Variable production costs. Types of production costs. Fixed and variable costs. Types of production costs

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

The concept of variable costs

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, and yeast can be cited as an example of variable costs for such an enterprise. These costs will increase in proportion to the increase in the volume of bakery products produced.

One cost item can relate to both variable and fixed costs. Thus, energy costs for industrial ovens on which bread is baked will serve as an example of variable costs. And the cost of electricity for lighting an industrial 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. At a small production level, some costs still do not decrease. If a production furnace is half loaded, then the same amount of electricity is consumed as a full furnace. That is, in this case, when production decreases, costs do not decrease. But as output increases above a certain value, costs will increase.

Main types of variable costs

Here are examples of variable costs of an enterprise:

The wages of workers, which depend on the volume of products they produce. For example, in a bakery production, a baker, a packer, if they have piecework payment labor. This also includes bonuses and rewards to sales specialists for specific volumes of products sold.
Cost of raw 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 that is spent on the production process. It could be natural gas, gasoline. It all depends on the specifics of a particular production.
Another typical example of variable costs are taxes paid based on production volumes. These are excise taxes, taxes under tax), simplified taxation system (Simplified taxation system).
Another example of variable costs is paying for services from other companies if the volume of use of these services is related to the organization's level of production. It can be transport companies, intermediary firms.

Variable costs are divided into direct and indirect

This division exists because different variable costs are included in the cost of the product differently.

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

Indirect costs are distributed over the entire volume of goods produced in accordance with a certain base.

Average variable costs

This indicator is calculated by dividing all variable costs by production volume. Average variable costs can either decrease or increase as production volumes increase.

Let's consider the example of average variable costs at a bakery enterprise. Variable costs for the month amounted to 4,600 rubles, 212 tons of products were produced. Thus, average variable costs will be 21.70 rubles/t.

Concept and structure of fixed costs

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

Fixed production costs usually include the following:

rent for premises, shops, warehouses;
utility fees;
administration salary;
costs of fuel and energy resources, which are consumed not by production equipment, but by lighting, heating, transport, etc.;
advertising expenses;
payment of interest on bank loans;
purchase stationery, papers;
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 costs of the organization. As production volumes increase, gross costs increase in terms of variable costs.

All costs, in essence, represent payments for purchased 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 core activities: divide profit by the amount of costs. Profitability shows the effectiveness of an organization. The higher the profitability, the better the organization performs. If profitability is below zero, then expenses exceed income, that is, the organization’s activities are ineffective.

Enterprise cost management

It is important to understand the essence of variable and fixed costs. With proper management of costs in an enterprise, their level can be reduced and greater profits can be made. It is almost impossible to reduce fixed costs, so effective work to reduce costs can be carried out in terms of variable costs.

How can you reduce costs in your enterprise?

Each organization works differently, but basically there are the following areas of cost reduction:

1. Reducing labor costs. It is necessary to consider the issue of optimizing the number of employees and tightening production standards. An employee can be laid off, and his responsibilities can be distributed among others, with additional payment for additional work. If production volumes increase at the enterprise and the need arises to hire additional people, then you can go by revising production standards and or increasing the volume of work in relation to old employees.

2. Raw materials are an important part of variable costs. Examples of their abbreviations could 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 analogues;
carrying out joint purchases of raw materials with other buyers from one supplier;
independent production of some components used in production.

3. Reduction of production costs.

This may include selecting other rental payment options or subletting space.

This also includes savings on utility bills, which requires careful use of electricity, water, and heat.

Savings on repairs 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 economical to narrow production and transfer some side functions to another manufacturer. Or, on the contrary, enlarge production and carry out some functions independently, refusing to cooperate with related companies.

Other areas of cost reduction may be the organization’s transport, advertising activities, reducing the tax burden, and paying off debts.

Any enterprise must take into account its costs. Work to reduce them will bring more profit and increase the efficiency of the organization.

