Classification of production costs and product sales. Production costs Signs of classification of production and sales costs
material costs;
labor costs;
deductions for social needs (pension fund, employment fund, medical insurance, etc.);
depreciation of fixed assets;
other expenses (travel, postage, taxes included in the cost price, etc.).
The composition of the calculation items includes the costs:
A) direct
1. Raw materials and materials.
2. Purchased finished products, semi-finished products.
3. Fuel and energy for technological needs.
4. Basic and additional wages of production workers.
5. Deductions for social needs from the basic and additional wages of production workers.
6. Expenses for development and preparation of production.
7. Special expenses.
8. Loss from marriage.
B) Indirect:
9. Expenses for the maintenance and operation of equipment.
10. Shop expenses.
11. Factory costs.
12. Non-manufacturing expenses.
According to the method of attributing costs to the cost of certain types of products, they are divided into direct and indirect.
Direct - directly related to the production of this type of product.
Indirect - related to all manufactured products.
One of the most common methods of attribution to the cost of production is in proportion to the basic wages of production workers.
Depending on the volume of production, costs are divided into variable and fixed.
Variables - change in direct proportion to the change in the volume of production: all direct material costs, the basic wages of production workers, the cost of tools and motor energy, etc.
Fixed costs are those costs that do not change or change slightly when the volume of production changes. These include: depreciation, wages of auxiliary workers and administrative and managerial personnel.
The sum of variable and fixed costs form the total costs.
Unit cost
Production costs - the cost of purchasing economic resources consumed in the process of issuing certain goods.Any production of goods and services, as you know, is associated with the use of labor, capital and natural resources, which are factors of production, the cost of which is determined by production costs.
Due to the limited resources, the problem arises of how best to use them from all the rejected alternatives.
Opportunity costs are the costs of issuing goods, determined by the cost of the best lost opportunity to use production resources, ensuring maximum profit. The opportunity cost of a business is called economic cost. These costs must be distinguished from accounting costs.
Accounting costs differ from economic costs in that they do not include the cost of factors of production owned by firm owners. Accounting costs are less than economic costs by the value of the implicit earnings of the entrepreneur, his wife, implicit land rent and implicit interest on the equity of the owner of the company. In other words, accounting costs are equal to economic costs minus all implicit costs.
Variants of classification of production costs are diverse. Let's start by distinguishing between explicit and implicit costs.
Explicit costs are opportunity costs that take the form of cash payments to owners of production resources and semi-finished products. They are determined by the amount of the company's expenses to pay for the purchased resources (raw materials, materials, fuel, labor, etc.).
Implicit (imputed) costs are the opportunity costs of using resources that are owned by the firm and take the form of lost income from the use of resources owned by the firm. They are determined by the cost of resources owned by the firm.
The classification of production costs can be carried out taking into account the mobility of production factors. There are fixed, variable and general costs.
Fixed costs (FC) - costs, the value of which in the short period does not change depending on changes in the volume of production. These are sometimes referred to as "overhead costs" or "sunk costs". Fixed costs include the costs of maintaining production buildings, purchasing equipment, rent payments, interest payments on debts, salaries of management personnel, etc. All these costs must be financed even when the company does not produce anything.
Variable costs (VC) - costs, the value of which varies depending on changes in the volume of production. If production is not produced, then they are equal to zero. Variable costs include the cost of purchasing raw materials, fuel, energy, transportation services, salaries of workers and employees, etc. In supermarkets, the payment for the services of supervisors is included in variable costs, since managers can adjust the volume of these services to the number of buyers.
Total costs (TC) - the total costs of the company, equal to the sum of its fixed and variable costs, are determined by the formula:
TC = FC + VC.
Total costs increase as the volume of production increases.
The costs per unit of goods produced are in the form of average fixed costs, average variable costs, and average total costs.
Average fixed cost (AFC) is the total fixed cost per unit of output.
They are determined by dividing fixed costs (FC) by the corresponding quantity (volume) of output:
Since total fixed costs do not change, when divided by an increasing volume of production, average fixed costs will fall as the quantity of output increases, since a fixed amount of costs is distributed over more and more units of production. Conversely, if output decreases, average fixed costs will rise.
Average variable cost (AVC) is the total variable cost per unit of output.
They are determined by dividing the variable costs by the corresponding amount of output:
Average variable costs first fall, reaching their minimum, then begin to rise.
Average (total) costs (ATS) are the total costs of production per unit of output.
They are defined in two ways:
A) by dividing the sum of total costs by the quantity of goods produced:
ATC=TC/Q;
b) by summing average fixed costs and average variable costs:
ATC = AFC + AVC.
Initially, the average (total) cost is high because the output is small and the fixed costs are high. As the volume of production increases, average (total) costs decrease and reach a minimum, and then begin to rise.
Marginal cost (MC) is the cost associated with producing an additional unit of output.
Marginal cost is equal to the change in total costs divided by the change in the volume of output, that is, they reflect the change in costs depending on the amount of output. Since fixed costs do not change, fixed marginal costs are always zero, i.e. MFC = 0. Therefore, marginal costs are always marginal variable costs, i.e. MVC = MC. It follows from this that increasing returns to variable factors reduce marginal costs, while falling returns, on the contrary, increase them.
Marginal cost shows the amount of costs that the firm will incur if the production of the last unit of output increases, or the money that it saves if production decreases by this unit. If the incremental cost of producing each additional unit of output is less than the average cost of the units already produced, the production of that next unit will lower the average total cost. If the cost of the next additional unit is higher than the average cost, its production will increase the average total cost. The foregoing refers to a short period.
In the practice of Russian enterprises and in statistics, the concept of "cost" is used, which is understood as the monetary expression of the current costs of production and sales of products. The composition of the costs included in the cost price includes the cost of materials, overheads, wages, depreciation, etc.
There are the following types of costs:
Basic - the cost of the previous period;
- individual - the amount of costs for the manufacture of a particular type of product;
- transportation - the cost of transporting goods (products);
- sold products, current - evaluation of sold products at the restored cost;
- technological - the amount of costs for organizing the technological process of manufacturing products and providing services;
- actual - based on the data of actual costs for all cost items for a given period.
Production Cost Cost
Certain types of resources are spent on the production and sale of products in kind: material, labor, information. In order to assess the effectiveness of the enterprise, it is necessary to evaluate these costs in terms of value (costs).Costs are the costs of production factors in monetary terms, necessary for the enterprise to conduct its commercial and production activities. They are expressed in terms of production costs, which characterize in monetary terms all material costs, labor costs and costs that are necessary for the production and sale of products.
The cost of production is an economic indicator of the activity of industrial enterprises and associations, which expresses in monetary terms all the costs of the enterprise associated with the production and sale of products.
The cost price shows how much it costs the company to produce its products. The cost price includes:
1) the costs of past labor transferred to products (depreciation of fixed assets, the cost of raw materials, materials, fuel and other material resources);
2) the cost of remuneration of employees of the enterprise (wages).
The cost price is the lower limit of the price, it defines the limit of possible maneuvering in the implementation of a particular price policy, when their stimulating function is carried out.
