Cost price (kostprijs)
Cost price (kostprijs) is the amount of expenditure and allocated costs attributed to a product, service or asset on a chosen basis.
What does cost price mean?
Cost price (kostprijs) is the amount of expenditure and allocated costs attributed to a product, service or asset on a chosen basis.
For inventory and self-made assets, the composition is crucial. Cost of sales is a period cost, whereas inventory costs may first be carried on the balance sheet.
How does it work?
In the annual accounts, cost price is the collective term for the acquisition cost of what was purchased and the production cost of what was made in-house. The acquisition cost consists of the purchase price and incidental costs such as freight and import duties (art. 2:388(1) DCC). The production cost comprises raw and auxiliary materials and other costs directly attributable to production; a reasonable share of indirect costs and interest during the construction period may be included (paragraph 2).
For inventories, RJ 220 lists what does not belong: abnormal waste, storage costs not required by the production process, general administrative costs and selling costs. Similar inventory may be valued at weighted average prices, FIFO or LIFO (art. 2:385(2) DCC). If the net realisable value is lower than the cost price, the item is written down (art. 2:387(2) DCC).
Example
A furniture maker (BV) makes tables. Wood and fittings: € 150 per table. Direct labour: 4 hours at € 40 = € 160. Indirect production costs (machine depreciation, workshop rent) are € 90.000 a year at a normal output of 1.500 tables: € 60 per table. Production cost: 150 + 160 + 60 = € 370. If the workshop makes only 1.000 tables in a bad year, the surcharge stays at € 60; the under-utilisation of € 30.000 is a charge of that year.
In the annual accounts
Inventory/asset on the balance sheet or cost of sales in the P&L.
Difference from the full cost price
In a calculation for the selling price you include all costs, including selling and administration: the full cost price. For the balance sheet this is not allowed; only the costs of obtaining or making the product count. If the table in the example costs € 430 in the calculation, it still appears at € 370 on the balance sheet.
Common mistakes
- Taking the selling price as the cost price
- Allocating indirect costs without a method
What to watch for
- Base the surcharge for indirect costs on normal capacity, not on the year's output, and record the calculation.
- Compare the cost price per product group with the expected selling price less selling costs, and write down where the proceeds are lower.
- Micro and small entities that apply tax-based accounting policies follow the tax cost price rules (art. 2:396(6) DCC).
Legal basis and source
art. 2:388 DCC
Frequently asked questions
Does VAT belong in the cost price?
Only VAT you cannot reclaim, for example on exempt supplies. Deductible input VAT is a receivable from the Dutch Tax Administration (Belastingdienst) and not part of the acquisition cost.
May I include wage costs in the cost price of a self-made asset?
Yes, if the staff spent the hours directly on production and you can substantiate this (art. 2:388(2) DCC).
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Preparing Dutch annual accounts?
Your first set of annual accounts is free, for every size class. Create an account and prepare the annual accounts of your Dutch company under Title 9 of Book 2 of the Dutch Civil Code.
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