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Costs are made to divide on constant and variable costs. Continuous costs are such costs that do not depend on production and sales, they are unchanged, and do not constitute the direct cost of production, goods, services. Variable costs are the costs that make up the direct cost of products, and their size directly depends on the volume of production and sales of products, goods or services. Constant and variable costs Examples are very diverse, they depend on the species and activities. Today we will try to submit constant and variable costs in the examples in more detail.
The following types can be attributed to constant costs:
Rent. The most vivid example of constant costs, which meets in any form of business activities are rental payments. Entrepreneur, renting an office, shop, the warehouse is forced to pay regular rental payments, regardless of how much he earned, sold goods or provided services. Even if he did not receive a single ruble of income, he still will have to pay the rental cost, otherwise the treaty will terminate with it and it will lose the leased area.
Salary of administrative staff, management, accounting, remuneration of support staff (system administrator, secretary, repair service, cleaner, etc.). The accrual and payout of such wages also does not depend on sales volumes. This also includes a busting part of sales managers, which is accrued and paid regardless of the results of the sales manager.
The percentage of the same part or premium will be attributed to variable costs, as it directly depends on the volumes, sales results. Examples of constant costs include the busting part of the wages of the main workers, which is paid regardless of the volumes of production produced, or the payment for the forced simple.
depreciation deductions. The amount of accrued depreciation is also a classic example of constant costs.
Payment for services related to the general management of the enterprise. This includes utility costs: electricity, water, communication and Internet services. Services of security organizations, banking services (calculated cash services) are also examples of permanent costs. Advertising agencies.
Bank percentage, interest on loans, discounts on bills.
Tax payments, the taxable base of which is the static tax objects: land tax, enterprise property tax, a single social tax paid with wages accrued by salaries, UNVD is a very good example of constant costs, various payments and fees for the resolution of trade, Environmental fees, transport tax.
Examples of variable costs associated with the production volume of production, sales of goods and services, it is not difficult to submit to them:
Complete wages of workers, the volume of which depends on the number of products manufactured or services rendered.
The cost of raw materials, materials and components used for the production of products, the cost of purchased goods for subsequent resale.
The amounts of interest paid by sales managers from the sales results of goods, the amount of premiums accrued by the personnel on the results of the enterprise's activities.
The amounts of taxes, the taxable base of which is the volume of production and sales of products, goods: excise taxes, VAT, tax on the USN, ESN, paid with accrued premiums, interest on sales results.
The cost of third-party organizations paid depending on the volume of implementation: services of transport companies for transportation of products, services of mediation organizations in the form of agency or commission, sales of sales outsourcing,
The cost of electricity, fuel, in manufacturing enterprises. These costs also depend on the production volumes, or the provision of services, the cost of electricity used in the office or administrative building, as well as the costs of fuel to cars used for administrative purposes relate to constant costs.
As we have already spoken, knowledge and understanding of the essence of constant and variable costs is very important for competent management of business, its profitability. Due to the fact that constant costs do not depend on the volume of production and sales of goods they are a certain burden for the entrepreneur. After all, the more constant costs, the higher the value of the break-even point, and this in turn increases the risks of the entrepreneur, as to cover the amount of large constant costs, the entrepreneur must have a large amount of product sales, goods or services. However, in the conditions of rigid competition, ensuring the constancy of the busy market segment is very difficult. This is achieved due to an increase in advertising costs and promotion, which also relates to constant costs. It turns out a vicious circle. Increasing advertising costs and promotion, we are thereby increasing the constant costs, at the same time we stimulate sales. Here, the main thing is that the efforts of the entrepreneur in the field of advertising were effective, otherwise the entrepreneur will receive a loss.
This is especially important for small businesses, since the safety margin of an entrepreneur engaged in small business is low, it has access to many financial instruments (loans, loans, third-party investors), especially at a novice entrepreneur who is just trying to develop their business. Therefore, for small businesses you need to try to apply low budget ways to promote business, such as partisan marketing, non-standard advertising. It is necessary to try to reduce the level of permanent costs, especially at the initial stage of development.
In the activities of any enterprise, the adoption of proper managerial decisions is based on the analysis of its work indicators. One of the tasks of such an analysis is to reduce production costs, and, consequently, increasing business profitability.
Permanent and variable costs, their accounting is an integral part of not only the calculation of the cost of production, but also the analysis of the success of the enterprise as a whole.
The correct analysis of these articles allows you to make effective management decisions that have a significant impact on profits. For the purpose of analysis in computer programs in enterprises, it is convenient to provide automatic diversity of costs for permanent and variables on the basis of primary documents, in accordance with the principle adopted in the organization. This information is very important for determining the "break-even point" point of business, as well as assessing the profitability of various types of products.
