Additional costs are. Types of production costs. Fixed and variable production costs

29.09.2019

Production costs are expenses associated with the creation of products. In fact, it is payment for various production factors. Costs directly affect both the cost and the cost of production.

Classification

Costs can be private or public. They will be private if this indicator relates to a specific company. Social costs are an indicator that applies to the entire society. The following basic forms of enterprise costs are also distinguished:

Permanent. Expenses within one production cycle. Can be calculated for each of production cycles, the length of which the enterprise determines independently.
Variables. Full costs transferred to the finished product.
Are common. Costs within one production stage.

In order to find out the overall indicator, you need to add up the constant and variable indicators.

Opportunity Cost

This group combines a number of indicators.

Accounting and economic costs

Accounting costs (BI)– costs of resources used by the enterprise. The calculations include the actual prices at which the resources were purchased. BI are equal to explicit costs.
Economic costs (EC) is the cost of products and services formed with the most optimal alternative use of resources. EI is equal to the sum of explicit and implicit costs. BI and EI can be either equal or different.

Explicit and implicit costs

Explicit costs (EC) are calculated based on the amount of company spending on external resources. External resources refer to reserves that do not belong to the enterprise. For example, a company has to purchase raw materials from a third-party supplier. The list of nuclear weapons includes:

Salary to employees.
Purchase or rental of equipment and premises.
Transport expenses.
Communal payments.
Acquisition of resources.
Depositing funds into banking institutions and insurance companies.

Implicit costs (NI) are costs that take into account the cost of internal resources. Essentially, this is alternative spending. These may include:

The profit that an enterprise would receive if internal resources were used more efficiently.
The profit that would appear when investing capital in another area.

The NI factor is no less important than the NI factor.

Returnable and sunk costs

There are two definitions of sunk costs: broad and narrow. In the first meaning, these are expenses that the company cannot recover upon completion of its activities. For example, the company invested in registration and printing of advertising leaflets. All these costs cannot be returned, because the manager will not collect and sell leaflets to receive funds back. This indicator can be considered the enterprise’s payment for entering the market. It is impossible to avoid them. In a narrow sense sunk costs is a waste of resources that have no alternative use.

Return costs– these are expenses that can be returned partially or completely. For example, at the beginning of its work, the company purchased office space and office equipment. When the company ends its existence, all these objects can be sold. You can even get some benefit from selling the premises.

Fixed and variable costs

Over the short term, one part of the resources will remain unchanged, and the other will be adjusted in order to reduce or increase total output. Short-term expenses can be constant or variable. Fixed costs– these are expenses that are not affected by the volume of goods produced by the enterprise. These are the costs of fixed production factors. They include the following costs:

Payment of interest accrued as part of lending at a banking institution.
Depreciation charges.
Interest payment on bonds.
Salary of the head of the enterprise.
Payment for rent of premises and equipment.
Insurance charges.

Variable costs- These are expenses that depend on the volume of goods produced. They are considered the costs of variable factors. Includes the following costs:

Salary to employees.
Transport costs.
Expenses on electricity necessary to ensure the functioning of the enterprise.
Costs of raw materials and materials.

It is recommended to monitor the dynamics of variable costs, as they reflect the efficiency of the enterprise. For example, as the optimal scale of a company’s operations increases, transportation costs increase. More carriers need to be hired for the increased volume of products. Raw materials must be promptly transported to headquarters. All this increases transport costs, which immediately affects variable costs.

General costs

General (aka gross) costs (OC)- these are expenses for the current period that are needed to produce the main product of the enterprise. They include the costs of all production factors. The size of the ROI will depend on the following factors:

Quantities of products produced.
Market value of the resources used.

At the very beginning of the enterprise (at the time of its launch), the total costs are zero.

Cost planning

Analysis and planning of expected expenses is mandatory for every enterprise. Determining the amount of costs allows you to find ways to reduce costs, which is important for reducing, as well as the cost at which it is offered to customers. Cost reduction is necessary to achieve goals such as:

Increasing the attractiveness of the company's products.
Increasing the competitiveness of the company.
Rational use of available resources.
Increased profit growth.
Optimization of production processes.
Increasing the profitability of the company.

You can reduce enterprise costs in the following ways:

Staff reduction.
Optimization of work processes.
Purchasing new equipment that will make production less expensive.
Purchasing raw materials at a lower cost, searching advantageous offers suppliers.
Transferring a number of employees to freelance work.
By moving the enterprise to a relatively small building with a lower rental cost.

The goal of cost reduction is to reduce the cost of production without compromising its quality. This rule is extremely important, since it is almost always possible to reduce costs by reducing the quality of the product, but this will not benefit the company.

IMPORTANT! Costs need to be planned taking into account the results of previous calculations. The planned cost level must be realistic. Setting minimum values that cannot be met is pointless. As an example, you need to take the approximate indicator of past periods.

Displaying costs in accounting documents

Information about expenses is recorded in the “Losses” report. It is compiled according to Form No. 2. During the period of preparing indicators for their recording in the balance sheet, preliminary calculations can be divided into two categories: direct and indirect. Information must be included in documents for on a regular basis to analyze the activities of a large enterprise and track efficiency.

Costs You can call any expenditure of resources accountable. Those costs that are directly necessary for the production of a good or service are considered production costs.

The essence of costs is intuitively clear to almost everyone, but a significant part of the efforts of economic science is spent on their assessment, calculation and distribution. This happens because assessing the effectiveness of any process is a comparison of the amount of expenses incurred with the result obtained.

For economic theory, the study of costs means their determination and classification by type, origin, items and processes. Economic practice puts specific numbers into the formulas proposed by the theory and gets the desired result.

Concept and classification of costs

The simplest way to study costs is to add them up. The resulting amount can be subtracted from the revenue to determine the size, you can compare the amount of expenses for similar processes to determine a more economical option, etc.

