Product CostingCarlsberg Serbia GroupDragan Vjestica20.09.2012.
Page 2Product Costing, summaryo Company Carlsbergo Standard Reportso Accounting Principleso Production overviewo Standard COGS – Elementso Standard COGS - Budget Costing
Page 3Company Carlsberg Serbia-Founded 1847. in Copenhagen, Denmark by J.C. Jacobsen-Name: by son of founder “Carl” and “berg” – hill; location of the brewery-Have production in 45 countries-“Pivara Celarevo” founded by Lazar Dundjerski in 1892.-After II world war becomes government property-From 1975. till 1980. bigger investments – capacity 1,2 HL brewhouse-Cooperation with company Löwenbrau-In September 2003. majority of shares buys company Carlsberg Breweries A/S-Started high investments in all parts of the business but mainly in production-Be a part of the“PROBABLY THE BEST BEER COMPANY IN THE WORLD”
Page 5 Product Costing is method of calculating costs of goods sold perproduct unit based on allocation of total production expenses. Product Costing gives the possibility to understand product profitability Standard Costs of Goods Sold (COGS) is budgeted productioncosts per unit product multiplied by actual volume. Standard COGS is referencefor further analyze of COS. Cost of Sales (COS) is actual costs of producing and purchasinggoods or services. It is usually presented in the form:Standard COGS+ VariancesCosts of SalesStandard Reports – Cost of Sales and ProductCosting
Page 7The five Accounting Principles1. Standard Cost Accounting2. Full cost Principle3. Indirect Production Overhead (IPO) in inventory4. Practical capacity5. Capitalization of returnable bottles & cratesThe Product Cost five Accounting Principles
Page 81. Standard Cost Accounting•A standard cost per SKU must be developed once a year aspart of the budget process• Product cost standards should only be changed once a year•Approved budget assumptions are used for product costing• E.g. purchasing prices, line efficiencies, manning, std. losses•Product cost are recorded as standard costs in actual booking• Production variances to this standard are recorded (material variances,usage variances labour, machine variances capacity variances and supportvariances)•Cost of Sales in Profit & Loss statement is related to salesvolume, except for variances which are related to productionvolumeThe five Accounting Principles
Page 92. Full cost Principle• Full cost means that•All production expenses are allocated to each single unitproduced•The products absorb all budgeted production expenses3. Indirect Production overhead (IPO)• Product costs are used for inventory valuation• Product costs include cost of support functions (IPO)The five Accounting Principles
Page 104. Practical capacity• Depreciation costs reflect capacity costs• Capacity is by definition 8760 hours (24x365)• Products are only charged for the capacity they actually use,including planned stops and changeover.• Cost of idle capacity is not absorbed by products5. Capitalization of returnable bottles & crates• Returnable bottles and crates (B&C) are considered fixedassets and depreciated over useful lifetime.The five Accounting Principles