The main thing is to analyze economic activity. Types of production costs

Initially, any course of economic theory is paid to the study of costs. This is due to the high significance of this element of the enterprise. In the long term, all resources are variable. In the short term, part of the resources remains unchanged, and part changes to reduce or increase the issue.

In this regard, it is customary to allocate two types of costs: constant and variables. Their amount is called common costs and more often used in various calculations.

Permanent costs

They do not depend on the final issue. That is, whatever the company would do, no matter how many customers it has, these costs will always have the same value. On the chart, they are in the form of a direct horizontal line and are indicated by FC (from English Fixed Cost).

The constant costs include:

Insurance payments;
- salary of managing staff;
- depreciation deductions;
- payment of interest on bank loans;
- payment of interest on bonds;
- Rent, etc.

Variable costs

They directly depend on the amount of products produced. It is not a fact that the maximum use of resources will allow to get the company maximum profits, so the issue of studying variable costs is always relevant. On the chart, they are depicted in the form of a line curve and designated VC (from English Variable Cost).

To variable costs include:

Raw material costs;
- the cost of materials;
- electricity costs;
- fare;
- etc.

Other types of costs

Explicit (accounting) costs are all costs associated with the purchase of resources that are not owned by a particular company. For example, labor, fuel, materials, etc. Implicit costs are the cost of all resources that are used in production and which the company already owns. An example is the salary of the entrepreneur, which he could receive, working on hiring.

There are also return costs. Returns call costs whose cost can be returned during the activities of the company. Non-returnable firm can not even get if it completely stops its activities. For example, the costs associated with the registration of the company. In a narrower sense, non-refundable is the costs that do not have an alternative value. For example, a machine that has been manufactured by order specifically for this company.

Any business implies costs. If they are not, then there is no product supplied to the market. To make something, you need to spend on something. Of course, the smaller the costs, the more cost-effective business.

However, following this simple rule requires an entrepreneur to take into account a large number of nuances reflecting the diversity of factors affecting the success of the company. What are the most notable aspects that reveal the essence and varieties of production costs? What does business efficiency depend on?

A bit of theory

Production costs, according to the common interpretation in the Russian economists, are the costs of an enterprise related to the acquisition of the so-called "production factors" (resources without which the goods cannot be released). What they are lower, the economically cost-effective business.

The costs of production are measured, as a rule, correlate with the total volume of the cost of the enterprise. In particular, the individual spending class can go those related to the sale of released products. However, it all depends on the methodology used in the cost classification. What options can be here? Among the most common in the Russian marketing school of their two: the "accounting" methodology, and the one, which is called "economic".

According to the first approach, production costs is a common set of all the actual costs associated with business (the purchase of raw materials, rental of premises, payment of utilities, compensation for the labor of personnel, etc.). The "economic" methodology implies the inclusion of also those costs whose value is directly related to the company's affected profit.

In accordance with the popular theories that Russian marketers adhere to, production costs are divided into permanent and variables. Those belong to the first type, as a rule, do not change (if we talk about short-term time periods), depending on the growth or reduction of the rate of production.

Costs permanent type

Permanent production costs are, most often, such expense articles such as rental of premises, remuneration of administrative personnel (managers, managers), obligations to pay some types of contributions to social funds. If they are presented in the form of a graph, it will be a curve that is directly dependent on the volume of products.

As a rule, enterprises are calculated by the average production costs of those belong to constant. They are calculated, based on the volume of cost per unit of goods produced. Usually as the volume of production of goods "schedule" of average costs is descended. That is, as a rule, the larger the productivity of the factory, the cheaper the unit product.

Variable costs

The costs of the production of an enterprise related to variables, in turn, are very susceptible to changes in the volume of production. These include the cost of purchasing raw materials, payment of electricity, labor compensation for personnel at the level of specialists. It is clear: more material is required, energy is spent, new frames are needed. The graph that displays the dynamics of variable costs is usually non-permanent. If the company is just beginning to release something, then these costs usually grow active in comparison with the rate of increasing production.

But as soon as the factory comes to sufficiently intensive speeds, then variable costs are usually growing so actively. As in the case of constant costs, the average cost is often calculated in the second type of costs - again, correlate with the release of a unit of products. The aggregate of constant and variable costs is the total costs of production. Usually they simply mathematically add up when analyzing the company's economic indicators.