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

Especially often costs are divided into:

Constant - independent of the volume of production in a specific period;
Variables - the size of which is directly tied to the amount of output.

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

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

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

If we imagine costs as economic elements, then we can distinguish from them:

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

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

According to costing items, costs are divided into:

Purchased raw materials and materials;
Semi-finished products, components, production services;
Energy;
Labor costs for key production personnel;
Tax deductions from wages in this category;
from the same salary;
Costs of preparation for production development;
Shop costs - a category of costs for operations associated with a specific production unit;
General production costs are expenses of a production nature that cannot be fully and accurately attributed to specific departments;
General expenses - expenses associated with the provision and maintenance of the entire organization: management, some support services;
Commercial (non-production) expenses - everything related to advertising, product promotion, after-sales service, maintaining the image of the enterprise and products, etc.

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

And the cost of each new unit of production when the volume of output changes is called marginal cost.

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

Methods for calculating costs

Formulas and graphs

Does not give a general idea of the cost classification system and the presence of expenses in certain areas practical results when assessing a specific situation. Moreover, even building models without exact numbers requires tools to illustrate the dependencies between certain elements of the cost system and their impact on the final result. Formulas and graphic images help to do this.

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

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

Total costs = fixed costs + variable costs;

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

In the same way one can imagine total costs determined by costing items will differ only in the name and structure of expense items. With the right approach and calculation, application to the same situation different types formulas for calculating the same value should give the same result.

To represent the economic situation in graphical form, you should place points corresponding to cost values on the coordinate grid. By connecting such points with a line, we get a graph of a certain type of cost.

This is how the graph can illustrate the dynamics of changes in marginal costs (MC), average total costs (ATC), average variable costs (AVC).

The costs incurred by the company for the acquisition of all components of production and their use, expressed in monetary terms, are the costs of the company. Types of costs can be determined using two approaches - accounting and economic, containing different attitude to capital and its turnover.

Capital turnover

If an already completed capital turnover process is assessed, this is an accounting approach. But a look into the future of the company and its development is economic. This means that the types of costs clearly differentiate the calculation of existing expenses as a summing up of all activities that have occurred in a certain period of time, that is, a calculation of real expenses and ways to optimize them for the future.

Both of these approaches are simply necessary in the activities of each company, since each of them carries its own burden. Accounting and economic approaches have common goals aimed at the welfare of the company. Each of them (although its own cost function is considered) has a type, composition and value. All this must be objectively calculated through the analysis of various business items and prepared for inclusion in the general business development scheme.

Past and future

Accounting costs necessarily include production expense items: material costs, depreciation of equipment, wages, insurance, and so on. Economic types of costs reveal various options, following which the company can use its funds, and there is always a choice. You can invest them in production to make a profit, you can put them in a bank at a favorable interest rate, or you can take a walk in Courchevel.

Of course, the same money is spent, that is, a certain amount, but with the same expenses the results will be completely different. Thus, the system of economic calculations reveals alternative costs, and their types are determined as a result of choice. What is opportunity cost? These are cash costs resulting from the summation of all expense items. They are always associated with some missed opportunities.

Opportunity Cost

Lost opportunity costs are expressed as the price of the best available opportunity; this is the main guideline for all commercial activities. It is with this that accounting expenses are compared, bypassing other types of costs. But, despite the fact that opportunity costs also represent the company's cash expenditures, they often do not coincide with them in reality. Here is an example: a company buys some resources from the state at a fixed price, and their price clearly relates to accounting costs. And on the main market, the same resources are sold at higher free prices. Costs that were not incurred will be considered opportunity costs.

The opposite example can be given. The company acquires some part of the resources at the market price, and then other types of costs are considered, these will be obvious expenses - monetary. The other part of the resources involved in production is the property of the company and is implicit costs. To calculate the alternative costs in this case, you need to add up the implicit and explicit costs.

Types of costs have, in turn, smaller divisions. First, let's identify the main ones.

Accounting. The cost of resources that have already been used.
Economic. The amount of food that is sacrificed or abandoned for a certain amount of the main product.

Accounting involves classifying costs according to various principles.

Basic. Costs of technological process and labor exploitation.
Invoices. Costs of managing and servicing the production process and selling products.

The cost classification method involves even more ramifications.

Direct costs. The costs of manufacturing only the main type of product (are included in the cost price).
Indirect costs. They do not directly affect any type of product.

The volume of production also requires its own classification.

Variable costs. The period of time is important; such calculations are not made for a long time. Direct dependence on volume and sales.
Fixed costs. They do not depend on the structure and volume of production, as well as on sales.

If a firm focuses on opportunity cost, rather than accounting cost, as the constraint on the supply of marketable goods, it can calculate its costs, determine its output, and anticipate supply. The company always strives to minimize opportunity costs. Types of costs are considered and calculated comprehensively so as not to reduce profits or reduce business activity.

Normal profit

The differences between economic and accounting costs are not only in their alternatives, but also in the methods of calculation. It should be noted here that the so-called normal profit is included in economic costs production. Types of costs considered in in this case, show an additional minimum income for the cost of the advance, and this operation is an indispensable condition for analyzing the activities of each enterprise. Accounting costs do not include this component of cost, because they cannot include anything unstable (assumed) in commercial performance.

They are a real and already established value, and even in structure they differ radically from economic costs. They present only production costs that have already occurred. There are types of economic costs:

variables;
permanent;
limit;
average.

With the help of this division, the process of formation of all kinds of costs is traced and optimized, the composition and degree of participation of each is revealed structural element in increasing production output.

Types of production costs

The short-term period of production activity can be analyzed by dividing all costs into variable and fixed. The latter are the costs in monetary terms for the resources of constant factors of production. Their value does not depend in any way on the volume of production; it is the operation of structures, buildings, equipment, administrative and management costs and rent. All this does not disappear anywhere even when production does not take place at all. Types of production costs include fixed costs as sunk costs.

