Fixed costs include. Variable costs: what they are, how to find them and calculate them. What are Variable Costs?

21.09.2019

The expenses of any enterprise include so-called forced costs. They are associated with the acquisition or use of various means of production.

Cost classification

All costs of an enterprise are divided into variable and fixed. The latter includes payments that do not affect the volume of products produced. Accordingly, we can say which expenses are not considered variable. Among them, in particular, are the costs of renting premises, management costs, payment for risk insurance services, payment of interest for the use of credit funds, etc.

What expenses are included? variable costs? This category of costs includes payments that directly affect production volume. Variable expenses include costs for raw materials and supplies, staff salaries, purchase of packaging, logistics, etc.

Fixed costs always exist throughout the entire operation of the enterprise. Variable costs, in turn, are absent when the production process is stopped.

This classification is used to determine the company's development strategy over a certain period.

In the long run, all types of costs can be classified as variable costs. This is due to the fact that they all, to a certain extent, influence the volume of output of finished products and profit from the production process.

Cost value

Over a relatively short period, the enterprise will not be able to radically change the method of production of goods, capacity parameters, or begin the production of alternative products. However, variable cost indices can be adjusted during this time. This, in fact, is the essence of cost analysis. The manager, by adjusting individual parameters, changes the production volume.

It is impossible to significantly increase the quantity of output by adjusting this index. The fact is that at a certain stage, an increase in only those costs that relate to variable costs will not lead to a significant jump in growth rates - part of the fixed costs also needs to be adjusted. In this case, you can rent additional production space, launch another line, etc.

Types of variable costs

All costs that relate to variable expenses are divided into several groups:

Specific. This category includes costs that arise after the creation and sale of one unit of goods.
Conditional. Conditionally variable costs include all costs that are directly proportional to the current quantity of products produced.
Average variables. This group includes average values of specific costs taken over a certain period of time of operation of the enterprise.
Direct variables. This type of cost is related to the production of products of a particular type.
Limit variables. These include the costs incurred by the enterprise when producing each additional unit of goods.

Material costs

Variable costs include costs included in the cost of the final (finished) product. They reflect the cost:

Raw materials/materials obtained from third party suppliers. These materials or raw materials must be used directly in the production of the product or be part of the components necessary to create it.
Work/services provided by other business entities. For example, the enterprise used a control system supplied by a third party, the services of a repair team, etc.

Sales costs

Variables include logistics costs. We are talking, in particular, about transport costs, costs of accounting, movement, write-off of valuables, costs of delivering finished products to warehouses of trading enterprises, to points retail sales etc.

Depreciation charges

As you know, any equipment used in the production process wears out over time. Accordingly, its effectiveness decreases. To avoid negative influence moral or physical wear and tear of equipment for the production process, the enterprise transfers a certain amount to a special account. At the end of its service life, these funds can be used to modernize obsolete equipment or purchase new ones.

Deductions are made in accordance with depreciation rates. The calculation is made based on the book value of fixed assets.

The amount of depreciation is included in the cost of finished products.

Remuneration of personnel

Variable expenses include not only the direct earnings of the company's employees. They also include all mandatory deductions and contributions established by law (amounts to the Pension Fund, Compulsory Medical Insurance Fund, personal income tax).

Calculation

To determine the amount of costs, a simple summation method is used. It is necessary to add up all the costs incurred by the enterprise over a certain period of time. For example, the company spent:

35 thousand rubles. for materials and raw materials for production.
20 thousand rubles. - for the purchase of packaging and logistics.
100 thousand rubles. - to pay salaries to employees.

Adding up the indicators, we find the total amount of variable costs - 155 thousand rubles. Based on this value and production volume, their specific share in the cost can be found.

Let's say the company produced 500 thousand products. Specific costs will be:

What are fixed and variable costs

rub. / 500 thousand units = 0.31 rub.

If the enterprise produced 100 thousand more goods, then the share of expenses will decrease:

155 thousand rubles. / 600 thousand units = 0.26 rub.

Break even

This is a very important indicator for planning. It represents the state of the enterprise in which production is carried out without loss for the company. This state is ensured by the balance of variable and fixed costs.

The break-even point must be determined at the planning stage of the production process. This is necessary so that the management of the enterprise knows what minimum quantity of products needs to be produced in order for all costs to be recouped.

Let's take the data from the previous example with some minor additions. Let's say the fixed costs are 40 thousand rubles, and the estimated cost of a unit of goods is 1.5 rubles.

The amount of all costs will be - 40 + 155 = 195 thousand rubles.

The break-even point is calculated as follows:

195 thousand rubles. / (1.5 - 0.31) = 163,870.

This is exactly how many units of product the enterprise must produce and sell to cover all costs, i.e., to break even.

Variable expense rate

It is determined by indicators of estimated profit when adjusting the amount of production costs. For example, when new equipment is put into operation, the need for the same number of employees will no longer be required. Accordingly, the volume of the wage fund may be reduced due to a decrease in their number.

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Fixed costs FC (English fixed costs) are costs that do not depend on production volume.

Fixed costs- These are costs that do not change with changes in production volume. They are associated with fixed costs in each period of time, i.e. depend not on production volume but on time. Examples of fixed costs:

· Rent.

· Property taxes and similar payments.

· Salaries of management personnel, security, etc.

The schedule is straight.

Variable costs, their essence and graphic expression.

Variable costs VC (English variable costs) are costs that depend on production volume. Direct costs of raw materials, materials, labor, etc. vary depending on the scale of activity.

The graph is a linear slope.

Average gross, average variable and average fixed costs, dynamics of their changes (show graphically).

