Required Input
For accurate calculations, you must enter the required information about the product types youwill use for cost calculation on the 『Basic Information Input』 page.
Product Type
Enter the product type or name for which you want to calculate the cost.Period Selection
Select the period for cost calculation in units of month, quarter, first/second half of the year, or year. Applying a yearly unit can yield more accurate information. The selected period will be applied uniformly to the calculation of material costs, labor costs, and expenses.Cost Analysis Period Selection
Enter the total sales revenue of the business during the selected cost calculation period.Sales Quantity of the Product
Enter the number of units of the product sold during the selected cost calculation period.Product Price
Enter the price of the product.Working Days
Enter the actual number of working days during the same period as the selected cost calculation period.Working Hours
Enter the average daily working hours.Production time unit
Enter the production time for the product.Material Cost Calculation
Material costs are calculated on the 『Material Cost Calculation』 page,which covers the expenses incurred in the process of producing the product.
| Direct Material Costs | Direct material costs are the costs of materials that are directly used in the production of a specific product and can be directly traced to and charged to that product. In other words, these are the 'primary' materials that go into making a product. They are the main raw materials that form the physical substance of the product (e.g., wood for furniture making, steel sheets for car production, fabric for clothing manufacturing). |
| Indirect Material Costs | ndirect material costs are the costs of auxiliary materials that are commonly used for the production of various types of products, or whose consumption is difficult or uneconomical to directly trace to a specific product even if used for it. These materials are necessary for product production but are not the main components of the finished product (e.g., machine lubricants, factory cleaning supplies, consumable tools, adhesives, nails, etc.). |
Labor Cost Calculation
Labor costs are calculated on the 『Labor Cost Calculation』 page,which covers all expenses paid as compensation for the labor of workers.
| Direct Labor Costs | Direct labor costs are the costs associated with the labor directly involved in the production of a specific product, and these costs can be directly traced to and charged to that product. In other words, these are the expenses paid to workers who 'directly' participate in making a product. This includes the labor costs of personnel directly involved in processing raw materials into products, such as production line workers and machine operators (e.g., wages of automobile assembly line workers, carpenters' wages for furniture making). |
| Indirect Labor Costs | Indirect labor costs are the costs associated with personnel who are commonly required for the production of various types of products, or whose labor contributed to a specific product but is difficult or uneconomical to directly trace to that product. This primarily includes the labor costs of personnel who support, manage, or supervise the production process rather than directly engaging in production activities (e.g., salaries of factory supervisors, salaries of production management department staff, labor costs of factory equipment repair and maintenance personnel, labor costs of quality inspectors (when not dedicated to a specific product), labor costs of factory security guards and cleaning staff, etc.). Additionally, even for workers directly involved in production, expenses such as wages for idle time and the premium portion of overtime pay that is difficult to directly link to a specific product can also be classified as indirect labor costs. |
Expense Calculation
Expenses are calculated on the 『Expense Calculation』 page,which covers the costs necessary for managing or operating the business.
| Electricity Costs | Electricity costs refer to the electricity charges incurred for business operations, including factories and offices. While electricity costs for operating production equipment can be classified as manufacturing overhead (a part of manufacturing costs), electricity costs for offices and common areas are often categorized as general and administrative expenses. During cost analysis, these costs are allocated to either manufacturing overhead or general and administrative expenses based on their specific use. |
| Utilities Expenses | Utilities expenses include costs for water, gas, fuel, and other energy sources used for business operations, excluding electricity costs. Similar to electricity costs, these expenses are categorized as either manufacturing overhead or general and administrative expenses and are reflected in the cost analysis based on their usage location and purpose. |
| Depreciation Expense | Depreciation expense is the allocation of the cost of tangible assets (such as buildings, machinery, and vehicles) and intangible assets over their useful lives. Depreciation on production equipment is included in manufacturing costs, while depreciation on office furniture, buildings (excluding factory buildings), and vehicles (for sales/administrative purposes) is treated as general and administrative expenses. DetailCost employs the straight-line method, which recognizes an equal amount of depreciation expense each period by dividing the asset's acquisition cost less its residual value by its estimated useful life (the period over which the asset is expected to be used). |
| Repair and Maintenance Expenses | Repair and maintenance expenses are the costs incurred to maintain the original condition or improve the performance of a company's assets (such as buildings, machinery, and equipment). Repair and maintenance costs related to production facilities are included in manufacturing costs, while those for common assets like office furniture or buildings are treated as general and administrative expenses. |
| Transportation Costs | Transportation costs are the expenses associated with the shipment of goods related to product production and sales. Transportation costs incurred when purchasing raw materials can be included in the purchase cost or treated as manufacturing overhead, while transportation costs incurred during product sales are categorized as selling expenses. In this context, it may primarily refer to transportation costs related to product sales or general administrative activities such as the movement of goods between the head office and branches. |
| Employee Benefits Expenses | Employee benefits expenses are the costs incurred to promote the welfare of employees. This includes items such as meal allowances, the company's share of health insurance premiums, congratulatory and condolence payments, and fitness expenses. While employee benefits expenses for production department staff are included in manufacturing costs, those for office and administrative staff are classified as general and administrative expenses. |
| Storage Costs | Storage costs are the expenses incurred for storing products or raw materials. This includes warehouse rental fees, inventory management labor costs, etc. While the costs of storing raw materials necessary for the production process can be considered manufacturing overhead, the costs of storing finished goods for sale or general material storage may be treated as general and administrative expenses or selling expenses. |