And the variables are precisely those that make up the changing factors of production, that is, their value either grows or falls in connection with the volume: raw materials, materials, wages - these are variable costs. Although this division into variable and constant is very arbitrary, for long periods of time it is generally absent, since in this case all costs can be considered variable.

Other costs and their types

In sum, fixed and variable costs make up total, or total, which are the least for a company that are necessary to produce a certain amount of output. They can increase with production and are most often defined as a function of total costs. However, the average ones are most interesting for the company, because even with an increase in the total costs, those costs that fall on each unit of production are often hidden. The dynamics of average costs depends on the volume of production.

If it is small, then it has to bear the full weight of fixed costs. As production increases, fixed average costs decrease and variable average costs increase until the increase in variable costs is offset by a decrease in fixed average costs. After this, the process of growth in production volume is accompanied by an increase in average total costs. The category of marginal costs will help to calculate the reasons for the increase in variable costs with an increase in production volume. Costs and their types are a fairly extensive network in which each cell is important for good business development, which is simply impossible to do without a sensible analysis.

Marginal cost

Marginal costs are calculated by subtracting all adjacent values for total costs, since they are additionally required to produce one unit in excess of the assigned volume of production. Thus, the law of reduction to the limit of return is reflected this factor production. And since each additional unit of a factor of production is less than the productivity of the previous one, the costs are greater. An increase in production volume involves all types of costs of the company, since it is associated with the involvement of additional factors of production, which is why marginal costs also increase. For some time, increasing costs can be repaid by increasing the productivity of all factors used, and then the average return increases, and average costs decrease.

But this process is possible if the sum of productive factors grows faster than the falling return of each additional unit of resource, that is, average costs decrease before marginal costs increase. That is why, before a firm decides to increase production, it first carefully compares average and marginal costs. If the marginal ones are below the average, the expansion of production will force the latter to decrease, and on the contrary, if the marginal ones are higher than the average, the volume of production must be reduced. The company must carefully monitor how not only total, but also average and marginal costs are formed, and compare this movement with the dynamics of the average and marginal product. Then the production technology will have an optimal structure that will ensure not only the formation of average minimum costs, but also a good growth rate of the marginal product and a rapid decrease in marginal labor costs.

Costs and profits

Minimizing costs creates the emergence and growth of production profits, which is facilitated by the correct allocation of resources. Profit, of course, is the most important result of this process, and the main activity of each company is maximum profit. This is exactly what the cost function is designed for. Types of costs must be considered, analyzed and optimized, because this is what helps make profit the criterion of the most effective use resources. Why is profit a key performance indicator? This goal is not always unconditional, since there are others: the welfare of the owners, stability in the market or winning new ones, while all types of total costs will certainly change the indicators.

Profit is the means by which all goals are successfully achieved and all tasks assigned to the company are solved; it is a kind of efficiency criterion. The interpretation of the concept of profit is very simple: it is the difference between costs and income. Here the above division into types of production costs is applicable, since income is also divided into marginal, average and total. The excess of income over costs - accounting profit - is a reflection of the difference between revenue from sales of products and the company's actual paid production costs. Economic profit is very important for a company when income exceeds all realized and possible but lost costs.

Example

For example, twenty million rubles were spent as advanced capital to open an outerwear tailoring shop. Revenue from sewing coats and fur coats amounted to forty million in the first year of operation. A non-accountant can easily calculate the profit - forty minus twenty, and he will be wrong. After all, the owner of this studio, with the start of the business, lost his wages from employment, the income that he could have received from dividends if he had invested in the purchase of shares. For example, this would amount to twelve million rubles. This means that the amount of costs for opening an atelier increases by exactly twelve million and amounts to thirty-two million rubles, and not twenty at all.

Accordingly, the profit decreased significantly - to eight million. Profit cleared of all types of costs (this also includes costs that arose during economic choice) is called economic profit. This is the difference between revenue and opportunity cost. It is always less than the accounting profit by the amount of normal profit. In any case, this is a differential income - in addition to the gross costs (general) of the entire enterprise. It is precisely that profit, where the function of total costs is carefully considered, that has the form of economic profit, obtained as a result of the joint efforts of all fragments of production factors.

Cost reimbursement

A market economy, by its conditions, influences the formation of the profit of any company; both production costs and demand for products are important here. The nature of demand also determines the characteristics of income generation, since the competition factor operates. By analyzing the income that a company receives, the indicator of additional (marginal) income from a unit of production is highlighted. Marginal revenue characterizes the payback of an additional unit and, combined with indicators of marginal costs, represents a cost guideline for the feasibility of expanding production.

The enterprise's gross income reimburses costs, being the main source of subsidies for commercial activities. From gross income, funds are generated to purchase materials, raw materials, and pay wages, a depreciation fund is also formed. It is in income that profit lies - the source of financing for all areas of the enterprise's activities. Making a profit is the goal, and the main activity of the firm is to maximize profits. This is an incentive to improve production, its technologies, to optimize production volumes and to minimize costs. The company must reach a certain volume precisely because this will result in minimum gross average costs, and then maximum profit will be formed.

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COURSE WORK

Production costs and their types

production costs

Introduction

1. Costs and their types

1.2 Explicit and implicit costs

1.3 Fixed costs

1.4 Variable costs

1.5 Marginal costs

2. Estimates of the company’s costs in the short and long term

2.1 Short term

2.2 Long term

Conclusion

Introduction

A major role in a market economy is played by firms—production units that use factors of production to create goods and services and then sell them to other firms, households, or the government. The main motive of any private enterprise is the opportunity to make a profit, and the main principle of the activity of each company is to achieve maximum profit. The theory of a market economy is based on the proposition that the only incentive for a company to operate is to maximize profits. Any enterprise tries not only to sell its goods at a favorable high price, but also to reduce its costs of production and sales of products. If the first source of increasing an enterprise's income largely depends on the external conditions of the enterprise's activities, then the second - almost exclusively on the enterprise itself, more precisely, on the degree of efficiency of the organization of the production process and the subsequent sale of manufactured goods.