Variable costs
To variable costs The costs that are unchanged per unit of production, but their total amount is proportional to the volume of output. These include the costs of raw materials, consumables, energy resources involved in the main production, the salary of the main production personnel (together with the accrual) and the cost of transport services. These costs directly relate to the cost of production. In terms of value, variable costs change when the price of goods or services changes. Specific variable costs, for example, on raw materials in physical dimension, can decrease with increasing production volumes due to, for example, reducing losses or energy costs and transport.
Variable costs are direct and indirect. If, for example, an enterprise produces bread, then flour costs are direct variable costs that increase directly proportional to the volume of bread release. Direct variable costs may decline in improving the technological process, the introduction of new technologies. However, if the plant recycles oil and results in one technological process, for example, gasoline, ethylene and fuel oil, then oil costs for ethylene production will be variable, but indirect. Indirect variable expenses In this case, usually take into account in proportion to the physical volumes of products. For example, if 50 tons of gasoline, 20 tons of oil and 20 tons of ethylene (10 tons - losses or waste) are obtained when processing 100 tons of oil, then the production of one ton of ethylene includes the cost of 1.111 tons of oil (20 tons of ethylene + 2.22 tons of waste / 20 tons of ethylene). This is due to the fact that with a proportional calculation of 20 tons of ethylene, there are 2.22 tons of waste. But sometimes all waste is among the product. For calculations, these technological regulations use, and for analysis actual results for the previous period.
Decision on direct and indirect variable costs conditionally and depends on the nature of the business.
Thus, gasoline costs for the transport of raw materials during oil refining are indirect, and for the transport company direct, as directly proportional to the volume of transportation volumes. Wages of production personnel with accruals include variable costs with piecework wages. However, with time-based payment, these costs are conditionally variables. When calculating the cost of products, planned costs per unit of production are used, and when analyzing the actual, which may differ from the planned costs as towards the increase and decrease. Depreciation of the main means of production, attributed to the amount of product volume, are also variable costs. But this relative value is used only when calculating the cost of various types of products, since depreciation deductions in themselves, these are constant costs / costs.
Any firm functions for generating income, and its work is impossible without the funds spent. There are various types of such expenses. There are activities for which permanent finances are required. But part of the costs are not regular, and it is also necessary to take into account their impact on the course of product release and its sale.
So, the main meaning of the work of any company in the production of the product and receive income at the expense of it. To start this activity, you need to buy raw materials at the beginning of the raw material, to hire labor. This is spent on certain finances, in the economy they received the name of costs.
People invest Finance in production activities with the most different goals. In accordance with this, the classification of expenses was adopted. Categories of costs (depending on properties):
- Obvious. Such costs are made directly to pay employees, commission to other organizations, payment of banks and transport.
- Implicit. The costs of the needs of the company's heads that are not spelled out in contracts.
- Permanent. Funds that are provided continuous production processes.
- Variables. Costs, without problems to be adjusted while maintaining the same level of product output.
- Irretrievable. Expenses of movable assets that are invested in the company's activities free. Infected the initial period of production or republication of the organization. These funds are no longer possible to spend on other organizations.
- Middle. The costs obtained during the calculations characterizing attachments into each product unit. This indicator contributes to the pricing of goods.
- Limit. This is the greatest amount of costs that is not subject to increasing due to the low efficiency of capital in the company.
- Appeals. The cost of supplying goods from the manufacturer to the consumer.
Application of constant and variable costs
Consider the differences of constant costs from variables, their economic characteristics.
First cost (constant) Designed for investment in the manufacture of a product in a separate production cycle. In each organization, their size is individual, therefore the company considers them separately, given the analysis of the issue process. We note that such costs will not differ from the initial production stage to the sales of products to the consumer.
Second Type of Costs (Variables) varies in each production cycle, almost without repetitions of this indicator.
Two types of costs in aggregate constitute the total costs that are calculated at the end of the production process.
Simply put, continuous costs - those that are unchanged at a certain period of time. What can be attributed to them?
- Payment of utilities;
- Costs for the operation of premises;
- Payment of rental;
- Salary staff staff;
It should be borne in mind that the unchanged level of total costs used in a specific time interval of production, within one cycle, applies only to the total number of goods produced. If you calculate such costs for each unit, their size will decrease in accordance with the growth of the output. This fact refers to all types of production.
The variables of the same costs are proportional to the variable quantity or volume of goods produced.. These include:
- Energy costs;
- Material expenses;
- Contract labor payment.
