Whitaker Peace and Development

Initiative,
South Sudan
Costing Entrepreneurship Training
2021
Venue:

MR. TABAN FRANCIS MARK

 Training Outlines Costing
What are costs ?

What is costing?

Different types of costs

Why is costing important?

How can costing improve your business?

Session Objectives
By the end of this session participants should be able to:-

Define the term costs

Differentiate costing from costs

Mention different types of costs

Explain the important of costing

State how costing can help improving their businesses

What are costs ?
Every business has costs.
Costs are all the money your business spends to make and sell
your products or services.

It can also be define as the value of items used as a result of

producing a product or services.
 A cost centre is any part of the business to which costs can be
charged/portion. It may be a location, person or item of
equipment.
 However, a cost unit is a unit of quantity to produce a good or
services
What are costs Cont……
Let us look at examples of costs from tasty bread:
 Salaries and wages: I work 8 hours everyday in my business. my salary and my
employees’ wages are costs to business.

 Utilities: The business pays for electricity for lights, ovens and other equipment.
Electricity is a cost to the business.

 Raw Materials: we need flour, sugar, fat, yeast and salt to make bread. To buy
those ingredients is a cost to the business

Tasty Bread is a manufacturing business making bread to sell. If you

are a service operator, a retailer or wholesaler, you may not have the
same costs as manufacturer. But most businesses have costs for
materials, labour, electricity, rent, transport and so on
What is Costing?
Costing is the way you calculate the total costs making and
selling a product or providing a service. This whole session
will explain to you how costing can be conducted.

It can also be define as the allocation of costs to products or

services

However, before you proceed to calculating the costs, it is

imperative to understand the different types of costs which
business can acquire.
Different Types of Costs
Different businesses have different costs. Nevertheless, the
two types of costs which are common in all businesses are:-
 Direct costs, and
 Indirect costs

Raw
Materials Direct costs Indirect Total costs
costs
It is very important to understand the different types of
costs to be able to calculate the total costs for each product
or services your business makes or sell.
Different Types of Costs Cont…
Direct costs are all costs that are directly related to the products or
services your business makes or sells. There are two types of direct costs:
 Direct materials costs
 Direct labour costs

Direct material costs are all the money your business spends on the parts
and materials that become part of or are directly to, products or services
you make or sell.

For a retailer or wholesaler, the costs for buying goods to resell are the direct
materials costs
It must be;
 easy to calculate ,
 large enough to add a considerable amount to the total direct cost
Different Types of Costs Cont…
Indirect costs are all other costs that you have for
running your business, for examples rent, interest on
loan and electricity.
Indirect costs are normally not directly related to one
particular product or service.
Indirect costs are sometimes called overheads or
expenses.
 Exercise
This exercise will be work together with the Participants:-
Calculate total direct material costs per month
First calculates Amoko’s direct material costs, how much money his
business is likely to spend each month to buy goods to resell. He
estimates this to
be SSP. 1,080,000 based on the list in the monthly purchases below:
Shopping bags 700 @ cost SSP. 900
Laundry bags 150 @ cost SSP 600.
Green waste garden bags 150 @ 1,500
Prepare the costing plan of Amoko for direct materials as of the month of
July 2021
 Group exercise
Prepare the costs plan for the Poultry business Nimule Youth
Peace Marker Initiative is currently running
Calculate the direct material costs, direct labour costs,
Equipments/tools and indirect costs for the business per
cycle. This will be render with the assistance/guidance
from the Trainers
Why is Costing Important?
Costing needs to be done in order to ascertain whether your
product or service earns profit for your business.

Costing is the process of calculating the total cost of

making and selling any product or service in your business.
Many businesses are not aware of all their costs. Hence,
they are unable to carry out their costing properly.
How can costing improve your
business
Costing helps you to set price; when you know your total
cost, you can set prices which will give your business profit

Costing helps you to reduce and control your costs; when

you know your costs, you can work out better and cheaper
ways to make and sell your products or services
How can costing improve your
business?
Costing helps you to make better decisions about your
business; when you know the total cost for each type of
product or service, you can makes the decisions about
which products or services to sell so that your business
makes the highest profit

Costing helps you to plan for the future; when you know all
your costs, you can make plans for your business. For
example, you need to know all your costs before you can
make a Sale and Costs Plan or Cash Flow Plan
ANY QUESTIONS???
THANK YOU ALL