Costs and depreciation

Such a phenomenon as depreciation and the term "wear" term and closely associated with it are directly related to production costs. Through what mechanisms?

First we define what wear is. This, according to the interpretation common in the Russian economists, reducing the value of production resources into force. Wearing can be physical (when, for example, the machine or other equipment simply fails or cannot withstand the previous rate of production of goods), or moral (if the means of production used by the enterprise, say, is greatly inferior on the efficiency of what is used in competing factories ).

A number of modern economists converge that moral wear is the constant costs of production. Physical - variables. The costs associated with maintaining the volume of production of goods under the condition of equipment wear, form the most depreciation deductions.

As a rule, this is due to the purchase of new techniques or investments in the repair of the current. Sometimes - with a change in technological processes (for example, if the bicycle factory fails, the machine producing spokes for the wheels, then their release can be treated temporarily or on an indefinite-based basis on "outsourcing", which, as a rule, increases the cost of release of finished products).

Thus, timely modernization and purchase of high-quality equipment is a factor, which is largely affecting a decrease in production costs. A newer and modern technique in many cases implies smaller depreciation costs. Sometimes personnel qualifications are also affected on the costs associated with equipment wear.

As a rule, more experienced masters treat equipment more careful than newcomers, and therefore it may make sense to spend money on an invitation of expensive having a high qualifications of specialists (or invest in teaching young). These costs may be lower than investments in the depreciation of equipment that has fallen under the intensive operation of inexperienced newcomers.

Any firm organizing the production of goods or services should have a clear business plan. The entrepreneur will permit to represent what profit in the future he can count on. To this end, he studies the demand of his product or services in the market, determines at what price it will implement its products. And, most importantly, compares the estimated income with the costs or with their analogue costs.

The economic activity of any company involves certain costs. They are bound primarily with the acquisition of all necessary factors, as well as with the implementation of the product already produced. Their valuation of experts identified as the concept of "production costs". Speaking easier, production costs (COST) is the cost of all of what the seller has to give up for the sake of producing his product.

What is the cost of production

The concept of "production costs" associated with certain losses or victims that are necessary to carry for certain useful results is considered very diverse and versatile. Production costs can be:

• tangible;
• intangible;
• objective;
• subjective;
• cash;
• non-financial.

Economic costs can be represented in two ways. First of all, as the value of the resources spent, pronounced actual acquisition prices. Secondly, as the value of other goods, which theoretically, it could be obtained in the case of the most beneficial options for the use of the same resources. The first approach, specialists call "accounting". The second option is alternative production costs, which are indicative of the costs of favorable opportunities. Economic theory explains the essence of alternative expenses in the following example: alternative corn costs, grown on a certain section of the Earth, are presented as a profit from wheat, which could take place if the same site was used precisely under this cult

Production costs and their types

Costs can be classified according to the following features:

• public - they are cumulative expenses of the Company necessary for the production of a specific product and include not only production, but any other expenses, for example, to protect the environment, to prepare qualified personnel, etc.;
• individual - these are spending directly firm;
• production costs - they are directly related to the release of goods and services;
• costs of circulation - they are associated with the sale of manufactured products.

If you look at the sales process from the position of the seller, then to get an income from the deal, it will first of all, it will be necessary to recoup all incurred costs for the goods sold. Economic costs of production and there are those economic costs that, according to the entrepreneur, he had in the production process. They include:

• the resources that the firm acquired;
• domestic resources of the company that are not included in the market turnover;
• normal profits considered by the entrepreneur in compensation for their risk in business.

It is its economic expenses that the company should reimburse the price in the first place established on the goods or service. And if he fails to return the economic costs of production, he has one way out: to go from this field of activity to the market to another. Otherwise, as a result of constant losses, bankruptcy with all the ensuing consequences may occur.

Accounting costs include those cash spending and payments that exercise a firm in order to acquire all the necessary factors in order to carry out production. They are always less economic because they take into account only the real values \u200b\u200bof their acquisition of the resources that are necessary for production. And the costs of accounting, and costs of economic - all types of economic costs - must be legally decorated. They exist explicitly, and therefore are grounds for accounting.