This type of cost is closely related to the production volume of the product, as a result of which changes according to the production of this product.
Examples of costs:
Each production cycle corresponds to a specific amount of expenses remaining unchanged under any conditions. There are other costs depending on production resources. As it was previously established, the costs for a short time interval are variable and constant.
For a long time, such characteristics are not suitable, because Costs in this case will change.
Examples of permanent costs
Permanent costs remain at the same level with any volume of product release, in a small time interval. These are the cost of stable factors of the company, not proportional to the number of units of goods. Examples of such expenses are:
- payment of interest on a bank loan;
- depreciation costs;
- payment of interest on bonds;
- salary managers in the enterprise;
- insurance costs.
All expenses not dependent on the production of the product, which in a small period of production cycle are unchanged, can be called permanent.
Examples of variable costs
The variables, costs, on the contrary, are essentially investment in the release of goods, therefore depend on its volume. The size of the investment is directly proportional to the number of produced goods. Examples can serve as expenses for:
- on raw materials;
- paying premiums to employees producing products;
- delivery of materials and the product itself;
- energetic resources;
- equipment;
- other expenses for the production of goods or services.
Consider a schedule of variable costs, which is a curve. (Figure 1.)
Fig.1 - schedule of variable costs
The path of this line from the start of coordinates to the point A is depicting an increase in costs with the increase in the number of produced goods. Plot AV: more rapid increase in costs in mass production. The transparency costs of transport or consumables can be affected by the costs of transport or consumables, improper use of the released goods with reduced demand for it.
An example of calculating production costs:
Consider the calculation of constant and variable costs on a specific example. Suppose a shoe company produces 2000 pairs of boots during the year. During this time, the factory spends funds for the following needs:
- rent - 25000 r.;
- interest on bank loan - 11000 p.;
- payment for the production of one shoe pair - 20 r.;
- raw materials for the release of a pair of boots - 12 p.
Our task: to calculate variables, constant costs, as well as funds spent on each pair of shoes.
Permanent costs in this case can only be called rent and credit payments. Such expense expenses, depending on production volumes, so calculate them simply: 25000 + 11000 \u003d 36,000 rubles.
Expenditure on the production of one shoe pair is variable costs: 20 + 12 \u003d 32 rubles.
Consequently, the annual costs costs are calculated as follows: 2000 * 32 \u003d 64000 rubles.
General costs - This is the sum of variables and constant: 36000 + 64000 \u003d 100,000 rubles.
The average size of total expenditures per shoe pair: 100000/20 \u003d 50
Planning production costs
For each company it is important to calculate correctly, plan and analyze production costs.
In the process of expense analysis, options for the cost-effective use of finance, which are invested on the production of products and should be distributed correctly. This leads to a decrease in cost, which means the final price of the manufactured goods, as well as improving the competitiveness of the company and the growth of its income.
The task of each company is to save maximize in production and optimize this process so that the company develops and becomes more successful. As a result of these measures, the profitability of the organization increases, which means there are more opportunities to invest in it.
To schedule production costs, you need to take into account their size in previous cycles. In accordance with the volume of manufactured goods, a decision is made to reduce or increasing production costs.
Accounting balance and costs
Among the accounting documentation of each company there is a "profit and loss statement". There are fixed all information about expenses.
A little more about this document. This report does not characterize the property position of the enterprise in general, and provides information on its activities for the selected time interval. In accordance with OKUD, the income statement has the form 2. In it, income and expenses and spending indicators are recorded in the incident and by the end of the year. The report includes a table, in the line 020 of which the main costs of the organization are displayed, in line 029 - the difference between profit and costs, in line 040 - expenses included in the 26 account. The latter are travel costs, payment for the protection of premises and labor, employee remuneration. The line 070 shows the interest of the company on credit liabilities.
The initial results of computing (when drawing up a report) are divided into direct and indirect costs. If we consider these indicators separately, the direct costs can be considered permanent costs, and indirectly variables.
In the balance sheet data, costs are not recorded directly, it shows only the assets and financial liabilities of the enterprise.
Accounting costs (differently called explicit) - This is paid in the monetary equivalent of any transactions. They have a close relationship with economic costs and income of the company. Executive costs will be submitted from the company's profits, and if we get zero, it means the organization most correctly applied its resources.
Example Calculation of expenses
Consider the example of calculating accounting and economic costs and profits. The owner of the recently opened laundry planned to receive an income of 120,000 rubles per year. For this, he will have to cover the costs:
- rental of premises - 30000 p.;
- salary of administrators - 20000 p.;
- purchase of technology - 60000 p.;
- other minor costs - 15000 r.;
Credit payments - 30%, deposit - 25%.