Under average refers to the firm's costs of producing and selling a unit of goods. Highlight:

· average fixed costs AFC (English average fixed costs), which are calculated by dividing the firm's fixed costs by production volume;

· average variable costs AVC (English)

What costs are variable and constant examples?

average variable costs), calculated by dividing variable costs by production volume;

· average gross costs or the total cost per unit of an ATC product (average total costs), which are defined as the sum of average variable and average fixed costs or as the quotient of gross costs divided by output volume.

Rice. 10.4. Family of company cost curves in the short term: C - costs; Q - output volume; AFC - average fixed costs; AVC - average variable costs; ATC - average gross costs; MC - marginal cost

Marginal costs, formulas for their expression and graphical display.

The increase in costs associated with the release of an additional unit of production, i.e. The ratio of the increase in variable costs to the increase in production caused by them is called the marginal costs of the company MC (marginal costs):

where sVC is the increase in variable costs; sQ is the increase in production volume caused by them.

If, with an increase in sales volume by 1OO units. of goods, the firm's costs will increase by 800 rubles, then the marginal costs will be 800: 100 = 8 rubles. This means that an additional unit of goods costs the company an additional 8 rubles.

As production and sales volume increases, the firm's costs may change:

a) evenly. In this case, marginal costs are a constant value and are equal to variable costs per unit of goods (Fig. 10.3, A);

b) with acceleration. In this case, marginal cost increases as production volume increases. This situation is explained either by the action of the law of diminishing returns, or by the rise in prices of raw materials, materials and other factors, the costs of which are classified as variables (Fig. 10.3, b);

c) with slowdown. If the company's expenses for purchased raw materials, supplies, etc. decrease as output increases, marginal costs decrease (Fig. 10.3, V).

Rice. 10.3. Dependence of changes in firm costs on production volume

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Variable Cost Examples

Conditionally fixed and conditionally variable costs

In general, all types of costs can be divided into two main categories: fixed (conditionally fixed) and variable (conditionally variable). According to the legislation of the Russian Federation, the concept of fixed and variable costs is present in paragraph 1 of Article 318 of the Tax Code of the Russian Federation.

Conditionally fixed costs(English)

Types of production costs

total fixed costs) - an element of the break-even point model, representing costs that do not depend on the volume of output, contrasted with variable costs, which add up to total costs.

In simple terms, these are expenses that remain relatively unchanged during the budget period, regardless of changes in sales volumes. Examples are: administrative expenses, expenses for rent and maintenance of buildings, depreciation of fixed assets, expenses for their repairs, time wages, on-farm deductions, etc. In reality, these expenses are not constant in the literal sense of the word. They increase with increasing scale economic activity(for example, with the advent of new products, businesses, branches) at a slower pace than the growth of sales volumes, or grow spasmodically. That's why they are called conditionally constant.

This type of cost largely overlaps with overhead, or indirect costs that accompany the main production, but are not directly related to it.

Detailed examples of semi-fixed costs:

Interest for obligations during the normal operation of the enterprise and maintaining the volume of borrowed funds, a certain amount must be paid for their use, regardless of the volume of production, however, if the volume of production is so low that the enterprise is preparing for bankruptcy , these costs can be neglected and interest payments can be stopped
Enterprise property taxes , since its value is quite stable, are also mainly fixed expenses, however, you can sell the property to another company and rent it from it (form leasing ), thereby reducing property tax payments
Depreciation deductions for linear method their accrual (evenly for the entire period of use of the property) in accordance with the selected accounting policy, which, however, can be changed
Payment security, watchmen , despite the fact that it can be reduced by reducing the number of workers and reducing the load on checkpoints , remains even if the enterprise is idle, if it wants to preserve its property
Payment rental depending on the type of production, duration of the contract and the possibility of concluding a sublease agreement, it can act as a variable cost
Salary management personnel under conditions of normal functioning of the enterprise is independent of production volumes, however, with the accompanying restructuring of the enterprise layoffs ineffective managers can also be reduced.

Variable (conditionally variable) costs(English) variable costs) are expenses that change in direct proportion in accordance with the increase or decrease in total turnover (sales revenue). These costs are associated with a business's operations to purchase and deliver products to consumers. This includes: the cost of purchased goods, raw materials, components, some processing costs (for example, electricity), transportation costs, piecework wages, interest on loans and borrowings, etc. They are called conditional variables because a directly proportional dependence on sales volume actually exists only during a certain period. The share of these costs may change over a certain period (suppliers will raise prices, the rate of inflation of selling prices may not coincide with the rate of inflation of these costs, etc.).

The main sign by which you can determine whether costs are variable is their disappearance when production stops.

Variable Cost Examples

In accordance with IFRS standards, there are two groups of variable costs: production variable direct costs and production variable indirect costs.

Manufacturing variable direct costs- these are expenses that can be attributed directly to the cost of specific products based on primary accounting data.

Manufacturing Variable Indirect Costs- these are expenses that are directly dependent or almost directly dependent on changes in the volume of activity, however, due to the technological features of production, they cannot or are not economically feasible to be directly attributed to the manufactured products.

Examples direct variables costs are:

Costs of raw materials and basic materials;
Energy costs, fuel;
Wages of workers producing products, with accruals for it.

Examples indirect variables costs are the costs of raw materials in complex production. For example, when processing raw materials - coal - coke, gas, benzene, coal tar, and ammonia are produced. When milk is separated, skim milk and cream are obtained. It is possible to divide the costs of raw materials by type of product in these examples only indirectly.

Break even (BEP — break-even point) - the minimum volume of production and sales of products at which costs will be offset by income, and with the production and sale of each subsequent unit of product the enterprise begins to make a profit. The break-even point can be determined in units of production, in monetary terms, or taking into account the expected profit margin.

Break-even point in monetary terms- such a minimum amount of income at which all costs are fully recouped (profit is equal to zero).

