The cost of production is related to those expenses incurred for the generation of products such as empanadas.

It usually includes raw materials, labor, and manufacturing overhead.

If the production costs turn out to be very high, this affects the final price of the empanadas and the profitability of the company, since every empanadero wants to recover the amount spent and receive profits.

ELEMENTS OF THE COST OF EMPANADAS PRODUCTION

As we have mentioned, there are three key elements in the cost of
production. Next, we explain each one of them:

  • 1.One is the  raw material: They are those materials that are transformed in the production process. Example: Corn, flour, starches, potato, meat, rice, onion and salt in the pie.
  • 2. The second, as important as the first, is labor:  In this case only direct labor is included, that is, that involved in the production process. For example, employees who work in production plants such as: Assemblers, fryers and support personnel for the preparation of stews. According to studies carried out by our company MAQUIEMPANADAS, it has been identified that for every 1000 empanadas, only one operator is required if the technology is available. (Meet the CM08 machine)
  • 3.The third are the other indirect production costs:  Here we include indirect labor, which is necessary, even though it is not involved in the process. For example, the personnel of the administration department, messengers, among others. Expenses such as rentals or taxes must also be added.

EJEMPLOS COSTOS DE PRODUCCIÓN

Suppose we run a factory of empanadas that every day produces 2,500 units that are packaged and put on the market, where they are consumed by an audience of young people. What would our operating costs be?

Production costs

  • Raw material: The price of corn, wheat flour, potatoes, rice, meat, chicken, which fluctuate in the market according to their supply and demand.
  • Labor: The workers who operate the different machines to make the empanadas in their different positions and hierarchies, including workers and supervisors.

Indirect manufacturing costs:

  • Services:  Gas, water, and electricity are consumed in the process, and another company is hired to manufacture the empanadas’ packaging from a paper printed with motifs.
  • Personnel: In charge of dispatches, addresses, billing and accounting processes.
  • Rentals: Both the place where we have located our factory, as well as the equipment that is not owned by us
  • Marketing: We will pay for the ads of our empanadas in newspapers, television, radio or social networks to promote them and make the public look for them.