Production costs: their types, dynamics. Production costs. Types of production costs. Fixed and variable costs

Costs(cost) - the cost of everything that the seller has to give up in order to produce the goods.

To carry out its activities, the company incurs certain costs associated with the acquisition of the necessary production factors and the sale of manufactured products. The cost estimate of these costs is the costs of the firm. The most cost-effective method of production and sale of any product is considered to be one in which the costs of the company are minimized.

Cost has several meanings.

Cost classification

Individual- the costs of the firm itself;
Public- the total costs of society for the production of a product, including not only purely production costs, but also all other costs: environmental protection, training of qualified personnel, etc .;
Production costs- these are costs directly related to the production of goods and services;
Treatment costs- related to the sale of manufactured products.

Classification of distribution costs

Additional costs circulation includes the costs of bringing the manufactured products to the end consumer (storage, packaging, packaging, transportation of products), which increase the final cost of the goods.
Net distribution costs- these are costs associated exclusively with acts of purchase and sale (remuneration of sales workers, keeping records of trade operations, advertising costs, etc.), which do not generate a new value and are deducted from the cost of the goods.

The essence of costs from the standpoint of accounting and economic approaches

Accounting costs- This is the cost estimate of the resources used in the actual prices of their implementation. The costs of the enterprise in the accounting and statistical reporting are in the form of the cost of production.
Economic understanding of costs is based on the problem of limited resources and the possibility of their alternative use. Essentially, all costs are opportunity costs. The task of the economist is to choose the most optimal use of resources. The economic costs of the resource chosen for the production of a good are equal to its cost (value) under the best (of all possible) options for its use.

If the accountant is mainly interested in the assessment of the firm's activities in the past, then the economist, in addition, is interested in the current and especially the predicted assessment of the firm's activities, in the search for the most optimal option for using the available resources. Economic costs are usually higher than accounting costs. cumulative opportunity costs.

Economic costs, depending on whether the firm pays for the resources used. Explicit and Implicit Costs

External costs (explicit)- these are costs in monetary form, which the company carries out in favor of suppliers of labor services, fuel, raw materials, auxiliary materials, transport and other services. In this case, the resource providers are not the owners of the firm. Since such costs are reflected in the balance sheet and report of the company, they are essentially accounting costs.
Internal costs (implicit) Is the cost of own and independently used resource. The firm views them as the equivalent of the cash payments that would be received for a self-used resource in the most optimal use.

Let's give an example. You are the owner of a small store located in your property. If you didn’t have a store, you could rent this premises, say, for $ 100 per month. These are internal costs. The example can be continued. Working in your store, you use your own labor, without, of course, receiving any payment for it. With the alternative use of your labor, you would have a certain income.

The logical question is: what keeps you as the owner of this store? Some kind of profit. The minimum wage required to support someone in a given area of business is called normal profit. Unearned income from the use of own resources and normal profit together form internal costs. So, from the standpoint of the economic approach, all costs should be taken into account in production costs - both external and internal, including in the latter and normal profit.

Implicit costs cannot be equated with so-called deadweight costs. Irrecoverable costs- these are costs that are incurred by the company once and cannot be reimbursed under any circumstances. If, for example, the owner of an enterprise incurred certain monetary costs to make an inscription with its name and type of activity on the wall of this enterprise, then by selling such an enterprise, its owner is ready in advance to incur certain losses associated with the value of the inscription produced.

There is also such a criterion for the classification of costs as the time intervals during which they occur. The costs incurred by a firm producing a given volume of output depend not only on the prices of the factors of production used, but also on which factors of production are used and in what quantities. Therefore, there are short- and long-term periods in the activities of the company.

There is no production without costs. Costs - it is the cost of purchasing factors of production.

Costs can be calculated in different ways, therefore, in economic theory, starting with A. Smith and D. Ricardo, there are dozens of different systems for analyzing costs. By the middle of the XX century. general principles of classification have developed: 1) by the cost estimation method and 2) in relation to the amount of production (Fig. 18.1).

Economic, accounting, opportunity costs.

If you look at the sale and purchase from the perspective of the seller, then in order to generate income from the transaction, first of all, it is necessary to recoup the costs incurred for the production of the goods.