B EP =* Revenue from sales

Or, which is the same thing BEP = = *P (see below for explanation of meanings)

Revenue and expenses must relate to the same period of time (month, quarter, six months, year). The break-even point will characterize the minimum acceptable sales volume for the same period.

Let's look at the example of a company. Cost analysis will help you clearly determine BEP:

Break-even sales volume - 800/(2600-1560)*2600 = 2000 rubles. per month. Actual sales volume is 2600 rubles/month. exceeds the break-even point, this is a good result for this company.

The break-even point is almost the only indicator about which we can say: “The lower, the better. The less you need to sell to start making a profit, the less likely it is to go bankrupt.

Break-even point in units of production- such a minimum quantity of products at which the income from the sale of these products completely covers all the costs of its production.

Those. it is important to know not only the minimum allowable revenue from sales as a whole, but also the necessary contribution that each product should bring to the overall profit - that is, the minimum required quantity sales of each type of product. To do this, the break-even point is calculated in physical terms:

VER =or VER = =

The formula works flawlessly if the enterprise produces only one type of product. In reality, such enterprises are rare. For companies with a large range of production, the problem arises of allocating the total amount of fixed costs to individual types of products.

Fig.1. Classic CVP analysis of the behavior of costs, profits and sales volume

Additionally:

BEP (break-even point) - break even,

TFC (total fixed costs) - the value of fixed costs,

V.C.(unit variable cost) - the value of variable costs per unit of production,

P (unit sale price) - cost of a unit of production (sales),

C(unit contribution margin) - profit per unit of production without taking into account the share of fixed costs (the difference between the cost of production (P) and variable costs per unit of production (VC)).

C.V.P.- analysis (from the English costs, volume, profit - expenses, volume, profit) - analysis according to the “costs-volume-profit” scheme, an element of managing the financial result through the break-even point.

Overhead– costs of conducting business activities that cannot be directly correlated with the production of a specific product and therefore are distributed in a certain way among the costs of all produced goods

Indirect costs- costs that, unlike direct ones, cannot be directly attributed to the manufacture of products. These include, for example, administrative and management costs, costs for staff development, costs in production infrastructure, costs in social sphere; they are distributed among various products in proportion to a justified base: the wages of production workers, the cost of materials consumed, the volume of work performed.

Depreciation charges- an objective economic process of transferring the value of fixed assets as they wear out to the product or services produced with their help.

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Solution. 1. Determine the share of semi-fixed costs in the cost of production:

1. Determine the share of semi-fixed costs in the cost of production:

2. Planned production costs will be:

3. The amount of cost reduction in the planning period due to an increase in production volume:

Costs per unit of production decreased from 2 million rubles. (40000: 2000) up to 1.82 million rubles. (4.36: 2 1.2), i.e. almost 200 thousand rubles.

Cost structure in production and the factors that determine it

Under cost structure its composition by elements or items and their share in the total cost are understood. It is in motion and is influenced by the following factors:

1) specifics (features) of the enterprise. Based on this, they distinguish: labor-intensive enterprises (a large share of wages in the cost of production); material-intensive (large share material costs); capital-intensive (large share of depreciation); energy-intensive (large share of fuel and energy in the cost structure);

2) acceleration of scientific and technological progress. This factor influences the cost structure in many ways. But the main influence is that under the influence of this factor the share of living labor decreases, and the share of materialized labor in the cost of production increases;

3) level of concentration, specialization, cooperation, combination and diversification of production;

4) geographical location of the enterprise;

5) inflation and change interest rate bank loan.

The structure of product costs is characterized by the following indicators:

The relationship between living and materialized labor;

The share of an individual element or item in total costs;

The relationship between fixed and variable costs, between fixed and overhead costs, between production and commercial (non-production) costs, between direct and indirect, etc.

Systematic determination and analysis of the cost structure of an enterprise are very important, primarily for managing costs in an enterprise in order to minimize them.

The cost structure makes it possible to identify the main reserves for their reduction and develop specific measures for their implementation at the enterprise.

For recent years(1990-2004), the cost structure in general for industry and its branches has changed significantly, as evidenced by the data presented in Table 2.

Analysis of the data in this table allows us to conclude that the structure of production costs in the industry as a whole during the analyzed period has changed significantly: the share of depreciation decreased from 12.1 to 6.8%; other expenses increased from 4.1 to 18.1%; the share of material costs decreased from 68.6 to 56.3%; contributions for social needs increased from 2.2 to 5.1%; The cost structures for production of products in individual industries differ quite significantly.

The cost structure for the analyzed period was influenced by the following factors:

Inflationary process.

QUESTION 2: What are the main differences between the concepts of “costs” and “expenses”?

The cost of material resources, fixed assets, and labor changed inadequately in relation to each other, and this was reflected in the cost structure;

The process of disposal of fixed assets is faster than the process of their input, which led to a decrease in the share of depreciation. The fact that the repeated revaluation of fixed assets did not correspond to the level of inflation also had an impact;

The cost structure at each enterprise should also be analyzed both element-by-element and item-by-item. This is necessary, as already noted, to manage costs in the enterprise.

Planning of production costs at the enterprise

The production cost plan is one of the most important sections economic and social development enterprises. Planning the cost of production at an enterprise is very important, as it allows you to know what costs the enterprise will require for the production and sale of products, what financial results can be expected in the planning period. The product cost plan includes the following sections:

1. Cost estimate for production (compiled by economic elements).

2. The cost of all commercial and sold products.

3. Planned costing of individual products.

4. Calculation of the reduction in the cost of commercial products based on technical and economic factors.

The most important qualitative indicators of the plan for the cost of production are: the cost of commercial and sold products; unit cost the most important species products; costs per 1 rub. commercial products; percentage of cost reduction by technical and economic factors; percentage reduction in the cost of compared products.

