Cost is the core economic indicator that enterprises must face in the process of operation. It covers all kinds of expenses incurred by enterprises in production, sales, management and other links.
First of all, direct material costs refer to the expenses of raw materials, auxiliary materials and other expenses directly used in the production process. This is an important part of the cost of the product.
Secondly, direct labor costs involve the wages, benefits and other expenses of employees who are directly involved in the manufacturing of products in the production process.
In addition, manufacturing expenses include indirect costs such as depreciation, maintenance, and repair of production equipment, as well as rent of production sites, utilities, etc.
In addition to the above-mentioned production costs, period expenses are also an important part of the cost expenses. This includes selling expenses, administrative expenses, and finance expenses. Sales expenses are mainly related to sales activities, such as advertising expenses, sales staff salaries, etc.; Management expenses involve the daily operation of the enterprise, such as the salaries of administrative staff, office expenses, etc.; Financial expenses are related to the capital operation of the enterprise, such as interest expenses, foreign exchange losses, etc.
When understanding and controlling costs, enterprises should comprehensively consider various expenses and seek reasonable ways to reduce costs and expenses to improve economic efficiency and market competitiveness.