The cost price is determined for all products as a whole, for its individual types, assemblies, parts, production processes, for the work of departments, sections, workshops.
There are indicators characterizing the cost of production:
1) the total cost of all manufactured products and work performed by the enterprise for the planned (reporting) period - the cost of marketable products, comparable marketable products, sold products;
2) costs per unit of the volume of work performed - the cost of a unit of certain types of marketable products, semi-finished products and production services (products of auxiliary shops), costs per 1 rub. marketable products, the cost of 1 rub. normatively clean products.
The total costs of production and sale of products can be considered both in terms of actual costs and in terms of standard ones.
Depending on the volume of costs taken into account, the following types of costs are distinguished:
1) technological cost - includes only direct production costs: raw materials and materials, returnable waste (deductible), fuel and energy for technological purposes, wages of the main production workers;
2) shop cost - is formed by adding to the technological cost of cost items formed at the level of the shop: additional wages of the main production workers, deductions for social needs of the main production workers and overhead costs;
3) production cost (finished product cost) - in addition to the shop cost, it includes general factory expenses (administrative, managerial and general business costs) and auxiliary production costs;
4) full cost or cost of sold (shipped) products - an indicator that combines the production cost of products (works, services) and the costs of its implementation (commercial costs, non-production costs).
Also distinguish between planned and actual cost.
Planned cost - the cost determined at the beginning of the planned year on the basis of planned expenditure rates and other planned indicators for this period.
Actual cost - the cost determined at the end of the reporting period on the basis of accounting data on actual production costs.
The cost of production consists of a variety of costs according to their economic purpose. Therefore, it is necessary to classify them. All costs are classified according to the characteristics given in the table.
Cost classification:
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1. By economic elements |
Cost elements |
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2. According to costing items |
Costing articles |
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3. Relative to the production process |
Basic, overhead |
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4. By composition |
Single element, complex |
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5. According to the method of attribution to the cost |
Direct, indirect |
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6. By role in the production process |
Production, non-production |
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7. Where possible planning coverage |
Planned, unplanned |
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8. Relative to production volume |
Constants, variables |
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9. By the frequency of occurrence |
Current, one-time |
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10. Relative to finished products |
Costs of finished goods and work in progress |
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11. In relation to time |
Past, current period and future |
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12. By place of origin |
Departmental costs |
The main groupings of costs are groupings by "economic elements" and "by cost items". On the basis of these groupings, documents such as cost estimates for production, costing for individual types of products, and reporting form N 5-Z are developed.
There are 5 cost elements:
1) material costs minus the cost of returnable waste (raw materials and basic materials, including purchased semi-finished products, auxiliary materials, fuel and energy, etc.);
2) labor costs;
3) deductions for social needs;
5) other expenses (interest payments, depreciation of intangible assets, travel expenses, hospitality expenses, advertising expenses, personnel training expenses).
The classification of costs by economic elements is necessary to determine tasks to reduce the cost of production, calculate the need for working capital, calculate cost estimates and for the economic justification of investments, as well as to calculate indicators of material intensity, wage intensity (labor intensity), capital intensity of products.
The costs of the enterprise are grouped by costing items in order to calculate the cost of certain types of products.
The following costing items are distinguished:
1) raw materials and materials;
2) returnable waste (subtracted);
3) purchased products, semi-finished products and production services of third-party enterprises and organizations;
4) fuel and energy for technological purposes;
5) wages of production workers;
6) deductions for social needs;
7) expenses for the preparation and development of production;
8) overhead costs;
9) general business expenses;
10) losses from marriage;
11) other production expenses;
12) business expenses.
Selling expenses - expenses for tare and packaging; product transportation costs; commission fees and deductions paid to sales enterprises and organizations in accordance with agreements; advertising costs; other selling expenses.
General production and general business expenses are classified as overhead costs. General production overheads are the costs of maintenance and management of production (expenses for the maintenance and operation of equipment, shop management costs).
General business overheads or overhead costs for non-production purposes - these expenses include several groups: administrative and management, general business, taxes, mandatory payments, etc.
The main costs are the costs directly related to the performance of technological operations for the production of products (raw materials and materials, wages of workers).
Overhead costs are expenses incurred in connection with the organization, maintenance of production and management of it (general production and general business expenses).
Direct costs are costs that are directly related to the production of individual products and are directly related to their cost.
Indirect costs are costs that are associated with the organization and management of production and are included in the cost price indirectly.
Current costs are expenses that have a frequent frequency of implementation (consumption of raw materials and materials).
One-time costs are the costs of preparing and mastering the release of new types of products, the costs associated with the launch of new industries.
Fixed costs - these are costs, the value of which does not change with changes in production volumes (depreciation deductions, rental of buildings and equipment, insurance premiums, maintenance of the administrative and managerial apparatus).
Variable costs are costs, the total value of which is directly dependent on the volume of production and sales, as well as their structure in the production and sale of several types of products (raw materials, materials, fuel and energy for technological purposes, wages of key workers, transport services of the main production ).
Cost planning is one of the main components of the technical and economic planning of the enterprise.
The purpose of cost planning (cost) is to optimize the current costs of the enterprise to ensure the necessary growth rates of profit and profitability based on the rational use of cash, labor and material resources.
The enterprise cost plan includes the following sections:
1) calculation of the reduction in the cost of production due to the influence of technical and economic factors on it;
2) calculation of the cost of types of products (works and services);
3) cost estimate for production.
When planning the cost of production, the following methods are used:
1) Factor-by-factor method - determining the impact of technical and economic factors on production costs in the planned year compared to the previous year.
2) Estimated method - substantiation of each cost item using a special cost estimate.
3) Calculation method - substantiation of the cost of producing a unit of products, works, services or their structural elements, for example, a part, a node.
4) Normative method - the level of costs for the production and sale of products, works, services is calculated on the basis of pre-compiled norms and standards.
When planning the cost of production, the above methods are used in combination, they complement each other and make the cost planning process end-to-end.
In order to increase the efficiency of social production, it is of great importance to reduce the cost of production, which involves the economical consumption of resources.
The value of reducing the cost of production for the enterprise is as follows:
Increasing the profit that remains at the disposal of the enterprise, which allows not only simple, but also expanded reproduction;
- the emergence of great opportunities for solving social problems of the enterprise team, as well as material incentives for employees;
- improvement of the financial condition of the enterprise;
- the emergence of the possibility of reducing the selling price of their products, and this allows you to increase the competitiveness of products and increase sales.
Cost drivers are quantifiable cost savings opportunities.
Technical and economic factors can be combined into 4 groups, among which the main ones are distinguished:
1) increasing the technical level of production:
a) introduction of new and improvement of applied equipment and technology;
b) expansion of the scale of application of new equipment, technology, modernization and improvement of the operation of existing equipment;
c) the use of new types and the replacement of consumed raw materials, materials, fuel and energy, the improvement of their use;
d) improving the quality of products, improving their characteristics;
2) improvement of management, organization of production and labor:
a) rationalization of production management;
b) improving the organization and maintenance of production;
c) improving the organization of labor and the use of working time;
d) elimination of unnecessary costs and losses (including losses from marriage);
3) change in the volume and structure of products, production structure:
a) the relative change in semi-fixed costs as a result of changes in the volume of production;
b) relative change in depreciation charges;
c) change in the structure of products;
d) the commissioning of new industries (and in associations also the commissioning of new enterprises);
e) development of new enterprises and preparation of production at existing enterprises;
4) change in business conditions:
a) changes in prices for manufactured products;
b) changes in prices for consumed raw materials, materials, components and semi-finished products, fuel, energy;
c) change in wages in accordance with the decision of the government;
d) change in the conditions of taxation;
e) valuation of fixed assets and changes in depreciation rates.