Production cost estimate is compiled without intra-plant turnover based on calculations for each element and is the main document for developing a financial plan. It is compiled for the year with the distribution of the entire amount of expenses by quarter.

The costs of raw materials, main and auxiliary materials, fuel and energy in the cost estimate are determined primarily for the production program based on the planned volume, standards and prices.

The total amount of depreciation charges is calculated on the basis of current standards for groups of fixed assets. Based on the cost estimate, the costs for the entire gross and commercial output are determined. Production costs gross output are determined from the expression

Cost of products sold represents the full cost of commodity output minus the increase plus the decrease in the cost of the balances of unsold products in the planning period.

Calculation unit cost called calculation. Calculations can be estimated, planned, or normative.

Estimate calculation compiled for products or orders that are carried out on a one-time basis.

Planned costing(annual, quarterly, monthly) is compiled for mastered products provided for by the production program.

Standard calculation reflects the level of product costs calculated according to cost standards in force at the time of its preparation. It is compiled in those industries where there is a standard accounting of production costs.

Methods for planning production costs. In practice, two methods of product cost planning are most widely used: standard and planning based on technical and economic factors. As a rule, they are used in close interrelation.

The essence of the normative method is that when planning the cost of products, rules and regulations for the use of material, labor and financial resources are applied, i.e. regulatory framework of the enterprise.

The method of planning the cost of production based on technical and economic factors is more preferable than the standard method, since it allows us to take into account many factors that will most significantly influence the cost of production in the planning period. This method takes into account the following factors: 1) technical, i.e. introduction of new equipment and technology at the enterprise during the planning period; 2) organizational. These factors mean the improvement of the organization of production and labor at the enterprise in the planning period (deepening specialization and cooperation, improving the organizational structure of enterprise management, introducing a brigade form of labor organization, NOT, etc.); 3) changes in the volume, nomenclature and range of products; 4) the level of inflation in the planning period; 5) specific factors that depend on the characteristics of production. For example, for mining enterprises - changes in mining and geological conditions for the development of mineral resources; for sugar factories - change in sugar content in sugar beets.

All these factors ultimately affect the volume of output, labor productivity (output), changes in standards and prices for material resources.

To determine the amount of change in the cost of production in the planning period due to the influence of the above factors, the following formulas can be used:

a) change in the value of production costs from changes in labor productivity (DCpt):

b) change in the value of the cost of production from a change in production volume

c) changes in the value of production costs due to changes in norms and prices for material resources

We will show the methodology for planning product costs based on technical and economic factors using a conditional example.

Example. During the reporting year, the volume of marketable products at the enterprise amounted to 15 billion rubles, its cost was 12 billion rubles, including wages with deductions

for social needs - 4.8 billion rubles, material resources - 6.0 billion rubles. Conditionally fixed costs in the cost of production amounted to 50%. In the planning period, through the implementation of a plan of organizational and technical measures, it is planned to increase the volume of marketable products by 15%, increase labor productivity by 10%, and average wages by 8%. The consumption rates of material resources will decrease by 5% on average, and their prices will increase by 6%.

Determine the planned cost of marketable products and planned costs per 1 ruble. commercial products.

There are several cost classifications enterprises: accounting and economic, explicit and implicit, constant, variable and gross, repayable and non-refundable, etc.

Let us dwell on one of them, according to which all expenses can be divided into fixed and variable. It should be understood that such a division is possible only in the short term, since over long periods of time all costs can be attributed to variables.

What are fixed production costs

Fixed costs are expenses that a company incurs regardless of whether it produces products or not. This type of cost does not depend on the volume of products produced or services provided. Alternative names for these costs serve as overhead or sunk costs. The company ceases to bear this type of cost only in the event of liquidation.

Fixed costs: examples

The following types of enterprise expenses can be classified as fixed costs in the short term:

At the same time when calculating the average value fixed costs (this is the ratio of fixed costs to the volume of production), the amount of such costs per unit of output will be lower, the larger the production volume.

Variable and total costs

In addition, the enterprise also has variable costs - this is the cost of raw materials and equipment, which are fully used within each production cycle. They are called variables because the amount of such costs is directly dependent on the volume of products produced.

Magnitude fixed and variable costs during one production cycle is called gross or total costs. The entire set of expenses incurred by an enterprise that affect the cost of a unit of output is called the cost of production.

These indicators are necessary to carry out financial analysis activities of the company, calculating its efficiency, searching for opportunities to reduce the cost of products produced by the enterprise, and increasing the competitiveness of the organization.

A reduction in average fixed costs can be achieved by increasing the volume of products produced or services provided. The lower this indicator, the lower the cost of products (services) and the higher the profitability of the company.

In addition, the division into fixed and variable costs is very arbitrary. At different periods of time, when using different approaches to their classification, costs can be classified as both fixed and variable. Most often, the management of the enterprise itself decides which expenses are classified as variable or overhead costs.

Examples of expenses that can be classified as one or the other type of cost are:

Classification of costs.

A scientifically based classification of costs is of great importance for the correct organization of cost accounting. Production costs are grouped according to their place of origin, responsibility centers, cost carriers and types of expenses.

According to the place of origin, costs are grouped by production, workshop, site and other structural divisions of the enterprise. This grouping of costs is necessary for:

monitoring the performance of structural divisions and the enterprise as a whole;
distribution of overhead costs between certain types products when calculating the cost of products (works, services).

Costs are distributed among responsibility centers (enterprise segments) to accumulate data on costs and control deviations from the estimate. A cost center is an organizational unit or area of activity where it is advisable to accumulate information about the costs of acquiring assets and expenses.

Cost carriers are the types of products (works, services) of an enterprise intended for sale. This grouping is necessary to determine the cost per unit of production (work, services).