| Selling and Administrative Expenses | Selling and administrative expenses refer to costs that are incurred in relation to a company's primary operating activities but are not directly involved in the production process of goods or services. In other words, they encompass all expenses incurred for sales activities of products or services, as well as for the general management and maintenance activities of the company. |
| Subcontracting Costs | Subcontracting costs are the expenses paid to external specialized companies for entrusting part or all of the product manufacturing process to them. These costs arise when a company lacks its own production facilities or technology, or when outsourcing is utilized to adjust production volume. Subcontracting costs are directly included in the manufacturing overhead (an expense within the cost of goods sold) of the relevant product. |
| Safety Management Costs | Safety management costs are the expenses incurred to ensure workplace safety, including the prevention of industrial accidents. This includes costs for purchasing safety equipment, safety training expenses, and the maintenance costs of safety facilities. Safety management costs directly related to production activities can be treated as manufacturing overhead, while safety management costs for the overall business environment, such as office spaces, may be classified as general and administrative expenses. |
| Supplies Expenses | Supplies expenses are the costs of purchasing items that are consumed relatively quickly, such as office supplies and cleaning supplies. While the cost of supplies used in the production process can be classified as manufacturing overhead, the cost of office supplies used in the office is treated as general and administrative expenses. |
| Travel, Transportation, and Communication Expenses | Travel, transportation, and communication expenses are the costs incurred for business-related travel, transportation, telephone charges, internet communication fees, etc. Expenses related to sales activities are included in selling expenses, while those related to administrative activities are included in general and administrative expenses. |
| Taxes and Dues | Taxes and dues are the various taxes (such as property tax and vehicle tax) and public charges (such as various levies) that a company pays. While income-based taxes like corporate tax are generally not treated as selling and administrative expenses, asset-holding taxes like property tax can be classified as manufacturing overhead or general and administrative expenses depending on the nature of the related assets. |
| Waste Disposal Costs | Waste disposal costs are the expenses incurred for treating waste generated from production or administrative activities. Waste disposal costs resulting from the production process can be classified as manufacturing overhead, while those from offices and other administrative areas may be treated as general and administrative expenses. |
| Printing and Stationery Expenses | Printing and Stationery Expenses are the costs incurred for purchasing work-related books, printing documents, photocopying, etc. Printing costs specifically related to the production of a certain product can be considered manufacturing overhead, while general office-related book and printing expenses are treated as general and administrative expenses. |
| Service Fees Paid | Service fees paid are the fees remitted to external experts for services rendered. These encompass legal advisory fees, audit fees, consulting costs, and the like. While technical advisory fees pertinent to specific production activities can be categorized as manufacturing overhead, consulting expenses related to overall business management are typically treated as general and administrative expenses. |
| Rent Expense | Rent expense refers to the costs incurred for leasing buildings, land, equipment, etc. While factory building rent is included in manufacturing costs, rent for office buildings, warehouses (for product storage), etc., is treated as general and administrative expenses or selling expenses. |
| Insurance Premiums | Insurance premiums are the costs incurred for purchasing and maintaining insurance coverage for a company's assets or activities. Insurance premiums for production equipment are treated as manufacturing overhead, while premiums for buildings (offices), vehicles (for sales/administrative purposes), etc., are classified as general and administrative expenses or selling expenses. |
| Administrative Expenses | Administrative expenses are the costs incurred for the upkeep and maintenance of buildings, including expenses for security services, cleaning services, and common building maintenance costs. Administrative expenses related to factory buildings are treated as manufacturing overhead, while those related to office buildings are classified as general and administrative expenses. |
| Other Statutory Expenses | Other statutory expenses include mandatory expenditures required by laws and regulations that have not been listed above. Examples include environmental improvement charges and costs related to specific legally required training. These expenses are classified as either manufacturing overhead or general and administrative expenses based on the nature of their occurrence. |
| Patent Royalty | Patent royalty is the cost paid to a patent holder in exchange for the right to use their patented invention or apply it to a product. It is also commonly referred to as a royalty. This expense arises from the use of a patent for a specific technology or design, which enables the production or sale of a product. Payment methods vary and typically include a fixed amount per unit sold or a certain percentage of revenue. |
| Technology Royalty | Technology royalty comprehensively refers to the costs paid for introducing or using specific technical information, know-how, trademark rights, software licenses, etc., including patent royalties. It can be a broader concept than patent royalty. These costs may arise when introducing new production technologies or utilizing the technology of a specific brand to manufacture products |
| Research and Development Expenses | Research and development (R&D) expenses encompass all costs incurred to develop new products or technologies, or to improve existing ones. This includes research activity costs, development activity costs, related labor costs, material costs, external research service fees, and depreciation on research equipment. While R&D activities aim to generate future profits, they are characterized by the uncertainty of success. |
| Testing and Inspection Expenses | Testing and inspection expenses are the costs incurred for various tests and inspections conducted on raw materials, semi-finished goods, and finished goods to verify whether the product quality meets specifications and standards. This includes expenses for operating and maintaining testing equipment, labor costs for testing personnel (which can also be classified as labor costs or overhead), fees for external testing institutions, and sample costs. It is an essential part of quality control and improvement activities. |
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