Particularly important sources of cost reduction include:
1) increase in production volume due to more complete use of production capacity, production areas, improvement of technologies, rational organization of repairs;
2) the reduction in the cost of production is ensured by increasing labor productivity;
3) cost reduction due to the economical use of raw materials, the use of substitutes, the improvement of the range and structure of products, the reduction of unproductive costs and the reduction of defects;
4) Reducing the cost of production maintenance and management also reduces the cost of production.
Costs and price of products
The costs of production and sales of products represent the consumption of all factors of production (fixed assets, raw materials, materials, fuel, energy, labor resources), expressed in monetary terms. This is the most important intra-production indicator necessary for determining the offer price, as well as for developing an effective business policy.The entrepreneur produces goods for profit, moreover, he tries to maximize the ratio between profit and costs. However, the ability of a particular seller to set prices in the market is limited by the type of market system, and, in addition, the price level is formed under the influence of a number of factors. Therefore, for any manufacturer, the main, and sometimes the only source of increasing profits is cost reduction. This implies the main goal of market analysis of costs - to identify the optimal ratio between costs and income, which is the most important condition for the survival and well-being of the company.
In the practice of pricing at an enterprise in market conditions, it is customary to distinguish between accounting and entrepreneurial (economic) costs.
Accounting costs for the production and sale of products, attributable to the cost of production, are formed in accordance with the Regulations on the composition of costs for the production and sale of products (works, services), approved by the Government of the Russian Federation. Costs include the following elements: material costs, labor costs, social contributions, depreciation of fixed assets, and other costs.
However, in order to carry out its activities in the market, the enterprise must bear, and therefore, take into account, when determining the offer price, other, larger costs associated with simple and expanded reproduction. These costs are called entrepreneurial costs, and in essence they determine the offer price.
Entrepreneurial costs include:
Accounting costs;
- normal business profit, which should serve as a source of financing capital investments in fixed assets and a source of growth in working capital, R&D costs, social needs, payment of dividends on shares and tax deductions paid from profits;
- value added tax (VAT), if it is charged in excess of the price of the enterprise, and excises, if the goods of the enterprise are excisable;
- customs duties on export goods of the company, if it carries out foreign economic activity;
Opportunity (opportunity) costs are monetary losses associated with missed opportunities for the best use of the company's resources.
Indeed, economic decision-making is based on the fact that an economic entity is faced with limited resources and must make a choice between alternative ways of using these resources. In other words, the manufacturer must keep in mind that certain resources can be used in alternative ways, and, therefore, it is necessary to compare the expected benefits from these alternatives. When deciding on the use of resources in this production, the entrepreneur refuses to produce other goods and services, i.e. sacrifices the value of alternative possibilities.
From this point of view, it can be argued that the costs that should be taken into account when making economic decisions are always opportunity costs.
The Austrian scientist Friedrich Wieser, the founder of the theory of costs, which takes into account the principle of scarcity of resources, formulated the law of costs as follows: “The real cost of any thing is the lost utility of other things that could be produced using the resources that went into the production of this thing.” According to Wieser, production costs are nothing but lost (including potential) utilities: “He who thinks about “utility”, forgetting about “costs”, simply thinks about the usefulness of only one production, forgetting about the usefulness of others” .
Thus, all costs in the economy are associated with the rejection of the possibility of producing alternative goods, in other words, all costs are alternative, and therefore must be taken into account when making business decisions.
Considering the opportunity costs from the position of the enterprise, we can say that they have an explicit (external) or implicit (internal) character.
Explicit costs are imputed costs that take the form of direct cash payments by the enterprise for the acquired resources (wages of workers, payment for raw materials, fuel, energy, transport services, etc.). In Western practice, these costs are called external.
Implicit costs are the opportunity costs of using resources owned by the owners of the firm as legal entities. These costs are not stipulated by the contract, are not obligatory payments and remain uncollected. These include the salary of the owner of the company, if he works along with employees (and could earn money by working at another enterprise), and the cost of operating buildings owned by the company (if the company refuses to rent out its premises and receive appropriate payment) . Implicit costs are often hidden, but they must always be taken into account when making economic decisions. Another thing is sunk costs, which are usually in sight, but they are always ignored when making management decisions.
Sunk costs (otherwise called lost value) are those costs that were made in the past, they cannot be changed by any present or future actions. It is precisely because of their irreplaceability that they should not influence the firm's decisions. This category of expenses includes, for example, the purchase of specialized machinery, designed to the order of the enterprise, which can be used exclusively for the production of new products. It cannot be reconstructed for other purposes, it cannot even be sold at the cost of scrap metal. The capital cost of such equipment is therefore a sunk cost, and the opportunity cost of alternative uses is zero. Sunk costs include R&D, marketing research, etc.
In contrast to sunk costs, when making economic decisions, an entrepreneur should take into account the avoidable, i.e. not yet incurred costs that can be easily and without loss can be prevented. For example, promoting a new product in the media is a preventable expense of capital.
Product sales costs
The cost of products (works, services) is a valuation of natural resources, raw materials, materials, fuel, energy, fixed assets, labor resources used in the production process, as well as other costs for its production and sale.The cost includes the following types of costs:
1) costs directly related to the production of products, due to the technology and organization of production, including the costs of quality assurance;
2) the cost of servicing the production process;
3) costs associated with production management;
4) costs associated with improving technology and organization of production, improving the quality and reliability of products, inventions and rationalization;
5) costs for the maintenance and operation of environmental structures;
6) the costs of ensuring normal working conditions and safety;
7) costs associated with the training and retraining of personnel;
8) payments provided for by labor legislation;
9) deductions from salary expenses;
10) payments for compulsory (established by law) types of insurance and bank loans;
11) contributions to special funds;
12) expenses for the reproduction of fixed production assets (depreciation charges);
13) depreciation of intangible assets;
14) taxes, fees, payments and other obligatory deductions provided for by law;
15) Other types of costs in accordance with the procedure established by law.
In addition, the actual cost reflects:
A) losses from marriage;
b) the cost of warranty repairs, maintenance;
c) losses from downtime due to internal production reasons;
d) shortages in the absence of guilty persons;
e) cash benefits in the manner prescribed by law.
Production costs are included in the cost of the reporting period to which they relate, regardless of the time of payment.