Rice. 18.1.

Economic (imputed) costs - these are the economic costs incurred, in the opinion of the entrepreneur, by him in the production process. They include:

1) resources acquired by the firm;
2) internal resources of the firm, not included in the market turnover;
3) normal profit, considered by the entrepreneur as compensation for the risk in business.

It is the economic costs that the entrepreneur charges himself with the obligation to compensate, first of all, through the price, and if he fails to do so, he is forced to leave the market for another field of activity.

Accounting costs - cash costs, payments made by the company with the aim of acquiring on the side of the necessary factors of production. Accounting costs are always less than economic ones, since they only take into account the real costs of acquiring resources from external suppliers, legally formalized, existing in an explicit form, which is the basis for accounting.

Accounting costs include direct and indirect costs. The former consist of direct production costs, while the latter include costs without which the company cannot operate normally: overhead costs, depreciation charges, interest payments to banks, etc.

The difference between economic and accounting costs is opportunity cost.

Opportunity Cost - this is the cost of producing a product that the firm will not produce, since it uses resources in the production of a given product. Essentially, the opportunity cost is it is the cost of missed opportunity. Their value is determined by each entrepreneur independently based on his personal ideas about the desired profitability of the business.

Fixed, variable, total (gross) costs.

An increase in the production volume of a firm, as a rule, entails an increase in costs. But since no production can develop indefinitely, costs are a very important parameter in determining the optimal size of the enterprise. For this purpose, the division of costs into fixed and variable costs is applied.

Fixed costs - the costs of the company, which it bears, regardless of the volume of its production activities. These include: rent for premises, equipment costs, depreciation, property taxes, loans, remuneration of management and administrative staff.

Variable costs - the costs of the firm, which depend on the amount of production. These include: the cost of raw materials, advertising, wages for hired workers, transport services, value added tax, etc. When expanding production, variable costs increase, and when reduced, they decrease.

The division of costs into fixed and variable is conditional and acceptable only for a short period during which a number of factors of production are unchanged. In the long run, all costs become variable.

Gross costs - it is the sum of fixed and variable costs. They represent the cash costs of a firm to produce a product. The relationship and interdependence of fixed and variable costs as part of the general can be expressed mathematically (formula 18.2) and graphically (Fig. 18.2).

Rice. 18.2.

C - the costs of the company; 0 - the number of products manufactured; ГС - fixed costs; US - variable costs; TS - gross (total) costs

where RS - fixed costs; US - variable costs; GS - total costs.

(for simplicity, measured in monetary terms), used in the course of economic activity of the enterprise for (for) a certain time stage. Often in everyday life, people confuse these concepts (costs, costs and expenses) with the purchase price of a resource, although this is also possible. Costs, costs and expenses have not been historically separated in Russian. In Soviet times, the economy was an "enemy" science, so there was no significant further development in this direction, except for the so-called. "Soviet economy".

In world practice, there are two main schools of understanding costs. This is a classic Anglo-American, to which both Russian and continental can be attributed, which rests on German developments. The continental approach structures the content of costs in more detail and therefore becomes more and more widespread throughout the world, creating a qualitative basis for tax, accounting and management accounting, costing, financial planning and controlling.

Cost theory

Clarifying the definition of concepts

To the above definition, you can add more clarifying and delimiting definitions of concepts. According to the continental definition of the movement of value flows at different levels of liquidity and between different levels of liquidity, the following differentiation of concepts for negative and positive value flows of organizations can be made:

In economics, there are four main levels of value flows in relation to liquidity (shown from bottom to top):

1. Available capital(cash, highly liquid funds (checks ..), operational bank accounts)

payments and payments

2. Money capital level(1. Level + accounts receivable - accounts payable)

The movement at this level is determined costs and (financial) receipts

3. Production capital level(2. Level + production necessary subject capital (material and non-material (for example, a patent)))

The movement at this level is determined costs and production income

4. Net capital level(3. Level + other subject capital (material and non-material (for example, accounting program)))

The movement at this level is determined expenditures and income

Instead of the level of net capital, you can use the concept total capital level if we take into account other non-subject capital (for example, the company's image ..)