In turn, accounting costs have direct and indirect species. The first consists of the volume of expenses going directly to production, and the second is those without which a company or an individual entrepreneur cannot work normally. Such costs include:

• overheads;
• payment of interest bank;
• depreciation deductions and etc.

The difference between economic and accounting costs is alternative costs. And if an accountant, in particular, is interested in a specific assessment of the activities of a certain firm in the current short-term period, the economist, in addition, is also interested in both the current, especially the projected assessment of the activity, the theory of finding the most optimal option for the use of available resources in the long-term period.

Permanent and variable production costs

The concept of production costs assumes that various types of resources are in different ways to carry their cost on ready-made products. In accordance with this, the theory and practice distinguish constant or variable production costs. Continuous costs include the cost, the value of which does not change with the change in the volume of the produced product or service. They should be paid even if the firm for certain reasons does not produce products. It:

• rental of equipment and premises;
• depreciation deductions;
• insurance and pension contributions;
• payment of managerial personnel, etc.

The variables are expenses, the total value of which is in direct communication with many factors. These are factors like

• dependence on production volumes;
• dependence on sales;
• from the structure of production, etc.

Variable costs are costs for:

• raw materials;
• consumables;
• fuel;
• energy carriers;
• transport services,
• labor resources, etc.

It turns out that such types of production costs as variables ultimately depend not only on production volumes, but also from saving many material or labor costs. Variable production costs in the long term can be reduced by rationalizing them. The impact of all listed factors leads to the fact that variable costs increase differently with increasing production volumes.

In practice, three possible options for increasing the cost of variable costs are distinguished:

• in proportion to the increase in production volumes;
• regressive;
• an advanced pace compared with the increase in production.

It is possible to identify the degree of influence of rationalization and savings of both material and labor resources on the nature of variable costs, if we consider the variables of the average production costs per unit of products. In addition, when managing the cost formation process, the management of the company must constantly focus on the nature of the growth of their volume. This is necessary in order to take timely measures aimed at reducing production costs.

Costs of the production of the company in the short term

In the face of tough competition, reigning today in all spheres of the market, it is important not only to know the amount of permanent or variable costs, but also the total costs. Sometimes they are called gross. The formula for which total costs are calculated, it looks like this: Io \u003d IC + IV, where

Io - common or gross spending;

IC - constant;

IV - variables.

Calculating the average, permanent, variable expenses, and, ultimately, general or gross, as well as alternative costs, the company's management can clearly submit those values \u200b\u200bof the costs that the enterprise bears in the process of carrying out their activities, starting from the initial stage until the maximum use of everything Potential that has this production. It is necessary to draw up, a new, rationalized business plan of production, in which the profit will be larger, and the costs will have a downward trend.

Production costs in the short term

To determine the influence of each of the types of resources on the dynamics of production, specialists use the analysis of production functions by time periods. The main criterion for the allocation of time periods is the speed with which resources involved in production will change their quantitative and qualitative compositions. Three periods are distinguished:

• short;
• long-term;
• instantaneous.

In the instantaneous time period, all costs are constant, since the product has already been released to the market and no longer change the volumes of production or costs. In the short time, the costs of permanent and variables are observed. In the long term, the company has the opportunity not only for the purchase of more raw materials and materials, but also to increase the number of jobs and investment. Therefore, it is believed that in the long term, all costs are not constant, but variables.

In the short term, there is no change in constant costs depending on the change in the volume of production. For their measurement in the short term, only three categories are used:

• medium common;
• medium permanent;
• medium variables.

The first is the medium common - calculated as private: the amount of total costs divided by the amount of products issued. The average constant varieties are determined by the following formula: AFC \u003d FC / Q, where

AFC - the magnitude of constant costs;

Fc is a total amount;

Q - the number of products produced.

It turns out that all changes in the short-term period are not connected with constant, but with variables. The reaction of the production of products to changes in the variable value of expenses is determined by the law of decreasing limit performance, according to which the increase in costs for variable costs from a certain period develops to a decrease in the growth of production volume. Thus, in the short term of the company's activities, all production facilities should be considered as a fixed value.