Costs can be classified according to the following criteria:
1) according to the method of attributing costs to the unit cost of production:
a) direct (associated with the production of specific types of products, they can be directly included in the unit cost of production);
b) indirect or overhead (costs associated not with the production of a particular type of product, but with production in general);
2) according to the uniformity of the composition of costs:
a) simple - economically homogeneous (for example, material costs of the same purpose);
b) complex - economically heterogeneous costs, but the same purpose (for example, for the maintenance and operation of equipment);
3) by types of expenses:
a) by economic elements (the classification is based on the economic homogeneity of costs, regardless of the place of origin of the costs and the direction of use (for example, wages);
b) by calculation items (the place of origin and direction of use are taken into account);
4) by the nature of the connection with the volume of production:
a) conditionally fixed, it is customary to include such costs, the value of which does not change with a change in the degree of utilization of production capacities or a change in the volume of production;
b) conditional variables, these include costs that vary depending on changes in the volume of production.
The costs that form the cost of production are grouped according to their economic content according to the following elements:
1) material costs (minus the cost of returnable waste). Recyclable waste - the remnants of material resources formed during the production process, which have completely or partially lost the consumer qualities of the original resource and, therefore, are used at increased costs or not used at all for their intended purpose;
2) labor costs;
3) deductions from labor costs (for example, for social needs);
4) depreciation of fixed assets;
5) other expenses.
According to this classification, it is possible to determine the total costs of production and sales of products (to make an estimate of production costs).
The calculation of the cost of a unit of production includes a grouping of costs by items:
1) raw materials and basic materials, taking into account transportation and procurement costs;
2) purchased products, semi-finished products and services of an industrial nature of third-party organizations;
3) returnable waste (subtracted);
4) auxiliary materials;
5) fuel and energy for technological purposes;
6) basic wages of production workers;
7) additional wages of production workers;
8) deductions for social needs (additional wages are set, as a rule, as a percentage of the basic salary. Deductions for social needs include deductions: to a pension fund, a compulsory medical insurance fund, an employment fund, a social insurance fund. Deductions for social needs are made from the amount of basic and additional wages);
9) expenses for the preparation and development of production (costs are made in accordance with the Regulations on the composition of costs included in the cost);
10) expenses for the maintenance and operation of equipment;
11) shop expenses;
12) general factory expenses;
13) losses from marriage;
14) other production expenses;
15) non-production expenses (commercial expenses).
Cost grouping:
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Direct material costs |
Direct labor costs |
general shop expenses |
General plant costs |
non-manufacturing expenses |
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Technological cost |
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shop cost |
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Production cost |
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Full cost |
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When compiling a cost estimate for a unit of production, the following are used:
1) specifications for raw materials, materials, purchased semi-finished products and components;
2) flow charts with operational time standards and prices;
3) the system of norms and standards in force at the enterprise;
4) cost estimates.
The composition of the costs for the operation and maintenance of equipment:
1) depreciation of equipment and vehicles;
2) equipment operating costs (fuel, energy, etc.);
3) repair costs;
4) wear of low-value and wearing items and devices.
The composition of the workshop costs:
1) maintenance of the shop management apparatus;
2) maintenance of other personnel;
3) depreciation of buildings, structures, inventory;
4) the cost of maintaining buildings, structures, inventory;
5) repair;
6) testing, innovation, invention;
7) labor protection costs;
8) depreciation of low-value, wear-out inventory and other non-production expenses.
Composition of general factory expenses:
1) costs associated with the management of the enterprise;
2) personnel training;
3) fees and deductions;
4) other expenses are similar to shop expenses.
As a basis for the distribution of indirect costs, the following can be used:
A) the basic wages of production workers (minus additional payments for various bonus systems);
b) estimated rates calculated on the basis of the coefficient-machine-hours;
c) direct material costs.
Costs and cost of production
In modern accounting practice in the vast majority of enterprises and firms, instead of the category "costs", the category "cost" is used, which in its content differs significantly from the category "costs". Costs, costs, prime cost - are the most important economic categories. Their level largely determines the amount of profit and profitability of the enterprise, the efficiency of its economic activity. Reducing and optimizing costs are one of the main directions for improving the economic activity of each enterprise.The cost price is designated as the valuation of natural resources used in the production process, raw materials, fuel, materials, energy, fixed assets, labor resources, as well as other costs for its manufacture and execution.
Achieving the best effect at lower cost, saving labor and financial resources depends on how the organization solves the problem of reducing the cost of production. The main task of the analysis is: checking the viability of the plan at cost, the progressiveness of cost measures, analyzing the implementation of the plan and studying the source of deviations from it, finding ways to mobilize them.
In general, production and sales costs (the cost of products, works, services) are a cost measure used in the manufacturing process of natural resources, raw materials, materials, fuel, energy, fixed assets, labor resources, as well as other costs for its manufacture and implementation. .
The costs of production and sale of products include costs associated with the development of products, the organization of production, the use of natural materials, the improvement of production technologies, the payment for consulting, information services, hospitality costs associated with the commercial activities of enterprises, firms and the training of workers, counting on state and non-state public insurance and pensions, to the State Employment Fund, transfer of compulsory health insurance.
In modern accounting practice in the vast majority of organizations and enterprises, instead of the “costs” category, the “cost price” category is used, which in its content is very different from the “costs” category.
The cost price represents the total cost of manufacturing and selling products. They can be calculated both in terms of real costs and in terms of normative ones. In Russia, at state-owned enterprises, indicators are sectoral in nature. But in many situations, the standards do not play the role of an incentive to reduce the costs of organizations to manufacture products. Based on practice, we can say that they are often industry average. Enterprises have the opportunity to prove that they work in special conditions and industry standards are unacceptable for them.
Modern economic theory proceeds from rarely used resources and the possibility of their alternative production. Alternative production means, for example, the possibility of making building materials, paper, and furniture from wood. Therefore, when an organization decides to produce a certain product, for example, furniture from wood, it thereby refuses to produce blocks for country houses from wood. From here it is concluded that the economic costs of a certain resource that is used in a given production are equal to its cost in the most optimal way of using it for the manufacture of products. Thus, economic costs are the payment to the supplier made by the firm, or the income of the resource supplier provided by the firm, as well as the internal costs of ensuring that the resources are applied by this particular firm and for a certain production option.
So, we can conclude that the cost of production at any time is equal to the cost of the resources that are used to manufacture the goods and services sold during this period. The income of the enterprise depends on the price of products and the cost of its production. The price of products in the market is a consequence of the interaction of supply and demand. Here, the price changes under the influence of the laws of market pricing, and costs may increase or decrease depending on the amount of labor or financial resources used. The most important ways to reduce the cost of production is to determine the optimal amount of purchased resources and launched products consumed in production - labor and material. As well as reducing the labor intensity of products and increasing productivity. The main provisions of modern economics about production costs are as follows: in order to get more of any good, you need to provide potential producers and suppliers of this good with a certain incentive that would encourage them to transfer resources from their current use to the production of what we want. Costs are always the result of supply and demand. An increase in the demand for any good will increase the cost of acquiring that good only in so far as it does not cause an increase in the quantity supplied.
Variable cost per unit of output
Variable and fixed costs are the two main types of costs. Each of them is determined depending on whether the total costs change in response to fluctuations in the selected cost type.Variable costs are costs that change in proportion to changes in the volume of production. Variable costs include: raw materials and materials, wages of production workers, purchased products and semi-finished products, fuel and electricity for production needs, etc. In addition to direct production costs, some types of indirect costs are considered variable, such as: costs for tools, auxiliary materials, etc. Per unit of output, variable costs remain constant despite changes in output.