Equipment The head of the enterprise bought at his own expense. Washing machines are subject to breakage, after a while. Given this, you need to create a depreciation fund, which will be listed for 6,000 rubles each year. All of the above - explicit costs. Economic costs are the possible profit of the laundry service, in case of acquiring a deposit. To pay initial spending, he will have to use a bank loan. Credit for the amount of 45000 rubles. It will cost him at 13500 rubles.
Thus, we calculate the explicit costs: 30 + 2 * 20 + 6 + 15 + 13.5 \u003d 104.5 thousand rubles. Implicit (deposit percentage): 60 * 0.25 \u003d 15 thousand rubles.
Accounting: 120-104.5 \u003d 15.5 thousand rubles.
Economic income: 15.5-15 \u003d 0.5 thousand rubles.
The costs of accounting and economic are distinguished from each other, but they are usually considered in aggregate.
The value of production costs
Production costs form the law of economic demand: with an increase in the price of products, the level of its market supply is growing, and with a decrease - the proposal is reduced, while maintaining other conditions. The essence of the law is that each manufacturer wants to offer the maximum number of goods at the highest price, which is most profitable.
For the buyer, the cost of goods is a deterrent. The high price of goods causes the consumer to buy its smaller amount; And accordingly, cheaper products are purchased in large volumes. The manufacturer receives a profit for the released product, so he seeks to produce it in order to acquire revenue from each unit of goods, in the form of its price.
What is the main role of production costs? Consider it on the example of the manufacturing industrial enterprise. At a certain period of time, production costs increase. To compensate them, you need to raise the price of the product. The cost increase is due to the fact that it is impossible to quickly expand the production area. Equipment is overloaded, which reduces the efficiency of the enterprise. Thus, for the release of goods with the highest costs, the firm must establish a higher price for it. The price and level of proposal are directly interrelated.
The amount of variables and constant costs forms the cost of production (works, services).
The dependence of variables and permanent costs on the production volume per release and per unit of production is presented in Fig. 10.2.
Fig.10.2. The dependence of production costs on the amount of products
The presented figure shows that constant costs per unitproducts are reduced by increasing production. This suggests that one of the most effective ways to reduce the cost of products is as fully possible loading of production facilities.
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Permanent costs Does not depend on the dynamics of production and sale of products, that is, they do not change when the volume of production changes.
Their part of them is related to the production capacity of the enterprise (depreciation, rent, wages of management personnel on time payments and general expenses), the other - with the management and organization of production and sales of products (costs of research work, advertising, to improve the skills of workers and T .d.). It is also possible to allocate individual constant costs for each type of product and common to the enterprise as a whole.
However, the constant costs calculated per unit of production are changed when the volume of production changes.
Variable costs Warves depend on the volume and change to directly proportional to the change in the volume of production (or business activity) of the company. As it increases, variable costs are growing, and vice versa, decrease when it is reduced (for example, the wages of production workers manufacturing a certain type of product, raw materials and materials costs). In turn, as part of variable costs eliminate costs Proportional and disproportionate . Proportional Costs are changed directly proportional to the volume of production. These include mainly the costs of raw materials, basic materials, components, as well as piecework workers' wages. Disproportionate Costs do not have direct proportional dependence on production volume. They are divided into progressive and degressive.
Progressive costs are increasing more than production. They arise when the increase in production requires high cost per unit of production (costs for piece-progressive labor payment, additional advertising and trading costs). The growth of degressing costs lags behind the increase in production. We are usually determining the cost of operating machinery and equipment, a diverse tool (accessories), etc.
In fig. 16.3. Graphically shows the dynamics of general constant and variable costs.
Dynamics of cost per unit It looks different. It is easy to build on the basis of certain patterns. In particular, the variables proportional costs per unit of products remain at one level regardless of production. On the graph, the line of these costs will be the parallel axis of the abscissa. The constant costs per unit of products with an increase in its total volume are reduced by parabolic curve. For regressing and progressive costs, the same dynamics remains, only pronounced noticeable.
Variable costs calculated per unit of products are a constant value in these conditions of production.
More accurately name Permanent I. variable expenses conditional and conditionally variables. Adding a word conventionally conventionally means that variable costs per unit of production can decrease with the change in technology with large volumes of release.
Permanent costs may vary jump-like with a significant increase in the volume of release. At the same time, with a significant increase in production, its manufacturing technology changes, which leads to a change in the proportional relationship between the change in the amount of products and the value of variable costs (the angle of inclination on the chart is reduced).