COURSE WORK

In the discipline "Economics of an organization (enterprise)"

Topic: “Production and sales costs”

Introduction

1 Economic essence of costs (costs) of production and sales of products

1.1 Types of costs (expenses)

1.2 Composition of enterprise costs

1.3 Cost of goods sold and production costs

2. Cost structure using the example of the enterprise ZAO Kulikovskoye

2.1 Main indicators of the enterprise’s production activities

2.2 Production cost structure

2.3 Importance and ways to reduce production costs

Conclusion

List of used literature

Application

Introduction

The production process at an enterprise is a continuous interaction of three main factors: labor resources and means of production, which in turn are divided into means of labor and objects of labor. The totality of the costs of living and materialized labor represents production costs, which are a necessary condition implementation economic activity.
The concept of "cost" is one of the most general economic categories that can be used to different ways production in any conditions of economic activity.

The economic essence of the concept of “costs” can be viewed in different ways, depending on the specific goals and objectives of the study.
Thus, “cost” is often defined as a measure in monetary terms of the amount of resources used to achieve a certain goal. The concept of "cost" is also used to solve more wide range tasks, primarily to justify management decisions. For tax purposes, “costs” are the amount by which the amount of income subject to taxation, etc. is reduced.
Sometimes to determine various aspects economic essence of “costs” the terms “expenses” and “costs” are used.
In enterprise economics, these concepts are considered identical, and costs are understood as the monetary expression of use production factors, as a result of which the production and sale of products is carried out.

Purpose course work is: consider theoretical basis the concepts of “costs”, costs”, “prime cost”, reveal the composition and structure of the cost of production using the example of the enterprise ZAO “Kulikovskoe”, outline the main directions for reducing the costs of the enterprise.

1. The economic essence of costs (costs) of production and sales of products

1.1. Types of costs(costs)

Costs are the monetary expression of the costs of production factors necessary for an enterprise to carry out its production activities.

In countries with developed market relations, there are two approaches to estimating costs: accounting and economic.

Accounting costs represent the cost of resources expended, measured in actual acquisition prices. These are costs presented in the form of payments for purchased resources (raw materials, supplies, depreciation, labor, etc.).

However, to make decisions about whether to continue operating their business, owners must consider the economic costs.

Economic cost is the amount (cost) of other products that must be given up or sacrificed in order to obtain a certain amount of a given product.

The domestic economy is characterized by an accounting approach to cost estimation. If we take this into account, the terms “costs” and “expenses” can be considered synonymous.

For accounting purposes, costs are classified according to various criteria.

Based on their economic role in the production process, costs can be divided into basic and overhead.

The main ones include costs associated directly with the technological process, as well as with the maintenance and operation of labor tools.

Overhead – maintenance and management costs production process, sales of finished products.

According to the method of attributing costs to the production of a specific product, direct and indirect costs are distinguished.

Direct costs are costs associated with the production of only this type of product and attributable directly to the cost of this type of product.

Indirect costs in the presence of several types of products cannot be attributed directly to any of them and must be distributed indirectly.

In relation to the volume of production, costs are divided into variable and fixed.

Variable costs are costs whose total value is this period time is directly dependent on the volume of production and sales.

Under fixed costs understand such costs, the amount of which in a given period of time does not directly depend on the volume and structure of production and sales.

Variables usually include costs of raw materials, fuel, energy, transport services, part of labor resources, i.e. those costs whose level changes with changes in production volume.

Fixed costs include depreciation, rent, salaries of management personnel and other costs that occur even if the enterprise does not produce products.

As for the average fixed costs(per unit of production), they decrease with increasing production volume and increase with its decrease.

The sum of fixed and variable costs constitutes the gross costs of the enterprise. With an increase in the volume of production and sales of products, gross costs per unit of production are reduced due to a decrease in fixed costs.

1.2. Composition of enterprise costs

The formation of enterprise costs is carried out at five levels (Fig. 1):

1. at the level of costs of the enterprise as a whole;

2. at the level of costs associated with ordinary activities;

3. at the cost level of operating activities;

4. at the level of cost of goods and products sold;

5. at the level production cost products.