Example: With a production volume of 1000 rubles. at a unit cost of 10 rubles, variable costs amounted to 300 rubles, that is, based on the cost of a unit of production, they amounted to 6 rubles. (300 rubles / 100 pieces = 3 rubles). As a result of doubling the volume of production, variable costs increased to 600 rubles, but in terms of the cost of a unit of production, they still amount to 6 rubles. (600 rubles / 200 pieces = 3 rubles).
Fixed costs - costs, the value of which almost does not depend on changes in the volume of production. Fixed costs include: salaries of management personnel, communication services, depreciation of fixed assets, rental payments, etc. Per unit of production, fixed costs change in parallel with changes in production volume.
Example: With a production volume of 1000 rubles. at the cost of a unit of production of 10 rubles, fixed costs amounted to 200 rubles, that is, based on the cost of a unit of production, they amounted to 2 rubles. (200 rubles / 100 pieces = 2 rubles). As a result of doubling the volume of production, fixed costs remained at the same level, but in terms of the cost of a unit of production, they now amount to 1 ruble. (2000 rubles / 200 pieces = 1 rub.).
At the same time, while remaining independent of changes in the volume of production, fixed costs can change under the influence of other (often external) factors, such as price increases, etc. However, such changes usually do not have a noticeable effect on the amount of general expenses, therefore, when planning, accounting and control overhead costs are accepted as fixed. It should also be noted that some of the general expenses may still vary depending on the volume of production. So, as a result of an increase in the volume of production, the wages of managers, their technical equipment (corporate communications, transport, etc.) may increase.
Types of production costs
Explicit costs are opportunity costs that take the form of direct (cash) payments to suppliers of factors of production and intermediate products. Explicit costs include salaries paid to workers, salaries of managers, commissions to trading firms, payments to banks and other financial service providers, legal fees, travel expenses, and so on.There are also implicit costs. These include the opportunity cost of using resources owned by the firm's owners (or owned by the firm as a legal entity). These costs are not covered by contracts that are binding for explicit payments, and therefore remain under-received (in cash).
Distinguish between external and internal production costs.
An external cost is a payment for resources to suppliers that do not belong to the owners of the firm.
Internal costs are the costs of own, unpaid resources.
These include: depreciation for the restoration of fixed assets, remuneration of the owners of the company, etc.
“Total cost of production is the sum of all the external and internal costs necessary to attract and retain resources within the limits that ensure the economically sound functioning of the firm.”
Production costs have a complex structure that determines the nature and conditions of use in the production process.
Another important method of classifying costs is based on taking into account the time horizons during which certain production decisions are made.
Distinguish between fixed and variable production costs.
Fixed costs are called costs, the value of which does not change depending on the volume of production, the adjustment and regulation of which requires a lot of time, they also determine the size of the company, the parameters of its production capacities. These include the costs of acquiring, maintaining and maintaining land, buildings and structures, and equipment. Variables are costs, the value of which depends on the volume of production. The value of variable costs varies with the volume of production, increasing or decreasing along with this volume.
Variable costs include the cost of purchasing raw materials, wages, transport, heat and energy resources, etc.
Total cost is the sum of fixed and variable costs. For the analysis and management of the state of the firm, average and unit costs, as well as marginal production costs, are also of great importance.
Average and unit costs are the costs of producing a unit of finished goods. Distinguish between average total, average fixed and average variable costs.
Marginal cost is the additional cost associated with the production of one more (additional) unit of output.
"The sum of fixed and variable costs, as well as the magnitude of unit and marginal costs, constitute a technological set of production costs, determined by the level of technology and organization of production and the equation of market prices for resources or factors of production." Therefore, according to the method of attribution to the cost of production, direct and indirect costs are distinguished, which can be distinguished by grouping costs according to costing items.
Direct costs are directly dependent on the volume of output or on the time spent on its manufacture and can be directly and directly attributed to its cost: raw materials and basic materials, losses from marriage, and some others. This type of cost is directly related to the manufacture of products and is taken into account in a direct way for its individual types.
There are three groups of direct costs:
Direct costs of materials - these are the costs of those materials that really make up a part of the manufactured product (raw materials and materials, fuel for technological purposes);
- Direct labor costs - this is the wage paid to the worker for the work actually performed on the processing of some product;
- Direct overhead costs are those costs that are directly related to the number of products produced or the time spent on their manufacture (these include the cost of electricity needed to operate machines).
Indirect costs cannot be attributed directly to the cost of individual types of products and are distributed indirectly, using conditional calculations, for example, in proportion to the wages of production workers: general production, general business, non-production costs, etc. They are necessary for the overall implementation of the production process of this type of product at the enterprise.
They are also divided into three groups:
Indirect costs of materials are the costs of various by-products, but necessary materials used in the production process (lubricating oils, stationery, spare parts, etc.);
- Indirect labor costs are the wages paid to auxiliary workers, equipment maintenance workers, storekeepers, clerical workers, etc. They also include the downtime of the main production workers and the cost of overtime work;
- Indirect overhead costs are the wages of management, commercial, administrative workers, the cost of rent, transportation costs, the cost of developing new products.
Articles that combine indirect costs are called complex. The sum of all direct costs is the production cost of the product. The sum of all direct and indirect costs gives the cost of goods sold. The division of costs into direct and indirect depends on industry characteristics, the organization of production, the accepted method of calculating the cost of production, for example, in the coal industry, where only one type of product is produced, all costs are direct.
According to the frequency of occurrence, expenses are divided into current and non-recurring. Current expenses have frequent periodicity (consumption of raw materials and materials). One-time (one-time) - expenses for the preparation and development of the release of new types of products.
There are also proportional costs, the value of which does not change due to changes in production volumes, and non-proportional ones, i.e., those that change in a progressive or depressing way with changes in production volumes.
For planning, accounting and analysis, the production costs of an enterprise are combined into homogeneous groups according to many criteria:
1. By types of expenses. The grouping by types of expenses is generally accepted in the economy and includes two classifications: according to economic elements of expenses and according to cost items.
The first of them (according to economic elements) is used in the formation of the cost at the enterprise as a whole and includes five main groups of expenses:
material costs;
- labor costs;
- deductions for social needs;
- depreciation of fixed assets;
- other expenses.
The second group of costs (according to cost items) is used in the preparation of estimates (calculation of the cost of a unit of production), which allows you to determine what the unit of each type of product costs the enterprise, the cost of certain types of work and services. The need for this classification is due to the fact that the calculation of the cost of the above cost elements does not allow taking into account where and in connection with what the costs were incurred, as well as their nature. At the same time, the definition of costs by costing as a way of grouping them relative to a specific unit of production allows you to track each component of the cost of products (works, services) at any level.
According to the items of expenditure, the costs are grouped depending on the place and purpose (purpose) of their occurrence and are attributed to each type of product by a direct or indirect method. This classification is specific to each industry, so the composition of costs in each industry is different.