By type, costs are grouped by economically homogeneous elements and by costing items in accordance with the Regulations on the composition of costs for the production and sale of products (works, services) included in the cost of products (works, services).

For management accounting purposes, costs are divided into categories depending on what management task we need to decide.

Classification of costs depending on the goals of management accounting

Tasks	Cost classification
Calculation of the cost of manufactured products, assessment of the value of inventories and profit received	Incoming and expired Direct and indirect Basic and invoices Included in the cost (production) and costs of the reporting period (periodic) Single element and complex Current and one-time
Acceptance management decisions and planning	Constant and variable Accepted and not taken into account in assessments Irrevocable and repayable Imputed (lost profit) Marginal and incremental Planned and unplanned
Control and regulation	Adjustable and non-adjustable

Fixed and variable costs.

They are used when conducting break-even analysis and related indicators, as well as when optimizing manufactured products.

In relation to the volume of production or sales (level of business activity), costs are divided into “fixed” and “variable”.

Variable costs change in proportion to the volume of production or sales, and those calculated per unit of production are a constant value. An example of variable costs for a trading enterprise is the cost of purchased goods, commissions and other expenses associated with sales, which change in proportion to changes in sales volume.

Dynamics of total (a) and specific (b) variable costs.
SP - total variable costs, rub. UPer - specific variable costs, rub.

Fixed costs in total do not change with changes in the level of business activity, but calculated per unit decreases with an increase in the volume of production or sales. Examples of fixed costs include rental costs, administrative salaries, and professional services. The total amount of these expenses is relatively independent of sales volume.

When dividing expenses into variable and fixed, you need to use the concept " area of relevance", in which a special relationship between the planned relationships between revenue and costs is maintained. Thus, fixed costs are constant relative to a specific period, for example one year, but over time due to the impact external factors may increase or decrease (change in property tax rate, etc.).

Dynamics of total (a) and specific (b) fixed costs.
Spost - total fixed costs, rub. Upost - fixed costs per unit of production (specific), rub.

Some types of costs cannot be strictly defined in relation to production volume as variable or variable. Therefore, in management accounting, an additional group of semi-variable or semi-fixed costs is distinguished. These costs have both fixed and variable components. For example, the costs of maintaining a warehouse:

Constant component - rent storage facilities and utilities
Variable component - warehouse processing services (operations for moving commodity items)

When classifying costs, variable and fixed components are separated into independent expense items, therefore semi-variable or semi-fixed costs are not allocated to a separate group.

Costs taken into account and not taken into account when assessing.

The process of making a management decision involves comparing several alternative options in order to select the best one. The indicators compared can be divided into two groups: the first remain unchanged for all alternative options, the second vary depending on decision taken. It is advisable to compare only the indicators of the second group. These costs, which distinguish one alternative from another, are called relevant costs. Only they are taken into account when making decisions.

Example. An enterprise selling products to foreign market, basic materials were purchased for future use in the amount of 500 rubles. Subsequently, due to changes in technology, it turned out that these materials were of little use for our own production. Products made from them will be uncompetitive in the foreign market. However, the Russian partner is ready to buy from of this enterprise products made from these materials for 800 rubles. In this case, the additional costs of the enterprise for the manufacture of products will amount to 600 rubles. Is it advisable to accept such an order?

Expired costs for the purchase of materials in the amount of 500 rubles. have already taken place. They do not influence the choice of solution and are not relevant. Let's compare the alternatives based on relevant indicators (table).

By choosing alternative 2, the company will reduce its loss from the purchase of unnecessary materials by 200 rubles, reducing it from 500 to 300 rubles.

Approaches to cost reduction analysis.

Cost structure analysis

Construction of a cost management system.

Classification of costs.
Methodology for allocating costs by department, type of activity and type of product:
- bases and principles of cost distribution;
- formats of primary cost reporting forms;
- methodology for filling out primary reporting forms;
- a methodology for processing primary reporting forms that allows you to distribute costs between types of products, accounting objects and types of activities;
- formats of management cost reports.
Choosing a costing method.
Consider cost reduction opportunities.
Conducting cost-volume-profit analysis.

Costing method based on variable costs ("direct-costing").

Its essence lies in a fundamentally new approach to the inclusion of costs in the cost price. Costs are divided into fixed and variable. Only variable costs are included in prime cost. To determine it, the amount of variable costs is divided by the number of products produced and services provided. Fixed costs are not included in the cost calculation at all, but as expenses of a given period are written off from the profit received during the period in which they were incurred. In other words, before calculating the operating profit, the company’s marginal profit indicator is formed, and only then, by reducing the company’s marginal profit by the amount of fixed costs, the financial result is formed.

There are many opinions about the legality of such incomplete inclusion of costs in the cost price. International standards accounting prohibit the use of this approach for preparing the company's financial statements in financial accounting. The main argument against this is the thesis that fixed costs are also involved in the process of creating products. But on the other hand, it turns out that fixed costs participate in different ways in creating the cost of different volumes of the same product, and it is almost impossible to calculate the actual participation of fixed costs in creating the cost, so their cost is simply written off from the profit received by the company.

Below are brief summary characteristics of the "direct-costing" and "absorption-costing" costing methods.

"Direct-costing"	"Absorption-costing"
Based on accounting for specific production costs. Fixed expenses are included in the entire amount into the financial result and are not allocated to types of products.	It is based on the distribution of all costs included in the cost by type of product (calculation of the total cost of production).
It assumes the division of costs into fixed and variable.	It involves breaking down costs into direct and indirect.
It is used for more flexible pricing, as a result of which the competitiveness of products increases. It makes it possible to determine the profit brought by the sale of each additional unit of product, and, accordingly, the ability to plan prices and discounts for a certain sales volume.	It is used most often in Russian enterprises. Mainly used for external reporting.
Finished goods inventories are valued at direct costs only.	Product inventories in the warehouse are valued at full cost, including components of fixed production costs.

