Comparative Characteristics of Industrial and Trading Companies

Abstract

Production and non-production costs must be clearly distinguished from one another. The classification of production and commercial costs makes it possible to determine total production cost. This is necessary so that, when finished goods are transferred to the warehouse as completed products, the transfer is carried out at a value that reflects the total production costs incurred in their manufacture.

Administrative, selling, commercial, and financial costs are not related to the production process (they are not localized within the production facilities); therefore, they do not belong to the category of production costs.