The movement of values between levels is usually carried out at all levels at once. But there are exceptions when only a few levels are covered, not all. They are indicated in the image with numbers.

I. Exceptions in the movement of value streams of levels 1 and 2 are due to credit transactions (financial delays):

4) payments, not costs: repayment of credit debt (= "partial" loan repayment (US))

1) costs, non-payments: the emergence of credit debt (= the appearance (at US) of debt to other participants)

6) payment, non-receipt: input of receivables (= "partial" debt repayment by other participants for the product / service sold (NAMI))

2) receipts, not payments: the appearance of accounts receivable (= provision (by US) of an installment plan to pay for a product / service to other participants)

II. Exceptions in the movement of value flows of levels 2 and 4 are due to warehouse operations (material delays):

10) costs, not costs: payment for credited materials that are still in stock (= payment (NAMI) on debit in relation to "stale" materials or products)

3) costs, not costs: delivery of unpaid materials from the warehouse (in (OUR) production)

11) income, not income: prepayment for the subsequent delivery of ((OUR) "future" product by other participants)

5) revenues, not revenues: the launch of a self-produced installation (= "indirect" future revenues will create an income of the value of this installation)

III. Exceptions in the movement of value streams of levels 3 and 4 are due to the asynchrony between the intra-periodic and inter-periodic production (main) activities of the enterprise and the difference between the main and related activities of the enterprise:

7) costs, not costs: neutral costs (= costs of other periods, non-production costs and extraordinarily high costs)

9) costs, not costs: calculating costs (= write-offs, interest on equity capital, lease of own real estate to an enterprise, owner's salary and risks)

8) income, non-production income: neutral income (= income of other periods, non-production income and extraordinary high income)

It was not possible to find production incomes that would not have been incomes.

Financial balance

The foundation of financial balance any organization can be simplified to name the following three postulates:

1) In the short term: the superiority (or consistency) of payments over payments.
2) In the medium term: the superiority (or consistency) of revenues over costs.
3) In the long term: the superiority (or match) of income over expenses.

Costs are the "core" of costs (the main negative value stream of an organization). Production (basic) income can be attributed to the "core" of income (the main positive value stream of the organization), based on the concept of specialization (division of labor) of organizations in one or more types of activities in society or the economy.

Cost types

Third-party company services
Other

More detailed structuring of costs is also possible.

Cost types

By influence on the cost of the final product
- indirect costs
By interrelation with the utilization of production capacities
In relation to the production process
- Production costs
- Overhead costs
By constancy in time
- time constant costs
- episodic costs
By type of cost accounting
- accounting costs
- calculating costs
By subdivisional proximity to manufactured products
- overhead costs
- general operating costs
By importance to product groups
- group A costs
- group B costs
By importance to manufactured products
- product costs 1
- product costs 2

By importance for decision making
- relevant costs
- irrelevant costs
Removable
- disposable costs
- unrecoverable costs
By adjustability
- regulated
- unregulated costs
If possible, return
- return costs
- irrecoverable costs
By cost behavior
- incremental costs
- marginal (marginal) costs
Cost-to-quality ratio
- corrective action costs
- cost of preventive action

Sources of

Kistner K.-P., Steven M .: Betriebswirtschaftlehre im Grundstudium II, Physica-Verlag Heidelberg, 1997

Concept and classification of costs

The simplest way to investigate costs is to sum them up. The resulting amount can be deducted from the amount of revenue to find out the size, you can compare the amount of costs for the same type of processes to determine a more economical option, etc.

To model economic situations, create formulas, assess business processes and their results, costs must be classified, i.e. divided according to some criteria and combined into typical groups. There is no rigid classification system; it is more convenient to consider costs based on the needs of a particular study. But some of the frequently used options can be considered as a kind of rules.

Especially often, costs are divided into:

Constant - not depending on the volume of production in a particular period;
Variables - the size of which is directly related to the size of the issue.

Note that such a division is valid only when considering a relatively short-term period. In the long run, all costs tend to become variable.

In relation to the main production process, it is customary to allocate costs:

For the main production;
For auxiliary operations;
For non-production costs, losses, etc.