Marginal profit- is the excess of sales revenue over all variable costs associated with a given sales volume.

Therefore, the contribution margin method is based on the following formula:

Marginal profit = Revenue from product sales - Variable costs for the same volume of production

If we subtract fixed costs from marginal profit, we get the operating profit:

Operating profit = Contributory profit - Fixed costs

Example. The difference in the impact of full and variable cost accounting methods on the cost of goods sold. Let direct material costs per product be $59,136, direct labor costs $76,384, variable manufacturing overhead costs $44,352, and fixed manufacturing overhead costs $36,960. During the year, 24,640 units of products were produced. There was no work in progress either at the beginning or at the end of the reporting period. The unit selling price is $24.50 and the variable selling costs per unit are $4.80. Fixed selling expenses for the period are $48,210 and fixed administrative expenses are $82,430.

	Variable Cost Accounting	Full cost accounting
Unit cost
Direct material costs ($59,136:24,640 units)	$2,40	$2.40
Direct labor costs ($76,384:24,640 units)	3.10	3.10
Variable overhead costs ($44,352:24,640 units)	1.80	1.80
Fixed overhead costs ($36,960:24,640 units)	-	1.50
Total cost per unit of production	$7,30	$8.80
Finished goods balance at the end of the year (2,640 x $7.30) (2,640 x $8.80)	19,272	23,232
Cost of goods sold (22,000 x $7.30) (22,000 x $8.80)	160,600	193,600
	36,960	-
Total costs reported in the income statement	$197,560	$193,600
Total costs to be accounted for	$216,832	$ 216,832

Profit and Loss Statement (Margin Approach).

Sales revenue $539,000

Variable portion of cost of goods sold

$179,872

Minus Final balances of finished products $19,272

Variable portion of cost of goods sold $160,600

Plus Variable Selling Expenses (22,000 x $4.80) $105,600 $266,200

Marginal profit $272,80 0

Minus Fixed expenses

$36,960

Fixed business expenses $48,210

Permanent administrators expenses $82,430 $167,600

Operating profit (before tax) $105,200

Example. Price per unit - 10 thousand rubles, variable costs per unit - 6 thousand rubles, fixed overhead costs amounted to 300 thousand rubles. for the period, fixed general expenses amounted to 100 thousand rubles. for the period.

	Period 1	Period 2	Period 3	Period 4	Period 5	Period 6
Sales volume (pieces)	150	120	180	150	140	160
Production volume (pieces)	150	150	150	150	170	140

Full cost costing method.

	(thousand rubles)	(thousand rubles)	(thousand rubles)	(thousand rubles)	(thousand rubles)	(thousand rubles)
	Period 1	Period 2	Period 3	Period 4	Period 5	Period 6

Prod. cost

Cost of goods sold
Sales volume
Gross profit
General economic expenses
Operating profit

Direct costing method of cost calculation.

	(thousand rubles)	(thousand rubles)	(thousand rubles)	(thousand rubles)	(thousand rubles)	(thousand rubles)
	Period 1	Period 2	Period 3	Period 4	Period 5	Period 6
Inventories of finished products in the warehouse at the beginning of the period
Prod. AC cost
Inventories of finished goods in warehouse at the end of the period
Cost of products sold at variable costs
Fixed overhead costs
Total production cost
Sales volume
Gross profit
General economic expenses
Operating profit

Operating leverage.

You will need

- Data on the volume of output in natural units
- Accounting data on the costs of materials and components, equipment, wages, fuel and energy resources for the period.

Instructions

Based on documents on the write-off of raw materials and materials, acts on the performance of production work or services performed by auxiliary departments or third parties, determine the amount for production or services for. Exclude the amount of returnable waste from material costs.

Determine the amount of transportation and procurement costs and costs for packaging products.

By adding all the above sums, you will determine the common variables cost for everything produced during the period. Knowing the number of products produced, by division, find the sum of variable costs per unit of production. Calculate the critical level of variable costs per unit of production using C–PZ/V, where C is the product price, PZ are constants cost, V – volume of output in natural units.

Please note

In terms of taxes, fees, and other obligatory payments, the amount of which depends on the volume of production, a reduction in variable costs is possible only by changing legislative framework.

Useful advice

A reduction in variable costs will result from an increase in labor productivity, a reduction in the number of employees in primary and auxiliary production, a decrease in the volume of stocks of raw materials and finished products, economical use of materials, and the use of energy-saving technologies. technological processes, introduction of progressive management schemes.

Sources:

Practical magazine for accountants.
what costs are not variable
v - variable costs per unit of production, DE

What minimum capital you will need to start your own business depends on what exactly you want to open. But there are costs that are common to almost all types of business. Let's take a closer look at these costs.

Instructions

Currently, it is quite possible to open with the most minimal investment or almost without them. For example, online business. But if you are still inclined to the “traditional” form of business, then you can already identify at least three mandatory cost items: registration of a company or individual entrepreneur, rental of premises and purchase of goods (equipment).

If you are registering an LLC or individual entrepreneur, then all your costs are state fees and notary expenses. State registration fee legal entity currently amounts to 4,000 rubles. Individual can register himself as an entrepreneur by paying 800 rubles. Up to 1,500 rubles goes to the notary. However, by doing the registration yourself, you will save money, but will spend quite a lot of time, so it is more profitable to hire a specialized company to register your business. The company will register you for 5,000-10,000 rubles.