At the first level, from the totality of the enterprise’s costs, costs that are directly and directly related to the ordinary activities of the enterprise and costs associated with extraordinary events are distinguished. The magnitude and share of the latter indicate the degree of influence of unplanned and uncontrollable events on the activities of the enterprise in the reporting period. This distinction makes it possible to immediately distinguish from the composition of the enterprise’s costs expenses that cannot be taken into account when assessing the effectiveness of business activities.

At the second level, the costs of ordinary activities primarily include costs associated with operating and financial activities. In general, it is difficult to identify any criteria for the rationality of the cost ratio at this level. However, a significant portion of the costs financial activities may indicate a wide variety of activities of the enterprise, the combination of which within one legal entity may not always be practical and may require separation.

The amount of “other costs” (this group primarily includes costs associated with maintaining social sphere) also indicates the presence within the enterprise of cost objects not related to the main activity, and, as a consequence, with the main source of cost recovery.
At the third to fifth levels, the cost structure of operating activities is studied by economic elements and costing items.
Operating costs include all enterprise expenses associated with the production or sale of products (goods, works, services). The difference between the costs of core and operating activities is that the former do not include current costs of investing or financing activities.
The main indicator reflecting the cost structure of the operating activities of an enterprise is the ratio of material, energy costs and expenses for wages. Costs for these elements determine the total amount of consumption of all main types of resources necessary to maintain normal economic activities of the enterprise.

Products in which material costs predominate (for raw materials and supplies) are called material-intensive, fuel and energy products are called energy-intensive, and labor costs are called labor-intensive.

In the process of analyzing the costs of operating activities by economic elements, the specific weight of each element in total amount costs for the planned volume of operating activities. Then by matching specific gravity actual costs for the corresponding elements with planned indicators or indicators for previous periods, deviations and the reasons that caused them are identified.

When studying the structure and dynamics of costs by item, one should not confuse “cost items” with “costing items.”

In the first case we're talking about on the grouping of operating costs by various accounting objects (production of products or services; management of the enterprise as a whole, commercial and sales activities for the sale of manufactured products or services); trade (resale) of goods). IN in this case accounting objects are various stages operating activities, and costs are grouped according to the homogeneity of their purpose (by analogy: economic elements are the homogeneous essence of the costs themselves; cost items are their homogeneous purpose).

The most important factor determining a firm's ability and desire to bring a product to market is production costs. The production of any product requires the expenditure of economic resources, which, due to their relative rarity, have certain prices. The quantity of any product that a firm seeks to offer on the market depends on prices (costs) and the efficiency of using the resources necessary for its production, on the one hand, and on the price at which the product will be sold on the market, on the other.

Costs are the monetary expression of the costs of production factors necessary for the enterprise to carry out its production and sales activities. The costs of acquiring the production factors used are called production costs. Costs are the expenditure of resources in their physical, natural form, and costs are the valuation of the costs incurred.

There are production costs and distribution costs. Production costs are costs directly associated with the production of goods or services. Distribution costs are the costs associated with the sale of manufactured products.

Production costs mean the cost of material and labor resources used in the manufacture of products.

Depending on the relationship between costs and production volume, five types of costs are distinguished:

- Permanent;
- Variables;
- Are common;
- Average;
- Limit.

Fixed costs (FC) are expenses that do not depend in total on production volume. These costs are paid even if the enterprise does not produce anything. Fixed costs include: rent, depreciation, management salaries, interest on borrowed funds and other similar expenses.

Variable costs (VC) are costs that vary in proportion to changes in production volume. Variable costs include: costs of raw materials, materials and semi-finished products, fuel and energy resources, wages of workers, transport services.

The distinction between fixed and variable costs is significant. Fixed costs must be paid even if the product is not produced at all. An entrepreneur can manage variable costs by changing production volumes.

Total (gross) costs (TC) - the sum of fixed and variable costs for the production of a certain volume of products:

Average costs (A) - production costs per unit of output. These costs reflect the dynamics (increase or decrease) of costs as production volume changes.

There are average fixed, average variable and average total costs:

Average fixed costs (AFC) - represent fixed costs per unit of production:

where Q is the quantity of products produced. Since fixed costs do not change with production volume, average fixed costs decrease as output increases.