As a rule, the items of expenditure are:
A) raw materials and materials;
b) fuel and energy;
c) basic and additional wages of production workers;
d) social insurance contributions;
e) expenses for the preparation and development of production;
f) the cost of maintaining and operating the equipment;
g) shop expenses;
h) general factory expenses;
i) other production expenses;
j) non-production (commercial) expenses, etc.
2. By the nature of participation in the creation of products (works, services). Allocate the main costs directly related to the process of manufacturing products, in particular, the costs of raw materials, basic materials and components, fuel and energy, the wages of production workers, etc., as well as overhead costs, i.e. production management and maintenance costs - workshop, general factory, non-production (commercial), losses from marriage.
3. By variability depending on production volumes. Costs that change (increase or decrease) in proportion to the change in the volume of production are called conditional variables. Costs that remain unchanged, and their value is not associated with an increase in the reduction in output, are called conditionally constant. This classification of costs is necessary when planning production, as well as when analyzing the financial and economic activities of the enterprise.
4. According to the method of reference to production. Very often, when calculating the cost of production, it is impossible to determine exactly to what extent certain costs can be attributed to one or another type of product. In this regard, all costs of the enterprise are divided into direct, which can be directly attributed to this type of product (work, service), and indirect, which are associated with the production of many products, as a rule, these are all other costs of the enterprise.
Introduction
1 The concept and composition of production costs
1.1 The economic essence of the costs (costs) of production and sales of products
1.2 Types of costs (costs)
1.3 Composition of enterprise costs
2 Costing, its meaning
2.1 Calculation
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 classifications of production costs
5 Ways to reduce production and sales costs
Conclusion
List of used literature
Applications
Introduction
The production of products requires various costs, which are the cost of production or the cost of production. Production costs include the costs of raw materials, materials, process fuel, wages of employees, depreciation of equipment and other fixed assets, etc. but the finished product must be brought to the consumer. This industrial and technological process associated with the sale of goods requires certain costs, which are 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 act as distribution costs, which are an important part of the current costs of the enterprise.
Costs of production and circulation (sales of products) are classified according to various criteria: explicit and implicit costs; limit; alternative; depending on the functions performed by the enterprise; by types of costs; tangible and intangible; constants and variables; by product groups; direct and indirect; according to items, etc. At the same time, the classification of costs allows you to open reserves for saving material, labor and financial costs of the enterprise, reduce the cost of production, and increase profitability.
As we can see, distribution costs are one of the main estimated indicators of the results of the economic activity of an industrial enterprise. They allow you to determine the quality and effectiveness of the work of the team of a trading enterprise. Each industrial enterprise must constantly look for reserves to save distribution costs while improving the quality of customer service.
The mode of saving distribution costs contributes to the growth of labor productivity and an increase in the level of profitability, therefore 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, the factors that affect them, therefore, the profit of the economic activity of the enterprise depends on the level of knowledge of such an economic category as distribution costs by a specialist.
Thus, production costs and sales of products are one of the most important estimated indicators of the economic activity of an industrial enterprise; the profit of any commercial firm directly depends on their level. Therefore, the relevance of studying and researching this most important indicator is quite obvious.
The purpose of the course work is to systematize and consolidate the received theoretical knowledge and practical skills, to deepen theoretical knowledge in accordance with a given topic, to form the ability to apply theoretical knowledge to study production costs and sales of products using the example of JSC Zavod Saranskkabel.
In accordance with the goal of the course work, it is necessary to solve the following tasks; tasks are determined according to the plan:
Consider the concepts and composition of the costs of production and sales of products.
Learn about costing and what it means.
To reveal the economic characteristics of the enterprise.
Find out the classification of costs by items and elements.
To identify ways to reduce the cost of production and sales of products.
This course work is performed on the practical material of OJSC "Plant" Saranskkabel "
1 The concept and composition of production costs and product sales
1.1 The economic essence of the costs (costs) of production and sales of products.
The production process at the 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 total cost of living and materialized labor is the cost of production, which is 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 modes of production in any business environment.
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 resources expended, measured at their actual acquisition prices. These are costs presented in the form of payments for purchased resources (raw materials, materials, depreciation, labor, etc.).
However, in order to make decisions about the appropriateness of continuing the activities of their enterprise, the owners must take into account the economic costs.
Economic costs are the quantity (cost) of other products that must be abandoned or sacrificed in order to obtain some amount of this product.
The domestic economy is characterized by an accounting approach to cost assessment. If we take this into account, then the terms "costs" and "costs" can be considered synonymous.
1.2 Types of costs (costs)
For accounting purposes, costs are classified according to various criteria.
According to the economic role in the production process, costs can be divided into basic and overhead.
TO main include costs associated directly with the technological process, as well as with the maintenance and operation of tools.
Overhead- the cost of maintenance and management of the production process, the sale of finished products.
According to the method of allocating costs for the production of a particular product, direct and indirect costs are distinguished.
Direct- these are the costs associated with the manufacture of only this type of product and are directly attributable 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 are subject to distribution 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 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 the costs of raw materials and materials, fuel, energy, transport services, part of the labor force, i.e. those costs that change with the volume of production.
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 output), they decrease with an increase in the volume of production and increase with its decrease.
The sum of fixed and variable costs is the gross cost 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.
1.3 The composition of the costs of the enterprise.
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 level of operating costs;
4. at the level of the cost of sales of products and goods;
5. at the level of production cost of production.
At the first level, out of the entire set of costs of the enterprise, the costs that are directly and directly related to the normal activities of the enterprise, and the costs associated with extraordinary events are distinguished. The magnitude and proportion of the latter indicate the degree of influence of unplanned and uncontrolled events on the activities of the enterprise in the reporting period. Such a distinction allows you to immediately distinguish from the composition of the costs of the enterprise costs that cannot be taken into account when assessing the effectiveness of economic activity.
At the second level, in the costs of ordinary activities, the costs associated with operating and financial activities are primarily allocated. In general, it is difficult to single out any criteria for the rationality of the cost ratio at this level. However, a significant proportion of the costs of financial activities may indicate a wide variety of activities of the enterprise, the combination of which within the framework of one legal entity does not always seem appropriate and may require its separation.
The value of “other costs” (this group primarily includes costs associated with the maintenance of the social sphere) also indicates the presence in the enterprise of objects of expenses that are not related to the main activity, and, as a result, the main source of cost recovery.
At the third-fifth levels, the cost structure of operating activities is studied by economic elements and costing items.
Operating costs include all costs of the enterprise 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 expenses for the implementation of investment or financial activities.
The main indicator reflecting the cost structure of the operating activities of the enterprise is the ratio of material, energy costs and wage costs. The costs of these elements determine the total amount of consumption of all the main types of resources necessary to maintain the normal economic activity of the enterprise.
production costs
Costs associated with the production of goods. In accounting and statistical reporting, they are reflected in the form of cost
The total labor cost of producing a product. The simple moments of the labor process - expedient activity, or labor itself, the object of labor and the means of labor - form the primary elements of production costs. When the process of labor (reproduction) is repeated, its material elements (means of production) are compensated (subtracted) from the social product. The labor itself is not compensated, it is spent again. But first, the labor force (working capacity) of a person must be restored.