The cost of renting premises depends on the location of your office or. Accordingly, the closer to the center of Moscow or to elite areas, the higher the rental cost. On average per year square meter for rented premises you will pay from $400. This will be the cost of a class C office (a fairly low class) in the Central Administrative District. The cost of renting a Class A office can reach up to $1,500 per square meter per year, depending on the location. A room measuring 200 sq.m in the same Central Administrative District will cost you on average around 500,000 rubles.

Equipment costs or (if you decide to open a store) depend, of course, on the type of business you run. In any case, you will need to equip your office with at least one computer (if you do not have employees yet), a telephone and other office equipment, as well as “little things” - paper, stationery. Owners should take care cash registers.

Sooner or later, your business will expand and you will need employees. Every office needs a secretary. His salary now starts at an average of 20,000 rubles per month. A part-time student can be hired for 15,000. Accordingly, the more qualified the employee, the more he will have to pay. Salaries of sellers and cashiers now start from 10,000-15,000 rubles, but this is the minimum for which low-skilled employees will work.

Sources:

Small business website.

Variables are recognized costs, which directly depend on the volume of calculated production. Variables costs will depend on the cost of raw materials, materials, the cost of electrical energy, and the amount of wages paid.

You will need

calculator
notepad and pen
a complete list of enterprise costs with the indicated amount of costs

Instructions

Add it all up costs enterprises that directly depend on the volume of products produced. For example, the variables of a trading company selling consumer goods include:
Pp – volume of products purchased from suppliers. Expressed in rubles. Let a trade organization purchase goods from suppliers in the amount of 158 thousand rubles.
Uh – to electric. Let a trade organization pay 3,500 rubles for .
Z – the salary of sellers, which depends on the quantity of goods they sell. Let the average wage fund in a trade organization be 160 thousand rubles. Thus, the variables costs trade organization will be equal to:
VC = Pp + Ee + Z = 158+3.5+160 = 321.5 thousand rubles.

Divide the resulting amount of variable costs by the volume of products sold. This indicator can be found by a trade organization. The volume of goods sold in the above example will be expressed in quantitative terms, that is, by piece. Suppose a trading organization was able to sell 10,500 units of goods. Then the variables costs taking into account the quantity of goods sold are equal to:
VC = 321.5 / 10.5 = 30 rubles per unit of goods sold. Thus, variable costs are made not only by adding the organization’s costs for the purchase and goods, but also by dividing the resulting amount by the unit of goods. Variables costs with an increase in the quantity of goods sold, they decrease, which may indicate efficiency. Variables depending on the type of company activity costs and their types may change - added to those indicated above in the example (costs of raw materials, water, one-time transportation of products and other expenses of the organization).

Sources:

"Economic theory", E.F. Borisov, 1999

Variables costs represent types of expenses, the value of which can change only in proportion to changes in the volume of production. They are opposed fixed costs, which add up to total costs. The main sign by which it is possible to determine whether any costs are variable is their disappearance when production stops.

Instructions

According to IFRS standards, there are only two types of variable costs: production variable indirect costs and production variable direct costs. Production variable indirect costs - which are almost or completely directly dependent on changes in volume, however, due to production technological features, they are not economically feasible or cannot be directly attributed to those produced. Production variable direct costs are those costs that can be directly attributed to specific products in the primary data. Indirect variable costs of the first group are: all the costs of raw materials necessary for complex production. Direct variable costs are: fuel and energy costs; expenses for basic materials and raw materials; workers' wages.

To find the average of the variables costs, you need shared variables costs divided by the required quantity of products produced.

Let's calculate the variables costs using an example: Price per unit of output A: materials - 140 rubles, wages for one manufactured product - 70 rubles, other costs - 20 rubles.
Price per unit of manufactured product B: materials - 260 rubles, wages for one manufactured product - 130 rubles, other costs - 30 rubles. Variables costs for one unit of product A will be equal to 230 rubles. (add up all costs). Accordingly, variable costs for one unit of product B will be equal to 420 rubles. Keep in mind that variable costs are always associated with the production of each unit of product. Variables costs - those quantities that change only when the quantity of a given product changes and includes different types costs.

Sources:

how to open variables in 2019

In the absence of a real idea of the material costs of producing goods (cost), it is impossible to determine the profitability of production, which, in turn, is a fundamental characteristic for the development of the business as a whole.

Instructions

Familiarize yourself with the three main methods of calculating material costs: boiler, custom and distribution. Select one of the methods, depending on the costing object. So, with the boiler method, such an object is production as a whole, in the case of the order method - only a separate order or type of product, and with the cross-cut method - a separate segment (technological process). Accordingly, everything material is either not, or correlated by products (orders), or by segments (processes) of production.

Use different units of calculation when using each of the costing methods (natural, conditionally natural, cost, time and work units).

When using the boiler calculation method, do not forget about its low information content. The information obtained in boiler calculations can only be justified in the case of accounting for single-product production (for example, at mining enterprises to calculate its cost). Material cost are calculated by dividing the total amount of existing costs by the entire volume of production in physical terms (barrels of oil in question).

Use the order-to-order method per unit of production for small-scale or even single-piece production. This method is also well suited for calculating the cost of large or technologically complex products, when each segment of the production process is physically impossible. Material cost are calculated by dividing the cost of each order by the number of units produced and delivered in accordance with that order. The result of calculating the cost using this method is to obtain information about the implementation of each order.

Use the incremental method if you are the cost of production in mass production, characterized by a sequence of technological processes and repeatability of individual operations. Material cost are calculated by dividing the sum of all costs for a certain period of time (or for the duration of each individual process or operation) by the number of units of products produced for this period (or for the duration of the process or operation). The total cost of production is the sum of material costs for each of the technological processes.

In production, there are costs that remain the same even with hundreds or tens of thousands of dollars in profit. They do not depend on the volume of products produced. These are called fixed costs. How to calculate fixed costs?