If we represent costs as economic elements, then it will be possible to distinguish from them:

Main production costs (raw materials, energy, etc.);
Labor costs;
Social deductions from wages;
Depreciation deductions;
Other expenses.

A more thorough, detailed way to find out the concept, composition and types of production costs will be the compilation of a cost estimate for the enterprise.

According to the calculation items, the costs are divided into:

Purchased raw materials and supplies;
Semi-finished products, components, production services;
Energy carriers;
Labor costs of the main production personnel;
Tax deductions from wages in this category;
from the same wages;
The costs of preparing the development of production;
Workshop costs - a category of costs for operations associated with a specific production unit;
General production costs - production costs that cannot be fully and accurately attributed to certain divisions;
General business costs - costs associated with the provision and maintenance of the entire organization: management, some support services;
Commercial (non-production) expenses - everything related to advertising, product promotion, after-sales service, maintaining the image of the company and products, etc.

Another important type of cost, regardless of the analysis criteria, is the average cost. This is the amount of costs per unit of output; to determine it, the amount of costs is divided by the number of units produced.

And the amount of costs for each new unit of output when the volume of output changes is called marginal costs.

Knowing the size of average and marginal costs is necessary for making effective decisions about the optimal volume of output.

Cost calculation methods

Formulas and graphs

A general idea of the cost classification system and the availability of costs in certain areas does not give practical results when assessing a specific situation. Moreover, even building models without precise numbers requires tools to illustrate the dependencies between certain elements of the cost system and their impact on the final result. Formulas and graphics help to do this.

By putting appropriate values in the formulas, it becomes possible to calculate a specific economic situation.

The number of costing formulas is difficult to pinpoint; each formula appears with the situation it describes. An example of one of the most common would be the expression of total costs (calculated in the same way as the total). There are several variations of this expression:

Total costs = fixed costs + variable costs;

Total costs = costs for main processes + costs for auxiliary operations + other costs;

In the same way, you can present the total costs determined by the items of calculation, the only difference will be in the name and structure of items of expense. With the right approach and calculation, applying different types of formulas to the same situation to calculate the same value should give the same result.

To represent the economic situation in a graphical form, points corresponding to the costs should be placed on the grid of coordinates. By connecting such points with a line, we get a graph of a certain type of costs.

This is how the graph can illustrate the dynamics of changes in marginal costs (PI), average total costs (SOI), average variable costs (SPI).

Each enterprise incurs certain costs in the course of its activities. There are different ones. One of them provides for the division of costs into fixed and variable costs.

Variable cost concept

Variable costs are those costs that are directly proportional to the volume of products and services produced. If an enterprise produces bakery products, then the consumption of flour, salt, yeast can be cited as an example of variable costs for such an enterprise. These costs will grow in proportion to the growth in the volume of bakery products produced.

One cost item can relate to both variable and fixed costs. Thus, the cost of electricity for production ovens that bake bread will serve as an example of variable costs. And the electricity bill for lighting a production building is a fixed cost.

There is also such a thing as conditional variable costs. They are related to production volumes, but to a certain extent. With a small level of production, some costs still do not decrease. If the production furnace is half-charged, the electricity consumption is the same as for the full furnace. That is, in this case, with a decrease in production, costs do not decrease. But with an increase in output volumes above a certain value, costs will increase.

The main types of variable costs

Here are some examples of variable costs of an enterprise:

The wages of employees, which depends on the volume of products they produce. For example, in a bakery industry, a baker, a packer, if they have piecework wages. It also includes bonuses and rewards to sales specialists for specific volumes of products sold.
The cost of raw materials, materials. In our example, these are flour, yeast, sugar, salt, raisins, eggs, etc., packaging materials, bags, boxes, labels.
are the cost of fuel and electricity, which is spent on the production process. It can be natural gas, gasoline. It all depends on the specifics of a particular production.
Another typical example of variable costs is taxes paid on the basis of production volumes. These are excise taxes, taxes with tax), the simplified tax system (simplified taxation system).
Another example of variable costs is paying for the services of other companies if the volume of use of these services is related to the level of production of the organization. These can be transport companies, intermediary firms.

Variable costs are divided into direct and indirect

This separation exists due to the fact that different variable costs are included in the cost of a product in different ways.