The purposes of this course work is the study of production costs, their essence and the impact of costs on profit. Production costs are now a rather serious and pressing problem today, because in the conditions market relations the center of economic activity moves to the main link of the entire economy - the enterprise. It is at this level that products needed by society are created, necessary services. The most qualified personnel are concentrated at the enterprise. Here the issues of economical use of resources, the use of high-performance equipment and technology are resolved. The enterprise strives to reduce production and sales costs to a minimum.

Costs reflect how much and what resources were used by the firm. For example, the elements of costs for the production of products (works, services) are raw materials, wages, etc. The total amount of costs associated with the production and sale of products (works, services) is called cost.

The cost of products (works, services) is one of the important general indicators of the activity of a company (enterprise), reflecting the efficiency of resource use; results of the introduction of new equipment and progressive technology; improvement of labor organization, production and management.

Any company strives to obtain maximum profit at minimum total costs. Naturally, the minimum amount of total costs varies depending on the volume of production. However, the components of total costs react differently to changes in production volume. This applies primarily to payment costs service personnel and payment of production workers.

The essence of the concept of economic rationalism lies in the assumption that economic entities determine, on the one hand, the benefits from their actions, and on the other hand, the costs necessary to achieve these benefits, means and their comparison in order to maximize benefits for given costs of resources used (or minimize costs required to obtain these benefits). Such a comparison of benefits and costs when making economic decisions allows us to determine the most optimal actions of a given economic entity under given conditions. In this case, benefits are the benefits received by a given economic entity, and costs are the benefits that a given economic entity is deprived of during a given action. The rationality of the behavior of economic entities will consist in maximizing income from economic activity.

1. Costs and their types

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

We say that the costs of production factors are calculated in money, since it is necessary to use general criterion for description various factors: working time, kg of raw materials, kW of electricity, etc. However, their monetary valuation sometimes has certain difficulties.

Difficulties may also arise when determining the volume of production factors spent in a given period. In some cases, it is almost impossible to calculate costs with absolute accuracy. How, for example, can you determine how much of equipment purchased a year ago and expected to last several years will be consumed (depreciated) in a given period of time?

Therefore, we have to admit that when calculating the costs of an enterprise, there is a certain degree of inaccuracy. This inaccuracy can be reduced if, when choosing a calculation method, one keeps in mind its ultimate goal.

In conclusion, we note that the costs described here are understood as costs, according to which we are talking about the cost method, and since the costs included in the enterprise’s reports are calculated using this method, they are sometimes referred to as accounting costs.

1.1 Opportunity costs

Sometimes it is necessary to look at costs from a different angle, in which case they are defined as opportunity costs.

Opportunity costs are understood as costs and losses of income that arise due to preference given, when given a choice, to one of the methods of implementation. business transactions when refusing another possible method.

Because opportunity costs involve a choice between two options, they are also called opportunity costs (or opportunity costs).

At the planning stage of a company's economic activities, the problem of choosing between two or more options often arises. In this case, it is necessary to plan the costs that will entail giving preference to each of these methods of carrying out economic activities, i.e. we are talking about future costs. Giving preference to one of possible ways, the firm will not only bear the costs associated with this method, but will also lose (give up, lose) something by giving up the alternative opportunity. Therefore, when calculating costs as a result of carrying out business activities in an appropriate way, it is necessary to evaluate them from the point of view of the loss of other opportunities. Let us illustrate our reasoning with an example.

Example. The owner of the company planned the following results for 20...:

Budget (plan) for 20..., dollars

Gross revenue 5,000,000

Costs using the cost method 4 600000 Profit 400000 Own capital (approximately) 1500000

The owner has to decide whether he will continue his business activities or sell the enterprise and release equity and your personal workforce. If we consider the costs of the company continuing its business activities, then, in accordance with the cost method, their value will be, as indicated, $4,600,000.

From the point of view of lost opportunities, the costs for the company to continue its business activities will be, in dollars:

Costs according to budget 4,600,000

Loss of income (forecast) due to the loss of the owner of 300,000 of the opportunity to work in another company

Loss of possible interest payments due to 180,000 with the loss of the opportunity to place equity capital of $1,500,000 in any other way (at the rate of 12% per annum)

The profit we previously determined ($400,000) in fact - when calculating costs from the point of view of lost opportunities - turns out not to be a profit, but a loss of $80,000: gross revenues of $5,000,000 - costs of $5,080,000.

A significant part of decisions made in enterprises consists of choosing from alternative possibilities. As follows from the example we have given, it is necessary to take into account lost opportunities. Lost opportunities become the determining factor, other things being equal. This is the literal meaning of such terms as “lost profit”, from the point of view of lost opportunities”, “cost of lost opportunities”, “opportunity costs” and so on.

1.2 Explicit and implicit costs

When a firm spends money "out of pocket" (i.e., withdraws money from its bank account) to pay for resources, it spends only as much as it takes to keep that resource at its disposal. This kind of opportunity cost, which is associated with paying for resources at the expense of the firm's cash, is called explicit costs. Explicit costs are often divided into direct and indirect;

a) direct costs are directly related to the volume of output and change with the expansion or contraction of production. Such costs include the cost of hiring labor and purchasing raw materials, paying for electrical and thermal energy, etc.;

b) indirect costs do not change depending on the volume of production. Indirect costs include overhead costs, rental payments, wages for the entrepreneur, insurance contributions, etc.

Implicit costs. The production process involves not only raw materials and labor, but also capital resources - machines, equipment, workshop and factory buildings, as well as cash entrepreneur. What is the opportunity cost of capital resources?

