirect manufacturing costs, including rent, utilities, depreciation, and maintenance for the production facility.

·        Allocation methods for distributing overhead costs to specific products (e.g., machine hours, labor hours, square footage).

·        Any other indirect costs related to production.

 

 

7.     Production Volume:

 

·        The actual production volume for the product.

 

8.    Scrap and Waste:

 

·        Information about the expected or historical rate of scrap or waste generated during production.

·        Costs associated with disposing of or recycling waste materials.

 

9.    Quality Control and Inspection:

 

·        Costs related to quality control processes, including testing, inspection, and rework.

·        Costs of rejected or defective units.

  

10.  Packaging and Shipping:

 

·        Costs associated with packaging materials, labeling, and transportation of finished products.

·        Shipping and handling costs, including freight charges.

 

 

11.  Selling and Administrative Expenses:

 

·        Any non-production costs associated with selling and marketing the product.

·        Administrative expenses not included in the product's direct cost.

 

12.  Regulatory and Compliance Costs:

 

·        Costs associated with complying with industry regulations or product standards.

·        Fees for certifications or compliance testing.

 

13.  Details of Research and Development Expenses

 

14.  Details of Abnormal events if any – Details and costs and normal & abnormal loss related to product

 

 

 

15.  Salary and Wages Register

 

 

16.  Fixed Asset Register and Depreciation chart

 

 

17.  Cost center wise Repair & Maintenance

 

 

18.  Financial Accounts along with Trial balance with all schedules in Excel Format.

 

19.  Inventory valuation working file

 

20.  Lifecycle Costs:

 

Consider costs throughout the product's entire lifecycle, including maintenance, warranty, and disposal.

 

These details are essential for accurate product costing, and they help businesses make informed decisions about pricing, profitability analysis, and cost control. Hope this list will guide you to calculate product cost and will increase your costing skills. For improving costing skills please follow our blog.