Methods to reduce production costs

The problem of costs has always been and is the main task of the company. Its solution provides her not only profits, but also the preservation of competitiveness in the market. Any enterprise operates in a macroeconomic environment, so the results of its activities are largely dependent on the similar activities of the remaining economic entities. In this regard, the factors affecting the performance of the company and its profits, specialists are divided into external and internal. And, accordingly, methods for reducing these costs, on which the profit depends, is also reduced in general to these two factors.

The main method, as a result, there is a decrease in costs - this is the introduction of new NTP achievements to ensure resource savings - reduce the volume of material costs, for mechanization of production, etc. The experience of the organization's organization available abroad shows that the use of functional and cost analysis when designing products, the organization of production and quality control brings good results.

Paying more attention to the rhythm of the release, working on the principle of the rigorous introduction of related industries, solving the problem of production reserves, one can very soon observe the reduction in costs. On the Internet, a new economic presentation has recently appeared. "The costs of production and profit" - this is the name of the educational and methodological manual, built on the principle of alternating theory and examples - an excellent assistant to the entrepreneur in the analysis of his company precisely.

Based on an economic activity analysis program in world practice, a phased reduction in personnel is also supposed to be built in world practice. In addition, all the processes of the company are studied in detail to identify those that you need to automate, or to reduce the number of routine, repeatedly repetitive operations. According to the results of the analysis of economic activity, the company, having received a stable result, is achieved by a completely definite purpose: an increasingly manageable and mobile structure of the firm. At the same time, the costs are not only significantly reduced, but also the budget is saved, and, accordingly, increasing profits.

Costs You can call any expenses of resource accountability. Those costs that are directly needed for the production of goods or services are considered costs of production.

The essence of costs intuitively understandable to almost everyone, but on their assessment, the calculation and distribution is spent, a significant part of the efforts of economic science. This is because the evaluation of the effectiveness of any process is a comparison of the values \u200b\u200bof incurred costs with the result obtained.

For economic theory, the costs of costs means their definition and classification by type, origin, articles and processes. Economic practice puts specific figures in the proposed formula theory and gets the desired result.

The concept and classification of costs

The easiest way to study costs will be their summation. The resulting amount can be deducted from the amount of revenue to find out the size, you can compare the amounts of costs for the same type of processes to determine the more economical option, etc.

To simulate economic situations, creating formulas, evaluating economic processes and their results, costs must be classified, i.e. Divide on some features and combine into standard groups. The rigid classification system does not exist, costs are more convenient to consider based on the needs of a specific study. But some, often consumed options can be considered a kind of rules.

Especially frequent costs are divided into:

• Constant - independent of production in a specific period;
• Variables - the size of which is directly tied to the magnitude of the release.

Note that such a separation is valid only when considering a short-term period. In the long term, all costs have property to become variables.

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

• On the main production;
• On auxiliary operations;
• On non-production costs, loss, etc.

If you submit costs as economic elements, then it will be possible to allocate:

• Expenses for basic production (on raw materials, energy, etc.);
• Labor costs;
• Social deductions from wages;
• Depreciation deductions;
• Other expenses.

A more solid, detailed way to find out the concept, composition and types of production costs will be the preparation of costing the cost of the enterprise.

According to the calculation items, costs are divided into:

• Purchased raw materials and materials;
• Semi-finished products, components, production services;
• Energy carriers;
• Labor costs of the main production personnel;
• Tax deductions from wages of this category;
• from the same salary;
• Costs of preparation of production;
• Cost expenses - cost category for operations related to a specific production unit;
• General production costs - production costs that cannot be fully and accurately attributed to certain divisions;
• General costs - costs associated with the provision and maintenance of the whole organization: management, some auxiliary services;
• Commercial (non-productive) costs - all that is associated with advertising, product promotion, after-sales service, maintaining the image of enterprises and products, etc.

Another important, regardless of the criteria for analysis, the view of costs are the average costs. This is the size of the cost per unit of output, for its determination, the volume of expenses is divided by the number of units produced.

And the value of the cost per new unit of products when changing the volume of release is called limit costs.

Knowledge of the size of medium and limiting costs is necessary for the adoption of effective solutions about the optimal volume of release.

Methods for calculating costs

Formulas and graphs

The overall view of the cost classification system and the availability of expenses in certain directions does not provide practical results when evaluating a specific situation. Moreover, even the construction of models without accurate digits requires tools to illustrate dependencies between certain elements of the cost system and their influence on the final result. Make it helps formulas and graphic images.

