Financial Education | Cost planning for disbursement analysis and estimating

In order to manage an optimal cost planning for the analysis and estimation of disbursements, it should be taken into account that the production cost is one of the most important indicators to be considered in the institutions to execute and carry it out.

The production costs or inventoriable costs are those originated in the process of transforming raw materials into finished products, which is why inventories should be valued, presented in the balance sheet as realizable assets, and in the income statement as production and sales costs as the products are sold.

In this sense, production costs or inventoriable costs, as indicated by their name, are incorporated to the value of the products or items manufactured, complying with the meaning of a cost, the acquisition price of a good or service with the expectation of receiving a future profit or benefit (sale of the product)..

While distribution, administration and financial costs are traditionally not added to the value of the products manufactured, but are strictly treated as an "expense" and are taken directly to the statement of income in the same period in which they occur, since they are considered to provide benefits at the same time they are incurred or very quickly.

Cost systems are designed to accumulate, analyze, classify, and account for the various direct and indirect costs associated with the production, operation and marketing of goods and services.