Cost division of manufacturers in foreign supply chains

In foreign supply chains, in addition to imported goods, the country's local brand manufacturers, manufacturers are also one of the sources of goods. Because it is the manufacturer's own purchase of various raw materials, processing and assembling the products, the final packaging into a finished product. Their cost division and accounting will be different from the "reselling" roles of distributors and wholesalers in the supply chain. So how do producers divide their costs?



For a manufacturer, the general cost is mainly divided into two major parts, one is the manufacturing cost; the other is the non-manufacturing cost. Let's take a closer look!

Manufacturing cost
What are the manufacturers' manufacturing costs? It can be roughly divided into three parts. One is the raw material directly consumed in the process of producing products. For example, the production of products and the processing of finished products consume various raw materials purchased by the manufacturers before.

The second is the labor cost consumed in a series of production processes such as production, processing, assembly and packaging. For example, in the product production line, the labor required for making a product; for example, in the product packaging process, the finished product is packed in a carton seal and packaged, and the labor required for labeling, logo, etc.

The third is the management and operating costs incurred during production and manufacturing. This fee includes things like utilities, rent, equipment depreciation, daily cleaning, etc. There are also salaries for management personnel in factory warehouses, which are not directly involved in production and are not included in labor costs. But this part also belongs to the category of manufacturing costs. When the cost is calculated, it is calculated into the management cost.

It should be noted here that although the manufacturer's product manufacturing cost is composed of the above three parts, the raw materials and labor costs of the first two can be accounted for in this product, while the third management cost cannot. Why do we say that? Because in the production process of a product, how many raw materials and labor are consumed can be calculated in detail, and the management cost of machinery cleaning and workshop management salary cannot be calculated into the product, so the manufacturer should allocate it by themselves.

Next, let's take a look at the non-manufacturing costs of manufacturers. Some foreign trade friends may think of the cost of product sales, marketing, and promotion.

Non-manufacturing cost
As the name implies, non-manufacturing costs refer to the related costs that are not incurred in the production process of the product. The cost of this piece is mainly divided into the following two parts. The first is the cost of product sales, marketing, and market promotion, including the salary of sales staff, the cost of marketing tools, etc. For example, to push this product to the target market, we need to do a series of advertising and promotion work. This process will generate the necessary cost of goods sales...

The second is administrative expenses, which include things like salary of managers, office rent, salaries of other departments, etc. For example, if a manufacturer sells its own products, it needs to hire some sales representatives to help itself put the products on the market...

We can see that the above-mentioned costs are not direct costs incurred during the manufacturing process of the product, but can also be said to have nothing to do with the production of the product. Therefore, the cost of this part is not included in the manufacturing cost.

In short, manufacturing costs are closely related to product production, processing, assembly, packaging and other links, and these costs can be accounted for the cost of product consumption, which belongs to the category of product costs. Non-manufacturing costs are expenses incurred by the company in operating products and marketing and promotion, and belong to the category of period costs.