Putting the corresponding values \u200b\u200bto the formula, it becomes possible to calculate a specific economic situation.

The number of calculation of costs is difficult to accurately determine each formula appears together with the situation it describes. An example of one of the most common expression will be the expression of general costs (also calculated as common). There are several options for this expression:

Total costs \u003d permanent costs + cost variables;

Total costs \u003d costs of basic processes + costs of auxiliary operations + other costs;

In the same way, the total costs determined by the calculation articles will differ only in the name and structure of the costs of expenses. With the right approach and calculation, the use of different types of formulas to the same situation to calculate the same value should give the same result.

To present the economic situation in graphical form, it should be placed on the coordinate grid corresponding to cost values. By connecting such dots of the line, we obtain a graph of a certain type of costs.

So on the chart you can illustrate the dynamics of changes in limit costs (PI), medium total costs (soy), medium variable costs (SP).

Firm. Production costs and their types.

Firm(Enterprise) is a business link that realizes its own interests through the manufacture and sale of goods and services by planning combining factors of production.

All firms can be classified according to two main criteria: a form of ownership of Capital and the degree of capital concentration. In other words: who owns the firm and what is its value. For these two criteria, various organizational and economic forms of entrepreneurial activities are allocated. This includes public and private (sole, partnerships, joint-stock enterprises. According to the degree of production concentration, minor (up to 100 people), medium (up to 500 people) and large (more than 500 people) of the enterprise.

The determination of the magnitude and structure of the cost of the enterprise (firm) on the production of products that would provide an enterprise sustainable (equilibrium) position and prosperity on the market is the most important task of economic activities at the micro level.

Production costs - these are expenses, cash spending, which is extremely important to carry out goods. For an enterprise (firm), they act as payment of the acquired factors of production.

Most of the production costs is the use of production resources. If the latter are used in one place, they cannot be used in the other, as they have such properties as rarity and limited. For example, the money spent on the purchase of a domain for the production of cast iron cannot simultaneously be spent on the production of ice cream. As a result, using some resource defined, we lose the ability to use this resource in some other way.

By virtue of this circumstance, any decision on the production of something is extremely important to reflue to the use of the same resources for the production of some other types of products. Thus, costs represent from self-valuable costs.

Alternative costs- These are the costs of the production of goods, rated from the point of view of the lost possibility of using the same resources for other purposes.

From the point of view of the economy, alternative costs can be divided into two groups:''avny'''''' and'Neavyny'''''''''''Neeavny

Explicit costs- These are alternative costs that make the form of cash payments to suppliers of factors of production and intermediate products.

In the number of explicit costs include: the salary of workers (cash payment to workers as suppliers of production factor - labor); cash costs for the purchase or payment for renting machines, machinery, equipment, buildings, structures (cash payment suppliers of capital); payment of transportation costs; utility payments (light, gas, water); payment of services of banks, insurance companies; Payment of suppliers of material resources (raw materials, semi-finished products, components).

Implicit costs - these are alternative costs of using resources belonging to the company itself, ᴛ.ᴇ. Unpaid costs.

Implicit costs are presented as:

1. Cash payments that could receive a firm with more beneficial use of resources belonging to it. This can also include lost profits ('' increments of lost opportunities''''''); wages that an entrepreneur could get, working somewhere else; percentage of capital invested in securities; Rental payments to the ground.

2. Normal profits as a minimal remuneration to an entrepreneur holding it in the selected industry.

For example, an entrepreneur engaged in the release of the referral, considers it sufficient for himself to receive normal profits of 15% invested capital. And if the production of the author will give an entrepreneur less than normal profits, he will move its capital in the industry, giving at least normal profits.

3. It is important to note that for the owner of the capital with implicit costs is the profit, which he could receive, invested his capital not in this, but in some other business (enterprise). For the peasant-protection of the land - such implicit costs will be the rental fee that he could get by passing his land for rent. For an entrepreneur (including a person engaged in ordinary labor activity), that salary will be the same salary that he could receive in the same time working on any company or enterprise.

