productkosting

Productkosting refers to the process of determining the total cost of producing a product or delivering a service. It is a core activity of managerial accounting used to inform pricing, budgeting, and profitability analysis. The cost base typically includes direct materials, direct labor, and manufacturing overhead, which may be allocated to products using chosen cost drivers.

Two broad approaches exist: full costing (absorption costing) includes fixed and variable overhead in product costs, while variable costing (direct costing) assigns only variable manufacturing costs to products, treating fixed overhead as a period expense. Organizations choose methods based on reporting requirements and decision needs.

Common costing systems include job costing, where costs are traced to individual jobs or batches; process costing, where costs are averaged over large quantities of identical units; and activity-based costing, which assigns overhead based on activities that consume resources. Overhead allocation often uses predetermined rates or activity-based drivers.

Steps in productkosting typically include defining the cost object (the product or service), identifying and measuring direct costs, selecting an overhead allocation base, calculating overhead assignments, and computing the total and unit cost. The resulting cost information informs pricing, product design, product mix, and profitability analyses, as well as capital and outsourcing decisions.

Limitations include estimation error, arbitrary overhead allocation, and potential distortions of product profitability if drivers do not reflect actual resource use. Proper governance and regular review of cost drivers and data quality are important.