If a firm owns some capital resource (for example, a truck), then it always has the alternative of renting out this resource to other firms. The greatest lost opportunity to provide a capital resource in this case will be the cost of the lost opportunity of the capital resource (truck). Therefore, if the company "Vega" has a truck that gives it revenue of 1 million rubles during the year, and at the company "Orion" the same truck brings in 1.1 million rubles. revenue, then when using a truck at the Vega company, the opportunity to earn 0.1 million rubles is missed. (This could be done by renting out the truck to Orion). In this regard, 0.1 million rubles. should be attributed to the opportunity costs of the Vega company.

The above example shows that only the entrepreneur himself can assess the true costs of lost opportunity to use a machine or other capital equipment owned by the company. To do this, he must determine whether there was a more profitable alternative for using capital, as well as the maximum possible, from his point of view, “lost” return on capital to be taken into account as the cost of lost opportunity. Since these types of costs are internal in nature, they are not associated with payments of money from the company’s account and are not taken into account in accounting reports, they are called implicit costs.

1.3 Fixed costs

Fixed costs are understood as those costs, the amount of which in a given period of time does not depend directly on the size and structure of production and sales.

Employee salaries 600,000 Rent of premises 75,000 Miscellaneous 125,000 Depreciation 200,000 Total 10,000,000

During the specified period, it is planned to produce and sell 10,000 units of this product.

Fixed costs can be divided into two groups: residual and starting.

Residual costs include that part of the fixed costs that the enterprise continues to bear, despite the fact that production and sales have been completely stopped for some time.

Start-up costs include that part of the fixed costs that arise with the resumption of production and sales.

There is no clear distinction between residual and starting costs. On whether to attribute this type costs to a particular group is mainly influenced by the period for which production and sales are stopped. The longer the period of business interruption, the lower the residual costs will be, since the opportunities to be released from various contracts (for example, employment contracts and rental contracts) increase.

For example, if fixed costs of $1,500,000 are divided into residual costs of $1,100,000 and starting costs of $400,000, then this ratio can be graphically illustrated as follows (Fig. 1):

Distinguishing between residual and starting costs may be of interest only in cases where the question of the advisability of a complete cessation of economic activity is being considered.

A certain amount of fixed costs is an expression of the fact that a certain potential has been created to achieve a certain volume of production and sales. If economic activity is carried out within a given volume, fixed costs will remain unchanged. Expanding capacity, for example in the form of more machinery, more staff and more premises, will entail an increase in fixed costs (depreciation, salaries and rent). This growth will occur in the form of leaps, because the listed production factors can only be acquired in certain - indivisible - quantities.

If we are talking, for example, about staff reductions in connection with the curtailment of production, then this will be possible after a certain time has passed, corresponding, among other things, to the period for issuing notices of dismissal. Such costs - in our case for the payment of salaries - will be called reversible.

The situation is different with the reduction of that part of fixed costs that is associated with the fixed assets of the enterprise, for example, depreciation of machinery and equipment. Of course, you can sell part of the machine park. However, it often happens that when one enterprise in an industry has excess production capacity, other firms that would otherwise be potential buyers also have the same capacity. This situation leads to the fact that prices are very low, and this entails large losses for the company selling them, in the form of extraordinary write-offs (depreciation). Such costs - in this case, depreciation of machines, etc. - are called (in general) irreversible. If expanding the firm's capabilities leads to an increase in sunk costs, then this is much more risky than if these costs were reversible.

1.4 Variable costs

Variable costs are understood as costs, the total value of which for a given period of time 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.

Examples of variable costs manufacturing plant are the costs of acquiring raw materials, labor and energy needed in the production process.

On trading enterprises The most significant variable costs are the costs of purchasing goods. Other variable costs may include packaging costs and sales commissions.

Proportional variable costs mean variable costs that change in relatively the same proportion as production and sales.

Digressive variable costs mean variable costs that change in a relatively smaller proportion than production and sales.

Progressive variable costs are understood as variable costs that change in a relatively greater proportion than production and sales.

Table 1. Progressive variable costs

The gross costs of an enterprise are understood as the sum of its fixed and variable costs.

1.5 Marginal costs

At enterprises, the question often arises of how much the expansion or reduction of production and sales can justify itself. When solving these issues, it is important to be able to calculate the value of the costs of growth when expanding economic activity and, accordingly, the costs of reduction when it is curtailed. Such costs of growth and reduction are expressed by the general concept of “proper marginal costs” (SPRIZ).

The actual marginal cost is understood as a change in the value of gross costs that occurred as a result of a change in the amount of production and sales by 1 unit.

Often, changes in costs are planned in accordance with much larger changes in production and sales volumes. In such cases, it is not possible to calculate the actual marginal costs. However, it is possible to calculate a value that is close in value to the actual marginal costs - the so-called averaged marginal costs (hereinafter referred to as marginal costs).

Marginal costs are understood as the average value of the costs of increase or reduction costs per unit of production that arose as a result of a change in production and sales volumes by more than 1 unit.

2. Estimation of company costs in the short and long term

When carrying out his activities, an entrepreneur has to make a lot of decisions: how much raw material to purchase, how many workers to hire, what technological process to choose, etc. All these decisions can be conditionally combined into three groups:

1) how in the best possible way organize production using existing production facilities;

2) what new production capacities and technological processes to choose, taking into account the achieved level of development of science and technology;

3) how to best adapt to discoveries and inventions that make a turning point in technical progress.

The period of time during which a company solves the first group of issues is called a short-term period in economics, the second - long-term, and the third - very long-term. The use of these terms should not be associated with a specific period of time. In some industries, let's say energy, the short-term period lasts many years, in another, for example, aerospace, the long-term period can take only a few years. The “length” of the period is determined only by the corresponding group of issues being resolved.

