How to relate the cost of production with cost of sales, the relationship from materials to finished goods.?

In ideal world all the COP amount goes to Finished Goods. If you produced wheels and incurred 10$ for example and sold half of them then cost of sales will be 5$ and finished goods 5$. COP is not the same as COS. For example if during the production you incurred abnormall loss in the amount of 2$ and following the previous example: COP will be 10$, cost of sales will be 5, finished goods 3, and 2$ will be recognised as loss. 10=5+3+2.

. Record the value of your inventory at the start of the year. Inventory is simply the value of the goods your business has available for sale. Typically, this figure is the same as the closing value of your inventory for the prior year. 2. Add the amount of money you spent on acquiring new merchandise. For example, if you run a clothing business and buy 50 new dresses that you intend to sell, the cost of those dresses will be included in your cost of sales. If you operate a production business, you can also include the amount you spend on any raw materials necessary for making your product. For example, if you manufacture steel screws, the raw steel you purchase to make those screws is included in your new merchandise expense. This figure should not include items purchased for personal use, or money spent on inventory or product that is not available for sale. 3. Calculate your total overhead. Different IRS rules may apply for this step depending on the nature of your business. For construction and manufacturing or mining businesses, you can add in the value of wages paid to workers, supplies purchased for the business and other overhead costs, such as office and utilities expenses. For more traditional wholesale or retail operations, you must report these overhead costs as business expenses and not add them to the cost of sales. The defining line for the IRS is whether your workers are "production workers," meaning they actually construct or manufacture your product for you. For most small businesses, workers are not production workers. 4. Add your new purchases and allowable overhead expenses to your initial inventory value. 5. Subtract the value of your inventory at year-end. This will provide you with your cost of sales. Expressed as a formula: beginning inventory + inventory purchases and expenses - ending inventory = cost of sales, also known as cost of goods sold.

The cost of production valued by included by raw materials, quality, workmanship etc.., For sales point Over Head Cost, Sales, advertising will include in the final goods value

The relationship between cost production and cost of goods sales is the "value"between raw to refined that is created by the craftsmenship, technology, quality, timeliness... etc

normes, référentiels, models et maéthodes

In a typical production environment, the organization's cost structure is broken up into several components like

             Raw-Materials

             Direct Labour,

             Production Overhead (which can comprise of Indirect Labour asisting                                                 Production facilities, Maintenance cost of                                                         production facilities, spares and consumables                                                 used directly in production facilities, utilities                                                   & hired services engaged by production                                                         facilities)

             Sales and Distribution Overhead

             Finance and Interest Costs

 

The cost of sales is the cost totalled upto Sales and Distribution Overhead whereas Cost of Production is totalled upto Production Overheads of the above structure. In otherwords, the cost of sales includes proportionate cost of production for the quantity of sales volume.

However, the cost of production is the cost for the volume of production generated during the period.  Hence any unsold volume of production will be carrying its cost as Closing Stock Value in the balance sheet at the end of that period.

Cost of Sales otherwise known as Cost of goods sold, is the total cost of goods from initial production up to the point of it's sale. These costs include Materials costs, Labour costs, Factory Rentals and rates, Electricity used in production line, Storage costs and Transportation of both raw materials and the finished goods.

Product costing is done via process accounting, which records all the cost involved in the goods production so that the goods can be accurately valued in terms of their production cost. The additional costs after the process costing (e.g Transport, Storage etc) are also added to come up with a final cost of sales figure.