ᴀᴋᴎᴍᴀᴋᴎᴍ ᴏϭᴩᴀᴈᴏᴍ, in the cost of production of Western economic theory, the income of the entrepreneur is included. At the same time, this income is perceived as a risk fee that rewards the entrepreneur and stimulates it to keep its financial assets within this enterprise and not distract them for other things.

Production costs that include a normal or average profit, represent economic costs.

Economic or imputed costs in modern theory consider the expenses of the company implemented in the context of the best economic decision on the use of resources. This is the ideal to which the firm should strive. Of course, the real picture of the formation of common (gross) costs is somewhat different, as any ideal is difficult to achieve.

It must be said that economic costs are not equivalent to those that operate accounting. IN accounting costsentrepreneur's profit is not included at all.

The costs of production operate with the economic theory, compared with accounting, distinguishes the assessment of internal costs. The latter are related to the costs that are carried out by using their own products in the manufacturing process. For example, part of the grown harvest is used on sowing of land areas of the company. Such grain firm uses for internal needs and does not pay it.

In accounting, internal costs are accounted for at cost. But from the standpoint of the formation of the price of a released product of this kind of costs should be assessed at the market price of the resource.

Internal costs - these are related to the use of its own products, which turns into a resource for further production of the company.

External costs - these are the costs of money that is implemented to acquire resources that are owned by those who do not apply to the owners of the company.

The costs of production that are implemented in the production of goods can be classified not only depending on what resources are used, whether the resources of the company or resources for which they had to pay. Another classification of costs is possible.

Permanent, variables and total costs

The costs that the firm carries in the production of a given volume of products depend on the possibility of changing the number of allocated resources.

Permanent costs (FC, Fixed Costs)- These are the costs that are independent in the short term because how much the company produces products. Οʜᴎ represents of its permanent factors of production.

Permanent costs are associated with the existence of the company's production equipment and should be paid in this regard, and if the company does not produce anything. The company can avoid costs associated with its permanent production factors, only fully ceased to operate.

Variable costs (Us, Variable Costs)- These are the costs that depend on the volume of production of the company. ʜᴎʜᴎ represent the costs of variable factors manufactured by the company.

These include raw materials, fuel, energy, transportation services, etc. Most of the variable costs, as a rule, falls on the cost of labor and materials. Since the costs of variable factors increase as product production increases, then the costs are increasing with increasing release.

General (gross) costson the amount of goods produced is the cost of currently the time required for the production of one or another product.

In order to more clearly determine the possible volumes of production in which the firm guarantees itself from excessive growth of production costs, the dynamics of medium costs are investigated.

Distinguish medium permanent (AFC).medium variables (AVC)PI Middle General (PBX)costs.

Middle permanent costs (AFS)representation of permanent costs (FC)to the volume of release:

AFC \u003d FC / Q.

Medium variable costs (AVQ.represent the costs of variable costs (VC)to the volume of release:

AVC \u003d VC / Q.

Medium total costs (PBX)represent from themselves the total costs (TC)

to the volume of release:

PBX= TC / Q \u003d AVC + AFC,

as TC= VC + FC.

The average costs are used in solving the question of whether these products are made at all. In particular, if the price representing the average income per unit of products, less than AVC,that firm will reduce its losses by suspending its activities in the short term. In case the price is below PBX,then the firm gets negative economic; Profit and she should consider the possibilities of final closure. Graphically, this position should be depicted as follows.

In case the average costs below the market price, the firm can work cost-effective.

To understand whether the production of an additional unit of products is favorable, it is extremely important to compare the change in income with the limiting costs of production would be extremely important.

Limit costs (MS, MARGINAL COSTS) -these are the costs associated with the production of an additional unit of products.

In other words, the limiting costs represent from themselves TC,on ĸᴏᴛᴏᴩᴏᴇ should go the company for the sake of production of another unit of products:

Ms.\u003d Changes B. TC/ Changes in Q (MS \u003d TC / Q).

The concept of limiting costs is of strategic importance, since it allows you to determine the costs, the value of which the firm can be controlled directly.

The equilibrium point of the company and maximum profit is achieved in the event of equality of marginal income and limit costs.

When the firm reached such a relationship, it will no longer increase production, the issue will become stable, hence the name is the equilibrium of the company.

Firm. Production costs and their types. - Concept and species. Classification and features of the category "Company. Production costs and their types." 2017, 2018.