The behavior of a company is fundamentally different depending on which of the listed periods it operates in. In the short run, individual factors of production do not change; they are called constant (fixed) factors. These usually include resources such as industrial buildings, machines, and equipment. However, this could also be land, the services of managers and qualified personnel. Economic resources that change during the production process are considered variable factors. In the long run, all input factors of production may change, but the basic technologies remain unchanged. Over a very long period, the underlying technologies may also change.

Let us dwell on the company's activities in the short term.

2.1 Short term

Total costs (total cost - TC) - the total costs of producing a certain volume of products. Since in the short term a number of input factors of production (primarily capital) do not change, some part of the total costs also does not depend on the number of units of variable resource used and on the volume of output of goods and services. Total costs that do not change as production increases in the short run are called total fixed costs (TFC); total costs that change their value with an increase or decrease in output constitute total variable costs (total variable cost - TVC). Consequently, for any production volume Q, total costs are the sum of total fixed and total variable costs:

Fixed costs include mainly explicit indirect costs:

interest on loans taken, depreciation charges, insurance premiums, rent, manager's salary. For example: when a building is built or leased, when equipment is purchased, the entrepreneur assumes that they will serve him for a certain number of years before they need to be replaced with new ones. So, if it is known that a building lasts on average 40 years, then each year 1/40 of the cost of the building is charged as the firm's fixed costs. This type of cost is called depreciation and is used to cover the wear and tear of the building. If it is known that this type of equipment lasts 10 years, then every year the entrepreneur charges 1/10 of the cost of the equipment as the firm’s fixed costs. Equipment depreciation costs are also used to cover equipment wear and tear.

The service life of machinery and equipment depends to a greater extent on the pace of technological progress than on actual physical wear and tear.

If an industry is undergoing rapid development and the technology in it is changing rapidly, fixed capital becomes outdated and requires significant updating ahead of schedule its physical wear and tear, i.e. obsolescence is observed.

These types of costs will be present even if the company for some reason stops producing goods (rent for the premises used or debt to the bank must be paid in any case, regardless of whether the company produces products or not).

Variable costs are usually calculated per unit of output produced. This type of cost is also called direct or “optional” costs. Variable costs include the cost of paying employees, raw materials, auxiliary materials, fuel, electricity, etc.

The company, wanting to achieve maximum profit, seeks to reduce costs per unit of production. In this regard, it is important to introduce the concept of average costs. Average costs (average total cost - ATC or simply average cost - AC) is the value of the total costs per unit of output. If Q is the quantity of goods produced by the firm, then

Average fixed (AFC) and average variable (AVC) costs are calculated using the formulas:

AFC = TFC / Q AVC = TVC / Q

Obviously, ATC=AFC+AVC. Great importance have marginal costs.

Marginal cost (MC) is a value showing the increase in total costs when the volume of output changes by one additional unit:

Since fixed costs do not change and do not depend on the value of Q, a change in total costs, i.e. TS is determined by changes only in variable costs:

TC = TVC and MC = TVC / Q.

2.1.1 Cost curves in the short run

Knowing the prices of resources and the dependence of production volumes on the amount of resources used, it is possible to calculate production costs. Let us assume that in the considered example TFC = 1 million rubles, and the salary of one worker is 100 thousand rubles. Substituting these values in the table, we will find the values of TC, TVC, ATC, AVC, AFC and MC and construct the corresponding graphs.

This follows from the fact that

Since the release of an additional unit of goods is associated with an increase in total costs, the TC curve always has an “ascending” character for any value of Q.

The average and marginal cost curves have a different character (see Fig. 2). At the initial level (up to the value qa, point, and the MC curve), the values of marginal costs decrease, and then begin to constantly increase. This occurs due to the law of diminishing returns to resources.

As long as marginal costs are less than average variable costs, the latter will decrease, and when MC exceeds AVC, average costs will increase. Since fixed costs do not change, the total costs of ATC decrease while MC is less than ATC, but they will begin to increase as soon as MC exceeds ATC. Consequently, the MC line intersects the AVC and ATC curves at their minimum points. As for the average fixed cost curve, since AFC=TFC/Q, TFC=const, ATC values are constantly decreasing with increasing Q, and the AFC curve has the form of a hyperbola.

2.2 Long term

As we have already noted, any company seeking to maximize profits must organize production in such a way that costs per unit of output are minimal. This means that the long-term decision made should be focused on the task of minimizing costs. We will, as in the case of the short-term period, assume that prices for economic resources remain unchanged. In addition, for simplicity, we will assume that only two factors are used in production - labor and capital, and in the long run both of them are variables. Let's make one more assumption: first we fix a certain volume of production and try to find the optimal ratio of labor and capital for a given volume of production. When we understand the algorithm for optimizing the use of two factors for a certain volume of production, we will be able to find the principle of minimizing costs for any volume of output.

So, a certain volume of output q is produced at a given ratio of labor and capital. Our task is to figure out how to replace one factor of production with another in order to minimize costs per unit of output. The firm will replace labor with capital (or vice versa) until the value of the marginal product of labor per one ruble spent on purchasing this factor becomes equal to the ratio marginal product of capital to the price of a unit of capital, that is:

mpk/pk=mpl/pl (2)

where МРl and МРк are the marginal product obtained as a result of attracting an additional unit of labor or capital to production, Рк and Рl are the prices of a unit of capital and labor.

To understand the validity of this statement, consider this with an example: a unit of labor costs 250 rubles, and a unit of capital costs 100 rubles. (per month). Let the addition of one unit of capital increase total output by 10 units (i.e., the marginal product of capital MPk = 10), and the marginal product of labor equal to 5 units. Then in equality (2) the left side becomes larger than the right:

It follows from this that if an entrepreneur refuses two

units of labor, he will reduce production by 10 units and free up 500 rubles. With this money, he can hire one additional unit of capital (spend 100 rubles on this), which will compensate for the loss of production (give 10 units of production). This means that by replacing two units of labor with one unit of capital (for a certain volume of output), the firm can reduce total costs by 400 rubles. It should, however, be taken into account that a decrease in the volume of labor will invariably lead to an increase in the marginal product of labor (in accordance with the law of diminishing returns), and an increase in the amount of capital used, on the contrary, will cause a fall in the MPK. As a result, the left and right sides of equality (2) will become equal.