Average variable costs (AVC) - represent variable costs per unit of production:

Average total costs (ATC) - represent the gross costs per unit of production.

PBX = AFC + AVC

Marginal cost (MC) is the increase in total costs associated with the production of an additional unit of product, i.e. These are the additional costs required to produce an additional unit of output:

MC = TCp - TCp-1

Using marginal costs, you can determine the boundaries of profitable production volume. To do this, they must be compared with average costs and the market price of the product. If, as production volume expands, the value of marginal costs remains less than the value of average costs, production efficiency increases, but if marginal costs begin to exceed average production efficiency decreases.

Production is most profitable when marginal costs are below the market price, but when they begin to exceed the price, production efficiency drops as profits drop sharply.

Production costs are divided into economic and accounting costs.

Accounting costs are the sum of variable and fixed costs. These costs are taken into account by the accounting department. They record actual cash costs incurred and represent the cost of production.

Economic costs are the sum of explicit and implicit production costs - the cost of lost opportunities (income that could have been received from one’s own resources if provided for a fee to other users: at interest to the bank, rental of premises, fees for managerial work, etc. )

Explicit (external) costs are monetary payments for resources received from outside - accounting costs.

Implicit (internal) costs are the cost of choice or lost profits when changing production alternatives, determined by the value or quantity of those goods that are sacrificed when choosing other (alternative) goods. Unlike explicit costs, they are not paid and are not reflected in the financial statements. These costs are hidden.

Opportunity costs are what we give up when we choose between the two most desirable alternatives.

Introduction

1 Concept and composition of production costs

1.1 Economic essence of costs (expenses) of production and sales of products

1.2 Types of costs (expenses)

1.3 Composition of enterprise costs

2 Costing, its meaning

2.1 Costing

2.2 Costing methods

2.3 The concept and essence of the cost of products (works, services)

2.4 Cost functions

3 Economic characteristics of the enterprise

3.1 Enterprise

3.2 Production

3.3 Products

3.4 Suppliers

3.5 Delivery regions

4 Classification of costs by items and elements

4.1 Costs

4.2 Types of production cost classifications

5 Ways to reduce costs of production and sales of products

Conclusion

List of used literature

Applications

Introduction

The production of products requires various costs, which constitute production costs or production costs. Production costs include the costs of raw materials, materials, process fuel, wages for workers, depreciation of equipment and other fixed assets, etc. But finished products must be communicated to the consumer. This industrial and technological process associated with the sale of goods requires certain expenses, which represent distribution costs.

The main activity of an industrial enterprise is the organization and maintenance of the circulation process of the production and sales cycle, therefore its costs appear in the form of distribution costs, which are an important component of the current costs of the enterprise.

Production and distribution costs (product sales) are classified according to various criteria: explicit and implicit costs; limit; alternative; depending on the functions performed by the enterprise; by type of cost; tangible and intangible; constants and variables; by product groups; direct and indirect; by item, etc. At the same time, the classification of costs makes it possible to reveal reserves for saving material, labor and financial costs of an enterprise, reduce production costs, and increase profitability.

As we can see, distribution costs are one of the main evaluation indicators of the results of economic activity of an industrial enterprise. They allow you to determine the quality and efficiency of the team of a trading enterprise. Each industrial enterprise must constantly seek reserves for saving distribution costs while simultaneously improving the quality of customer service.

The mode of saving distribution costs contributes to an increase in labor productivity and an increase in the level of profitability, so it is quite obvious that their study for the purpose of successful analysis and forecasting is very relevant at any time. Since their reduction depends on the level of knowledge of the cost structure and the factors that influence them, therefore, the profit of the enterprise’s economic activity depends on the level of knowledge by a specialist of such an economic category as distribution costs.

Thus, production costs and sales of products are one of the most important assessment indicators of the economic activity of an industrial enterprise; the profit of any commercial company directly depends on their level. Therefore, the relevance of studying and researching this important indicator is quite obvious.

The purpose of the course work is to systematize and consolidate the acquired theoretical knowledge and practical skills, deepen theoretical knowledge in accordance with a given topic, and develop the ability to apply theoretical knowledge to study the costs of production and sales of products using the example of OJSC Saranskkabel Plant.