Direct costs are immediately included in the cost of the goods.

Indirect costs are allocated to the entire volume of goods produced in accordance with a defined base.

Average variable costs

This indicator is calculated by dividing all variable costs by the volume of production. Average variable costs can both decrease and increase as production volumes increase.

Consider an example of average variable costs in a bakery. Variable costs for the month amounted to 4,600 rubles, the output was 212 tons. Thus, the average variable costs will amount to 21.70 rubles / ton.

The concept and structure of fixed costs

They cannot be reduced in a short amount of time. With a decrease or increase in output volumes, these costs will not change.

Fixed production costs usually include the following:

rent for premises, shops, warehouses;
utility bills;
administration salary;
the cost of fuel and energy resources that are consumed not by production equipment, but by lighting, heating, transport, etc .;
advertising costs;
payment of interest on bank loans;
purchase of office supplies, paper;
costs for drinking water, tea, coffee for employees of the organization.

Gross costs

All of the above examples of fixed and variable costs add up to gross, that is, the total cost of the organization. As production volumes increase, gross costs increase in terms of variable costs.

All costs, in fact, represent payments for the acquired resources - labor, materials, fuel, etc. The profitability indicator is calculated using the sum of fixed and variable costs. An example of calculating the profitability of the main activity: divide the profit by the amount of costs. Profitability shows the effectiveness of the organization. The higher the profitability, the better the organization performs. If profitability is below zero, then expenses exceed revenues, that is, the organization's activities are ineffective.

Enterprise Cost Management

It is important to understand the nature of variable and fixed costs. With proper cost management in the enterprise, their level can be reduced and more profit can be obtained. It is practically impossible to reduce fixed costs, therefore, effective work to reduce costs can be carried out in terms of variable costs.

How you can reduce costs in the enterprise

In each organization, work is structured differently, but basically there are the following ways to reduce costs:

1. Reducing labor costs. It is necessary to consider the issue of optimizing the number of employees, tightening production standards. Some employee can be reduced, and his responsibilities can be distributed among the rest with additional payment for additional work. If the enterprise grows production volumes and it becomes necessary to hire additional people, then you can go by revising production standards and or increasing the volume of work in relation to old workers.

2. Raw materials and supplies are an important part of variable costs. Examples of their reduction can be as follows:

searching for other suppliers or changing the terms of delivery by old suppliers;
introduction of modern economical resource-saving processes, technologies, equipment;

stopping the use of expensive raw materials or materials or replacing them with cheap analogs;
implementation of joint purchases of raw materials with other buyers from one supplier;
self-production of some of the components used in production.

3. Reducing production costs.

This can be a selection of other options for rent payments, sublease of premises.

This also includes saving on utility bills, for which it is necessary to use electricity, water, and heat carefully.

Savings on the repair and maintenance of equipment, vehicles, premises, buildings. It is necessary to consider whether it is possible to postpone repairs or maintenance, whether it is possible to find new contractors for these purposes, or whether it is cheaper to do it yourself.

It is also necessary to pay attention to the fact that it may be more profitable and more economical to narrow production, transfer some side functions to another manufacturer. Or, on the contrary, to enlarge production and carry out some functions independently, refusing to cooperate with subcontractors.

Other areas of cost reduction can be the organization's transportation, advertising, tax reduction, and debt settlement.

Any business must consider its costs. Working to reduce them will bring more profit and increase the efficiency of the organization.

Production costs: their types, dynamics. Production costs. Types of production costs. Fixed and variable costs

Cost classification

Classification of distribution costs

The essence of costs from the standpoint of accounting and economic approaches

Economic costs, depending on whether the firm pays for the resources used. Explicit and Implicit Costs

Economic, accounting, opportunity costs.

Fixed, variable, total (gross) costs.

Cost theory

Clarifying the definition of concepts

Financial balance

Cost types

Cost types

Sources of

See also

See what "Costs" is in other dictionaries:

Concept and classification of costs

Cost calculation methods

Formulas and graphs

Variable cost concept

The main types of variable costs

Variable costs are divided into direct and indirect

Average variable costs

The concept and structure of fixed costs

Gross costs

Enterprise Cost Management

How you can reduce costs in the enterprise