Equality (2) can be written in the following form:

MRK / mpl= RK / pl (3)

Since prices for input factors of production do not change under our conditions, then for the example discussed above Pk I pl = 0.4

Then the ratio MPk / MPl should be equal to 0.4 for the selected volume of output.

In the long run, for a given volume of production, the firm achieves equilibrium in the use of input factors of production and minimizes costs when any replacement of one factor by another does not lead to a reduction in unit costs. This happens when equality (2) or its equivalent equality (3) is satisfied.

Equality (2) and (3) allows us to determine the firm’s actions if the relative prices of resources begin to change. If, suppose, the relative price of labor increases, then the left side of (2) will become larger than the right, and this will force the firm to use less of the more expensive resource - labor (which will cause an increase in MPl) and more of a relatively cheap resource - capital (thereby reducing MPk ) * As a result, equality (2) will be satisfied again.

So, we know how to minimize unit costs for a given production volume. And when the company begins to reduce or increase output finished products? If prices for resources are given and remain unchanged, then for each volume of production, using equalities (2) and (3), we can find the optimal combination of labor and capital from the point of view of minimizing average costs. Let us plot on the graph (Fig. 3) the considered output volumes along the x-axis, and the values of average costs along the y-axis. For each volume of production, we indicate on the coordinate plane a point whose ordinate is equal to the average costs at the optimal ratio of labor and capital for a given volume of capital" (points A, B, C). If we connect all these points with one line, we obtain the curve of average costs in the long run period (LRAC).

As can be seen from Fig. 3, the LRAC curve in the section from 0 to A decreases (that is, with increasing output, average costs fall), and then with a further increase in output, average costs begin to increase again. If we assume that prices for economic resources remain unchanged, then the initial decrease in average costs in the long run is explained by the fact that with the expansion of production, the growth rate of finished products begins to outpace the growth rate of costs for input factors of production.

This occurs due to the so-called “economies of scale” effect. Its essence lies in the fact that at the initial stage, an increase in the number of input factors of production makes it possible to increase the possibility of specialization of production and distribution of labor. A decrease in average costs can also be caused by the use of more productive equipment and a decrease in the number of employees.

However, further expansion of production will invariably lead to the need for additional management structures (heads of departments, shifts, workshops), administrative costs will increase, it will be more difficult to manage production, and failures will become more frequent. This will cause production costs to increase and the LRAC curve will increase.

LRAC curve divides coordinate plane into two parts: for all points below the LRAC curve (for example, point t), the corresponding output qm for the firm is unattainable at existing input prices (i.e., the firm will never be able to achieve average costs at output qm equal to Cm ). For points above the LRAC curve (point n), volume qn is achievable (but will require large average costs).

How are the short- and long-run average cost curves related? Let's consider point C on the LRAC curve. As we just said, at this point the lowest costs Cc per unit of output are achieved (i.e., the optimal ratio of labor and capital) with a production volume of qc units. To move along the LRAC curve from point C to point B, a firm must increase its amount of capital, and economies of scale take time to take effect. But at some point in its activity, the company does not change machines and equipment, i.e. we can assume that it operates in the short term. Let the company fix its capacity and the amount of capital (in the short term it becomes a constant factor) corresponds to point C of the LRAC curve. Having one fixed factor of production and operating in the short term (SRAC1 curve), the company can more effectively use the potential opportunities for economies of scale - quickly manage variable factors of production, quickly introduce a progressive division of labor, and improve the management of the company. As a result, a firm with the same production capacity can increase production volume to a value of qD while simultaneously reducing average costs to Cd, i.e., act more efficiently.

However, when planning activities for the future, an entrepreneur must assess the potential opportunities for expanding production. If he takes a risk and increases the amount of capital, so that the new optimal ratio of labor and capital is achieved at point B, then at first he may face losses - the volume of production will be reduced to qb. But then, using the potential opportunities for economies of scale in the next short-term period (SRAC2 curve), the firm will achieve an increase in production to the level qe while simultaneously reducing average variable costs.

This is where the costs of lost opportunities associated with entrepreneurial risk appear: the entrepreneur who was afraid to take a risk and expand production missed out on a benefit equal to (qe - qD) x (CD - Ce), i.e. the product of the resulting increase in production (qe - qd) and the magnitude of the reduction in average costs (Cd-Ce).

An entrepreneur must take a risk and expand production every time he is confident that the potential for expansion effects can reduce average costs while increasing production. At point A, a global minimum occurs, where both the corresponding SRAC3 curve and the LRAC curve itself reach lowest values. Any attempt by a firm to achieve simultaneous expansion of production and reduction of average costs will be unsuccessful. Economies of scale will exhaust themselves, and the entrepreneur who takes the risk of further expansion of production will fail. This means that at point A the company optimizes its activities in the long term.

Conclusion

Any market consists of buyers who want to purchase goods and suppliers who want to sell goods. Each of these parties strives to satisfy its own needs as fully as possible at any price set for the product, however, each of them is at the mercy of its own limiting factor: buyers are constrained by the limitations of their budget, and suppliers by the limitations of their technological capabilities.

The presence of these constraining factors leads to the fact that, if all other conditions remain unchanged, but the price of a product changes, supply and demand will change. The characteristic demand curve, reflecting the dependence of the quantity of a product that buyers are willing to buy on the price of this product, is decreasing. The characteristic supply curve, reflecting the dependence of the quantity of goods that suppliers are willing to sell on the price of this product, is increasing. The specific position of the demand curve and supply curve in the axes (price, quantity) is determined by a number of non-price parameters of demand and non-price parameters of supply. The degree of sensitivity of changes in supply and demand to changes in the price of a product or any non-price parameter is usually described by the elasticity coefficient. If the existing price on the market for a given product is lower or higher than the price for which the volume of demand coincides with the volume of supply, then a shortage or surplus of the product is formed in the market, accordingly, in the presence of which the monitoring by buyers and suppliers of their interests in maximally satisfying their needs leads to a change the existing price in the direction of the equilibrium price, which does not exclude the possibility of fluctuations in the price of a product around the equilibrium value if the initial price adjustments are too large.