In accordance with the stated purpose of the course work, it is necessary to solve the following problems; tasks are determined according to the plan:

Consider the concepts and composition of production and sales costs.

Study costing and its meaning.

Reveal the economic characteristics of the enterprise.

Find out the classification of costs by items and elements.

Identify ways to reduce production and sales costs.

This course work was carried out on practical material from JSC Saranskkabel Plant

1 The concept and composition of production and sales costs

1.1 The economic essence of costs (expenses) of production and sales of products.

The production process at an enterprise is a continuous interaction of three main factors: labor resources and means of production, which in turn are divided into means of labor and objects of labor. The totality of the costs of living and embodied labor represents production costs, which are a necessary condition for the implementation of economic activity.
The concept of “costs” is one of the most general economic categories that can be used for different methods of production in any conditions of economic activity.

Costs are the monetary expression of the costs of production factors necessary for the enterprise to carry out its production activities.

In countries with developed market relations, there are two approaches to estimating costs: accounting and economic.

Accounting costs represent the cost of expended resources, measured in actual prices of their acquisition. These are costs presented in the form of payments for purchased resources (raw materials, supplies, depreciation, labor, etc.).

However, to make decisions about whether to continue operating their business, owners must consider the economic costs.

Economic costs are the quantity (cost) of other products that must be given up or sacrificed in order to obtain a certain amount of a given product.

The domestic economy is characterized by an accounting approach to cost estimation. If we take this into account, the terms “costs” and “expenses” can be considered synonymous.

1.2 Types of costs (expenses)

For accounting purposes, costs are classified according to various criteria.

Based on their economic role in the production process, costs can be divided into basic and overhead.

TO main These include costs associated directly with the technological process, as well as with the maintenance and operation of labor tools.

Invoices- expenses for maintenance and management of the production process, sales of finished products.

According to the method of attributing costs to the production of a specific product, direct and indirect costs are distinguished.

Direct- these are the costs associated with the manufacture of only this type of product and are attributable directly to the cost of this type of product.

Indirect Costs in the presence of several types of products cannot be attributed directly to any of them and must be distributed indirectly.

In relation to the volume of production, costs are divided into variable and fixed.

Variables e costs are costs, the total value of which for a given period of time is directly dependent on the volume of production and sales.

Under permanent Costs mean those costs, the amount of which in a given period of time does not directly depend on the volume and structure of production and sales.

Variables usually include costs of raw materials, fuel, energy, transport services, part of labor resources, i.e. those costs whose level changes with changes in production volume.

Fixed costs include deductions for depreciation, rent, salaries of management personnel and other costs that occur even if the enterprise does not produce products.

As for average fixed costs (per unit of output), they decrease as production volume increases and increase as production volume decreases.

1.3 Composition of enterprise costs.

The formation of enterprise costs is carried out at five levels:

1. at the level of costs of the enterprise as a whole;

2. at the level of costs associated with ordinary activities;

3. at the cost level of operating activities;

4. at the level of cost of goods and products sold;

5. at the level of production cost of production.

At the second level, the costs of ordinary activities primarily include costs associated with operating and financial activities. In general, it is difficult to identify any criteria for the rationality of the cost ratio at this level. However, a significant share of the costs of financial activities may indicate a wide variety of activities of the enterprise, the combination of which within one legal entity is not always appropriate and may require its division.

The amount of “other costs” (this group primarily includes costs associated with the maintenance of the social sphere) also indicates the presence in the enterprise of cost objects not related to the main activity, and, as a consequence, the main source of cost recovery.
At the third to fifth levels, the cost structure of operating activities is studied by economic elements and costing items.

Operating costs include all enterprise expenses associated with the production or sale of products (goods, works, services). The difference between the costs of core and operating activities is that the former do not include current costs of investing or financing activities.
The main indicator reflecting the cost structure of an enterprise's operating activities is the ratio of material, energy costs and wage costs. Costs for these elements determine the total amount of consumption of all main types of resources necessary to maintain normal economic activities of the enterprise.