The means of subsistence required to rebuild the labor force is a necessary product. Production costs, reduced to their material elements, represent the total costs of material resources (means of production and means of subsistence for workers in production). These are the general features of production costs arising from the simple labor process.
External costs- payment for resources to individuals and legal entities that are not among the employees or owners of this firm. For example, the salary of employees for hire (not included in the number of employees of the company), payments for raw materials (except for own production), etc.
Internal costs- costs used only in relation to their own resource (resources) without the cost of labor or services of persons who are not among the company or other legal entity. For example, the cost of improving the quality of a particular product.
Cost classification
Costs can be classified according to the following criteria:
- 1) according to the method of attributing costs to the unit cost of production:
- a) direct (associated with the production of specific types of products, they can be directly included in the unit cost of production);
- b) indirect or overhead (costs associated not with the production of a particular type of product, but with production in general);
- 2) according to the uniformity of the composition of costs:
- a) simple - economically homogeneous (for example, material costs of the same purpose);
- b) complex - economically heterogeneous costs, but the same purpose (for example, for the maintenance and operation of equipment);
- 3) by types of expenses:
- a) by economic elements (the classification is based on the economic homogeneity of costs, regardless of the place of origin of the costs and the direction of use (for example, wages);
- b) by calculation items (the place of origin and direction of use are taken into account);
- 4) by the nature of the connection with the volume of production:
- a) conditionally fixed, it is customary to include such costs, the value of which does not change with a change in the degree of utilization of production capacities or a change in the volume of production;
- b) conditional variables, these include costs that vary depending on changes in the volume of production.
Classification of costs by economic elements
The costs that form the cost of production are grouped according to their economic content according to the following elements:
- 1) material costs (minus the cost of returnable waste). Recyclable waste - the remnants of material resources formed during the production process, which have completely or partially lost the consumer qualities of the original resource and, therefore, are used at increased costs or not used at all for their intended purpose;
- 2) labor costs;
- 3) deductions from labor costs (for example, for social needs);
- 4) depreciation of fixed assets;
- 5) other expenses.
Sales of products
Sales of products are carried out in accordance with agreements concluded with buyers or through retail trade.
The receipt of manufactured products in the national economic circulation with payment for it at existing prices.
Products sold outside the industrial enterprise and paid for by the consumer, marketing or trading organization are considered to be sold.
The fact testifies that the products produced are necessary for the national economy to satisfy certain social needs. The volume of sales output determines the degree to which enterprises and branches of the national economy participate in the process of socialist expanded reproduction. Sales of products is the most important economic indicator that characterizes the economic and financial activities of industrial enterprises, production associations, ministries and departments.
Product sales plan contains a list of products scheduled for sale, and the results from the sale
For the enterprise to make optimal decisions on the volume of output, it is necessary to take into account information on the level of costs.
Costs - this is a monetary expression of the costs of production factors necessary for the enterprise to carry out its production and sales activities.
The costs of producing a product are called production costs. In general production and sales costs (cost of products, works, services) is a valuation of natural resources, raw materials, materials, fuel, energy, fixed assets, labor resources, as well as other costs for its production and sale, used in the production process of products (works, services).
There are two approaches to cost estimation: accounting and economic.
Accounting production costs or production cost (works, services) is a valuation of natural resources, raw materials, materials, fuel, energy, fixed assets, labor resources and other costs for its production and sale used in the production process of products (works, services).
The company distinguishes shop, production and full cost.
shop cost is the sum of the costs of manufacturing products in this workshop.
Production cost includes all costs from the initial operation of the production process to the delivery of finished products to the warehouse.
Full cost includes production and selling expenses, that is, the costs of selling products.
Distinguish between standard, planned and actual cost.
Standard cost- these are the maximum allowable costs for the production and marketing of products at scientifically based consumption rates of living and materialized labor.
Planned cost may be higher or lower than the standard, since the norms of labor consumption in the planning period may differ significantly from those that were at the stage of drafting the project.
Actual cost- the one that has developed in the reporting period.
economic costs is the opportunity cost of the business. Opportunity cost expresses the cost of own resources used most efficiently of all other ways. Economic costs include explicit (accounting) and implicit costs. Implicit costs are the cost of services of factors of production that are used in the production process and are the property of the firm, that is, they are not purchased.
Cost functions:
The cost price is the basis of simple reproduction, a form of compensation for the consumed means of production and the distribution fund according to labor, since accumulating in cash the current costs of the enterprise for the production and marketing of products, for the production and marketing of products, the cost price is a necessary form of compensation for these costs;
Cost price - a monetary form of accounting for the costs of consumed elements of the production process;
Cost is the basis of pricing.
Enterprises plan and take into account the following cost indicators:
Unit cost of production (services),
The cost of goods sold,
the cost of a comparable product,
The cost of 1 ruble of marketable products.
The composition of costs included in the cost of products (works, services) is determined by the Basic Provisions on the composition of costs included in the cost of products.
The costs of production and sale of products include the costs associated with
o direct production of products, due to technology and organization of production;
o use of natural raw materials;
o preparation and development of production;
o improvement of technology and organization of production, as well as improvement of product quality;
o invention and rationalization, carrying out experimental work;
o maintenance of the production process;
o ensuring normal working conditions and safety;
o production management;
o training and retraining of personnel;
o deductions for state and non-state social insurance and pension provision, to the State Employment Fund;
o deductions for compulsory health insurance, etc.
The costs that form the cost of production are grouped according to the following criteria:
· Depending on the degree of generalization (detailing) for cost elements and costing item.
In the domestic practice of cost management for the purposes of planning, accounting and costing, there is the following classification:
§ by type of production - main and auxiliary;
§ by type of product - a separate product, a group of homogeneous products, an order, a redistribution, works, services;
§ by type of expenses - costing items for calculating the cost of production and organizing analytical accounting) and cost elements (for compiling a project cost estimate and a production cost report);
§ at the place of occurrence of costs - site, workshop, production, self-supporting team.
For practical use in the management system for the formation of costs and expenses, it is advisable to single out and consider classification of costs taking into account the type of costs- by costing items and cost elements.
The list of costing items, their composition and methods of distribution by types of products, works, services are determined by industry guidelines on planning, accounting and calculating the cost of products (works, services), taking into account the nature and structure of production.
Composition of calculation articles:
1. Raw materials and materials (excluding waste).
2. Purchased products, semi-finished products and services of cooperative enterprises.
3. Basic wages of production workers.
4. Salary additional production workers.
5. Deductions for social insurance from the wages of the main and additional production workers.
6. Costs for the preparation and development of production.
7. Expenses for the maintenance and operation of equipment.
8. Shop expenses.
9. General factory expenses.
10. Loss from marriage.
11. Non-manufacturing expenses.
The first eight cost items form shop cost . Shop cost plus general factory costs and losses from marriage are production cost . Finally, all 11 articles are total cost of production .
In the current conditions of transition to a market economy, many small and medium-sized enterprises use abbreviated nomenclature of costing items, including:
à Material costs (raw materials, materials, fuel and energy for technological purposes), in direct terms;
à Labor costs (also in direct terms);
à Other direct costs;
à Production management and maintenance costs (indirect).
