What Is The Formula For Deriving The Cost Price Of A Product?


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Anonymous Profile
Anonymous answered
I want to calculate the cost price? Please let me know how I can calculate? Whole procedure I need for calculating the C.p.? Plz Help.
Andrew Lewis Profile
Andrew Lewis answered
I am going to assume that you are selling said product. The basic formula I use starts with price of raw material used. I then calculate time spent in producing said product. I award myself an hourly rate and add this number to the raw price. For over head I take my monthly totals of power water and insurances, and assign that 100%. Next I compare the ratio of time spent on the product verses total month, to monthly overhead to obtain each products share. As an example, if 100 hours cost $100 then 3 hours spent on each product needs to pay $3 for its share. So in summation add raw material cost, your wage, the overhead percentage, through in 30% or so profit to fill the gaps and there's your sub total. But don't forget your state's sales tax. Hope this was helpful.

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