In this work, due to the limitations of the topic, many specific situations in which the interaction and structure of supply and demand naturally have their own characteristics have been left behind the scenes. For example, for the market for resources used for the production of another product, the profit from subsequent deliveries of finished products is of fundamental importance, and it is advisable to increase the consumption of resources (i.e., the value of demand for them) only as long as the increase in their total value due to the purchase of an additional unit of the resource is less, than the increase in income from the sale of an additional quantity of finished goods supplied thanks to this additional unit of purchased resource. To find out how the market (industry) long-term supply curve will behave, the influence of industry growth on the prices of resources used in this industry becomes fundamental; if, due to its increased size, the industry is able to acquire the necessary resources at more low prices, then the curve

long-term industry supply will decrease. Or, for example, when determining the nature of the aggregate demand curve, i.e. volumes of national production that all consumers in the country are willing to buy at different aggregate price levels, the impact of changes in the price level in the country on interest rates, consumer inflation expectations and demand for imported goods. When determining the nature of the aggregate supply curve, the determining factor is the availability of resources in the country for additional use.

Since the purpose of this work was general description economic content of demand, supply and their interaction, then the study of demand, supply and their interaction was carried out using the example of the most general simplest situation, and the above-mentioned and other specific situations may be the subject of a separate study.

List of used literature

1. Civil Code of the Russian Federation, Part I of November 30, 1994 No. 51-FZ (as amended. Federal laws dated 02/20/1996 N 18-ФЗ, dated 08/12/1996 N 111-ФЗ, dated 07/08/1999 N 138-ФЗ, dated 04/16/2001 N 45-ФЗ, dated 05/15/2001 N 54-ФЗ).

2. Civil Code of the Russian Federation, Part II of January 26, 1996 No. 14-FZ (as amended by Federal Laws of August 12, 1996 No. 110-FZ, No. 133-FZ of October 24, 1997, No. 213 Federal Law of December 17, 1999).

3. Tax Code of the Russian Federation, Part I of July 31, 1998 No. 146-FZ (as amended by Federal Laws of July 9, 1999 No. 154-FZ, of January 2, 2000 No. 13-FZ, of August 5, 2000 No. 118-FZ (as amended) 03/24/2001)).

4. Tax Code of the Russian Federation, Part II of August 5, 2000 No. 117-FZ (as amended by Federal Laws of December 29, 2000 No. 166-FZ, No. 71-FZ of May 30, 2001, No. 118 Federal Law of August 7, 2001).

5. Abryutina M.S., Grachev A.V. Analysis of the financial and economic activities of an enterprise: Educational and practical manual. M.: Publishing house "Delo and Service", 2001.

6. Bethge Jörg. Balance study: Transl. from German/Scientific editor V. D. Novodvorsky. M.: Accounting, 2000.

7. http://lib.vvsu.ru/books/Bakalavr02/page0089.asp

8. www.ido.edu.ru/ffec/econ/ec5.html

9. Bykardov L.V., Alekseev P.D. Financial and economic condition of the enterprise: Practical guide. - M. PRIOR Publishing House, 2000.

10. The use of computer technology in accounting: Proc. allowance / M.V. Drutskaya, A.V. Ostroukhov, V.I. Ostroukhov; Ross. in absentia Institute of Textiles. and light industry. -- M., 2000.

12. Kondrakov N.P. Accounting: Textbook. INFRA - M, 2002.

13. Russian statistical yearbook, 2001.

14. Organization management: Textbook / Ed. A.G. Porshneva, Z.P. Rumyantseva, N.A. Solomatina. - M.: INFRA-M, 2000.

15. Finance, money turnover and credit: Textbook / Ed. prof. N.F. Samsonova. - M.: INFRA-M, 2001

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Economic, accounting, opportunity costs.

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

Rice. 18.1.

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

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

It is the economic costs that the entrepreneur is obligated to compensate primarily through price, and if he fails to do this, he is forced to leave the market for another field of activity.

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

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

The difference between economic and accounting costs is opportunity cost.

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

Fixed, variable, total (gross) costs.

An increase in a firm's production volume usually entails an increase in costs. But since no production can develop indefinitely, costs are a very important parameter in determining the optimal size of an enterprise. For this purpose, costs are divided into fixed and variable.

Fixed costs - costs that a company incurs regardless of the volume of its production activities. These include: rent for premises, equipment costs, depreciation, property taxes, loans, wages for management and administrative staff.

Variable costs - company costs that depend on the volume of production. These include: costs of raw materials, advertising, wages, transport services, value added tax, etc. When production expands, variable costs increase, and when production decreases, they decrease.

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

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

Rice. 18.2.

C - company costs; 0 - quantity of products produced; GS - fixed costs; US - variable costs; TS - gross (total) costs

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

Additional costs are. Types of production costs. Fixed and variable production costs

Classification

Opportunity Cost

Accounting and economic costs

Explicit and implicit costs

Returnable and sunk costs

Fixed and variable costs

General costs

Cost planning

Displaying costs in accounting documents

Concept and classification of costs

Methods for calculating costs

Formulas and graphs

Capital turnover

Past and future

Opportunity Cost

Normal profit

Types of production costs

Other costs and their types

Marginal cost

Costs and profits

Example

Cost reimbursement

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Introduction

Conclusion

Introduction

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Economic, accounting, opportunity costs.

Fixed, variable, total (gross) costs.