Instructions

Determine the formula for calculating fixed costs. It calculates the fixed costs of all organizations. The formula will be equal to the ratio of all fixed expenses to the total cost of work and services sold, multiplied by the basic income from the sale of work and services.

Calculate in non-current assets deductions for depreciation of fixed assets, such as land plots, land improvements, buildings, structures, transmission devices, machinery and equipment, etc. Don't forget about library collections, natural resources, rental items, as well as capital investments in facilities that have not been put into operation.

Calculate the entire cost of completed work and services. This will include revenue from the main sale or from services provided, for example, and work performed, for example, construction organizations.

Calculate the basic income from the sale of works and services. Basic income is the conditional profitability for the month in value terms per unit of physical indicator. Please note that services classified as “domestic” have a single physical indicator, and services of a “non-domestic” nature, for example, housing rental and passenger transportation, have their own physical indicators.

Substitute the obtained data into the formula and get fixed costs.

In the process of economic activity of organizations, some managers are forced to send their employees on business trips. In general, the concept of “business trip” is a trip outside the workplace to resolve work-related issues. As a rule, the decision to send an employee on a business trip is made by the general director. The accountant must calculate and subsequently pay the employee travel allowances.

You will need

- production calendar;
- time sheet;
- pay slips;
- tickets.

Instructions

To calculate travel allowances, calculate the employee's average daily earnings for the last 12 calendar months. If wages are different every month, then first determine the total amount of all payments for the billing period, including bonuses and allowances in this number. Please note that any financial assistance, as well as cash payments in the form of gifts, must be deducted from the total amount.

Calculate the actual number of days worked over 12 months. Please remember that this number does not include weekends and holidays. If for any reason, even if it is valid, the employee was not present at the workplace, then exclude these days as well.

Then divide the amount of payments for 12 months by the days actually worked. The resulting number will be the average daily earnings.

For example, manager Ivanov worked for the period from September 1, 2010 to August 31, 2011. According to the production calendar, with a five-day working week the total number of days for the billing period is 249 days. But Ivanov took a vacation at his own expense in 2011, the duration of which was 10 days. Thus, 249 days – 10 days = 239 days. During this period, the manager earned 192 thousand rubles. To calculate the average daily earnings you need to divide 192 thousand rubles by 239 days, you get 803.35 rubles.

After the average daily earnings have been calculated, determine the number of business trip days. The beginning and end of a business trip is the date of departure and arrival of the vehicle.

Calculate travel allowances by multiplying your average daily earnings by the number of travel days. For example, the same manager Ivanov was on a business trip for 12 days. Thus, 12 days * 803.35 rubles = 9640.2 rubles (travel allowances).

Video on the topic

In the process of economic activity, company managers spend cash for certain needs. All these expenses can be divided into two groups: variables and permanent. The first group includes those costs that depend on the volume of products produced or sold, while the second group does not change depending on the volume of production.

Instructions

To determine variables costs, look at their purpose. For example, you purchased some material that goes into the production of products, that is, it directly takes part in the production. Let it be wood from which lumber of various sections is made. The volume of lumber produced will depend on the amount of wood purchased. Such expenses classified as variables.

In addition to wood, you use electricity, the amount of which also depends on the volume of production (the more you produce, the more you spend), for example, when working with a sawmill. All expenses that you pay to the electricity supply company are also classified as variable costs.

To produce products, you use labor, which must be paid wages. These expenses classify them as variables.

If you do not have your own production, but act as an intermediary, that is, you resell previously purchased goods, then classify the total cost of the purchase as variable expenses.

The size of which depends on the intensity of production. Variable costs are the opposite fixed costs. The key feature by which variable costs are identified is their disappearance when production is suspended.

What are variable costs?

Variable costs include the following:

Piece-rate wages for workers tied to personal results.

Expenses for the purchase of raw materials and components for production maintenance.

Interest and bonuses paid to consultants and sales managers based on the results of plan implementation.

The amount of taxes based on production and sales volumes. These are the following taxes: VAT, excise taxes, according to the simplified tax system.

Expenses for paying for the services of service organizations, for example, goods transportation services or sales outsourcing.

The cost of fuel and electricity consumed directly in the workshops. A distinction is important here: energy used in administrative buildings and offices is a fixed cost.

Break-even point and types of variable costs

The value of VC changes in proportion to the size of total costs. When determining the break-even point, it is assumed that variable costs are proportional to production volume:

However, this is not always the case. An exception may be, for example, the introduction of a night shift. Since the night is higher, variable costs will increase at a greater rate than production volumes. Based on this feature, there are three types of VC:

Proportional.

Regressive variable - costs increase at a slower rate than. This effect is known as “economy of scale.”

Progressive-variable - the rate of cost growth is higher.

Calculation of VC indicator

The classification of costs into fixed and variable is not used at all for accounting (there is no line “variable costs” in the balance sheet), but for management analysis. Calculation of variable costs is advisable because it gives the manager the opportunity to manage the profitability and profitability of the organization.

To determine the value of variable costs, methods such as algebraic, statistical, graphical, regression-correlation and others are used. The most famous and widespread is considered algebraic method, according to which the following formula can be used to determine the value of VC:

Algebraic analysis assumes that the subject of the study has such information as the volume of production in physical terms (X) and the size of the corresponding costs (Z) for at least two points of production.

Also often used margin method, based on the definition of magnitude marginal income, which is the difference between the organization's profit and total variable costs.

Breaking point: how to minimize variable costs?

A popular strategy for minimizing variable costs is to determine " points fracture" - such a volume of production at which variable costs stop increasing proportionally and reduce the growth rate:

There may be several reasons for this effect. Among them:

1. Reducing labor costs for management personnel.

2. Application of a focusing strategy, which consists of increasing the specialization of production.

4. Integration of innovative developments into the production process.

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