Understanding the Costing in Manufacturing Companies
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Understanding the Costing in Manufacturing Companies Course
Introduction:
This course aims to provide a comprehensive understanding of the Cost of Goods Sold (COGS), which encompasses costs directly associated with the manufacturing and distribution of products. The calculation of COGS includes essential expenses like raw materials, packaging, overhead, direct labor (and production-related indirect labor, such as supervisory labor), depreciation of manufacturing and distribution facilities, as well as shipping and handling costs. In essence, COGS represents the total direct cost incurred in the production or creation of a product or service. This calculation encompasses manufacturing overheads (if production-related) and related expenses, including direct labor costs, tools, and factory supplies.
Course Objectives:
By the end of the course, participants will be able to Understand:
- Gross Margin – Shows the profits of production which is driven by both price advantages and cost advantages. It measures how effectively a company turns its revenue into profit. To calculate the ratio, divide gross profit by the revenue. This is then expressed as a percentage.
- Cost of Goods Sold to Sales – Measures the direct costs incurred for the production of goods during a specific period, compared to the revenue earned as a result of those costs. The formula is the cost of goods sold divided by revenue.
Who Should Attend?
This course is suitable for a wide range of professionals but will greatly benefit:
- Supply chain, logistics, and transportation professionals
- Sourcing, procurement, and supplier management professionals
- Production and manufacturing professionals
- All of those who need an understanding of supply chain concepts that can deliver lasting value for your business
Course Outlines:
Companies can use periodic or perpetual systems to keep track of their inventory. The periodic inventory system is usually found in small businesses that have low sales volumes such as a car dealership, whereas large businesses, such as supermarket retailers, use perpetual inventory systems.
With a periodic inventory system, companies count their inventory occasionally and update it at the end of the period in question. In a perpetual inventory system, companies continuously count their inventory and record purchases and return immediately.