Unlike costing items, the grouping of which is advisory in nature, the costs that form production cost(works, services) are grouped according to their economic content according to the following common elements:
Material costs (minus the cost of returnable waste);
Labor costs;
Deductions for social needs;
Depreciation of fixed assets;
Other costs.
Mathematically it looks like this:
· Depending on the method of including costs in the cost price distinguish between direct and indirect costs.
· By the nature of the relationship with the volume of production: constants and variables, conditionally constant.
· By the nature of participation in the production process: basic and overhead.
· Depending on the time (period) of occurrence and attribution to the cost: expenses of the current period, future periods and forthcoming expenses.
Cost reduction reserves:
Increasing the technical level of production:
Mechanization and automation of production processes, introduction of advanced technology;
Modernization and improvement of the operation of the applied equipment and technology;
Changing the technical characteristics of the product, improving product quality;
Introduction of new types of raw materials, materials, fuel, energy;
Improving the organization of production and labor:
Improving production management;
Improving the organization of work;
Improved logistics;
Reduction of losses from marriage, etc.
Changes in the volume and structure of manufactured products:
Reduction of semi-fixed costs due to the growth in the volume of production;
Improvement in the use of production assets and the related relative change in depreciation;
Changing the structure of manufactured products.
Changes in natural conditions and methods of extraction of minerals and other types of raw materials.
Gross income is an indicator that characterizes the final result of the production or commercial activities of an enterprise, firm, calculated by excluding from gross revenue and the results of non-sales operations (without value added tax and excises) all costs for the production and sale of products included in the cost, except for the cost of payment labor. Gross profit - part of the gross income of the enterprise, the firm, which remains with them after deducting all obligatory expenses. Represents the amount of profit from the sale of products (works, services), fixed assets, other property of enterprises and income from non-sales operations, reduced by the amount of expenses on these operations.
Costs - costs expressed in monetary form, due to the expenditure of various types of economic resources (material, labor, land, financial) in the process of production and circulation of goods. They include the costs of living and materialized (past) labor embodied in the means of production. Costs are divided into production costs and distribution costs.
Production costs are the costs of consumed resources in the production cycle of the circulation of funds.
Distribution costs - the costs associated with the acquisition of production resources, the sale of finished products and their promotion in the sphere of circulation.
The main part of the total costs are production costs, which include labor costs with deductions for social needs, material costs, depreciation, etc. Production costs are divided into public and individual (private).
Public costs production represent the costs incurred to produce a product from the point of view of the entire national economy, i.e. society's costs. They characterize the value of the goods, show how much the goods cost to society.
Individual (private) costs reflect the costs of a particular enterprise for the production of products. They determine the cost of production.
Production costs are divided into fixed (fixed) and variable.
Fixed costs - costs, the value of which does not depend on the volume of production. They exist from year to year at the same level until the enterprise changes its assets (cash assets) and the number of employees. These include depreciation of fixed assets, certain types of taxes levied on the enterprise; insurance of fixed assets; the cost of repairing fixed assets of production; interest rates for loans; advertising costs; overhead costs, etc.
variable costs depend on the volume of production. These include wages, costs for feed, fertilizers, production materials (diesel fuel, lubricants, etc.), energy, auxiliary materials, insurance against adverse weather conditions (hail, drought), product sales costs. The distribution of costs into fixed and variable is of great importance in the analysis of the enterprise, as well as to simplify the calculation of standard costs and more flexible adjustments due to changes in the specified parameters.
There are economic and accounting costs of production.
Economic costs - this is the cost of other goods (goods, services) that could be obtained with the most profitable of the possible alternative directions for the use of production resources. Economic costs include accounting and opportunity (opportunity) costs.
Alternative (imputed) costs - lost profits from the alternative use of productive resources. For example, in agriculture, where resources are limited, the expansion of one of its branches will cause a restriction in the development of other branches that use the same resources, i.e. there is a loss of profit from the reduction of other industries. Lost profit acts as an imputed cost and is an additional opportunity cost that is not reflected in accounting (financial) accounting, but can be calculated in the management accounting system when determining the economic efficiency of production.
Accounting costs represent production costs, i.e. the cost of consumed (expended) production resources. These costs are explicit.
The individual costs of the enterprise represent the cost of production.
Prime cost - current costs calculated in monetary terms and due to the use of land, labor, material and financial resources for the production and sale of products.
The cost price is an economic category that shows what the production and marketing of manufactured products cost each enterprise. A certain amount of means of production and the living labor of workers are spent on the production of products. The spent means of production are past labor embodied in the means of production, which act as the cost of the enterprise for seeds, fuel, fertilizers, electricity, fixed assets (depreciation), etc. Live labor is accounted for by actual payment.
The cost price is one of the most important economic indicators of the activities of agricultural enterprises, since it shows the qualitative aspects of their work, the degree of rational use of the means of production and labor resources. An increase in the economic efficiency of production is ultimately determined by an increase in the production of high-quality products while reducing their cost. Consequently, the level of cost serves as a criterion for the location and specialization of agricultural production. In addition, the cost calculation makes it possible to determine the profitability of production.
The purpose of accounting for the cost of products (works, services) is a timely, complete and reliable reflection of the actual costs of its production, as well as control over the use of material, labor, land and other production resources.
In agriculture, the cost of gross output and a unit of output is calculated.
Cost of gross output is the sum of all production costs of the enterprise. Production costs consist of the costs associated with the use of natural, material, labor and financial resources in the production process.
unit cost is determined by dividing production costs by the volume of gross output in physical terms.
In addition to the cost of production, the cost of a unit of work is also determined (1 standard floor ha, 1 tkm, 1 horse-day, etc.), as well as the cost of cultivating 1 ha of crops, growing 1 head of livestock.
Depending on the volume of included costs, the cost price is divided into production and full (commercial). Production cost includes costs associated with the production of products. Commercial (full) cost - is the cost of producing and selling products.
Depending on the source of data, there are actual, planned and preliminary (provisional) costs.
Actual cost is calculated at the end of the year based on the results of economic activity on the basis of accounting data. It allows you to evaluate the results of the work of individual production units. Determining the actual cost of production, you can outline specific ways to reduce it, compare the indicators of the current year with the previous period or with the planned cost.
Planned cost calculated on the basis of standard indicators, taking into account the actual cost for the previous year. Calculations of production costs are carried out on the basis of technically justified norms for the consumption of material resources (seeds, fertilizers, pesticides, pesticides, fuel, energy, etc.), norms for production and maintenance, and other standards, taking into account recommendations for the rational use of land, as well as the expected economic effect . Calculations are performed on the basis of technological maps of cultivation of agricultural crops and cultivation of various types of livestock and poultry. When calculating the planned cost, measures are planned to reduce material, labor and cash costs, general business expenses, as well as the most complete use of agricultural production reserves.
Preliminary (provisional) cost is determined before the end of the financial year (usually on October 1) based on actual costs incurred for 9 months (three quarters) and expected indicators for the fourth quarter using standards.
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