/\u003e Variables
Figure Current enterprise costs
The cost of all products calculated as follows:
C - the total cost, rubles; a - variable costs per unit of production, rub; N is the volume of release, pcs; B - permanent costs for the entire volume of products.
Calculation of cost units of products:
With D \u003d A + B / N
With a more complete use of production facilities, the cost of a unit of products decreases. The same happens with a significant increase in the output, when variables and constant cost per unit of production are reduced at the same time.
Analyzing the composition of permanent and variable costs, brought the following dependence: increasing revenue will lead to a significantly greater increase in profits if constant costs remain unchanged.
Moreover, there are mixed costswhich contain both permanent and variable components. Part of these costs changes when the production volume changes, and the other part does not depend on the production volume and remains fixed during the reporting period. For example, a monthly fee for the phone includes a constant amount of the subscription fee and a variable part that depends on the number and duration of long-distance telephone conversations.
Sometimes mixed costs are also called semi-membered and semi-permanent. For example, if the enterprise's economic activity is expanding, at a certain stage there may be a need for additional warehouses for storing its products, which, in turn, will cause an increase in rental costs. Thus, constant costs (rent) will change together with a change in the level of activity.
Therefore, when taking into account, they need to be clearly distinguished between constant and variables.
The division of costs for permanent and variables is important in choosing a system of accounting and calculation. In addition, this cost grouping is used when analyzing and predicting the break-even production and, ultimately, to select the enterprise economic policy.
In paragraph 10 of IFRS 2"Stocks" are defined three groups of costsincluded in the cost of production, namely: (1) Production variables Direct costs, (2) Production variables Indirect costs, (3) Production constant indirect costs, which will further call production overhead costs.
Table Production costs in the cost according to IFRS 2
| Type of costs | The composition of costs |
| Variables direct | Raw materials and main materials, wages of production workers with accruals on it, etc. These are the costs that can be based on the initial accounting data directly at the cost of specific products. |
| Cosular variables | Such expenses that are directly dependent or almost indefinance from changes in the amount of activity, however, due to the technological features of production, they cannot be directly related to the manufactured products. Representatives of such expenses are the costs of raw materials in complex industries. For example, when processing raw materials - coal - coke, gas, benzene, coal resin, ammonia are produced. To divide the costs of the initial raw materials by type of products in these examples can only be indirectly. |
| Permanent indirects | The general production costs that do not change or almost do not change as a result of changes in production. For example, depreciation of industrial buildings, structures, equipment; expenses for their repair and operation; Costs for the maintenance of the workshop management apparatus and other workmanship. This accounting group in accounting is traditionally distributed by product types indirectly proportional to any database of distribution. |
Similar information.
Lecture:
Permanent and variable costs
The success of entrepreneurial activities (business) is determined by the amount of profit, the calculation of which is made by the formula: revenue - costs = profit .
What kind expenses Should the manufacturer incur in order to create a product or service? It:
- costs of raw materials and materials;
- expenditure for utility, transport and other services;
- payments for taxes, insurance premiums, interest on the loan;
- payout payments to employees;
- depreciation deductions.
Costs are otherwise called production costs. They are permanent and variables. Permanent and variable costs of the company for the production and implementation of a unit of goods constitute it cost pricewhich is expressed in cash.
Permanent costs - These are the costs that do not depend on the volume of products, that is, the costs that the manufacturer is forced to make even if its income did not compose a ruble.
These include:
- rental payments;
- taxes;
- interest on loans;
- insurance payments;
- utility costs;
- salary of management personnel (administrators, bustling part of the salary of managers, accountants, etc.);
- depreciation (replacement costs or repair of worn equipment).
Variable costs - These are the costs of which depends on the volume of products.
Among them:
- costs of raw materials and materials;
- fuel costs;
- payment of electricity;
- piecework of labor of hired workers;
- costs for transport services;
- costs for containers and packaging.
External and internal costs
Permanent and variable costs are reflected in the company's accounting report and are therefore external. But analyzing the profitability of the enterprise, the manufacturer also takes into account the internal or hidden costs associated with the actual resources used. For example, in his room, Andrei opened the store and works in it himself. He uses his own premises and its own work, and the monthly income from the store is 20 000 r. The same resources Andrei can use alternative way. For example, passing the room for rent for 10 000 r. per month and setting a manager to a large company for a fee of 15 000 r. We see the difference in income in 5 000 r. This is the internal costs - the money with which the manufacturer sacrifice. Analysis of internal costs will help Andrei to use its own resources more profitable.
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