Fixed and non-fixed production costs. fixed costs

variable costs These are costs, the value of which depends on the volume of output. Variable costs are opposed to fixed costs, which add up to total costs. The main sign by which it is possible to determine whether costs are variable is their disappearance during a stop in production.

Note that variable costs are the most important indicator enterprises in management accounting, and are used to create plans to find ways to reduce their weight in total costs.

What is variable cost

Variable costs have a major distinguishing feature- they vary depending on the actual production volumes.

Variable costs include costs that are constant per unit of output, but their total amount is proportional to the volume of output.

Variable costs include:

raw material costs;

expendable materials;

energy resources involved in the main production;

main salary production staff(together with charges);

the cost of transport services.

These variable costs are directly charged to the product.

In value terms, variable costs change when the price of goods or services changes.

How to find variable costs per unit of output

In order to calculate the variable costs per piece (or other unit of measure) of the products manufactured by the company, you should divide the total amount of variable costs incurred by the total number of finished products, expressed in natural values.

Classification of variable costs

In practice, variable costs can be classified according to the following principles:

According to the nature of the dependence on the volume of output:

proportional. That is, variable costs increase in direct proportion to the increase in output. For example, the volume of production increased by 30% and the amount of costs also increased by 30%;

degressive. As production increases, the company's variable costs decrease. So, for example, the volume of production increased by 30%, while the size of variable costs increased by only 15%;

progressive. That is, variable costs increase relatively more with output. For example, the volume of production increased by 30%, and the amount of costs by 50%.

Statistically:

general. That is, variable costs include the totality of all variable costs of the enterprise across the entire product range;

average - average variable costs per unit of production or group of goods.

According to the method of attribution to the cost of production:

variable direct costs - costs that can be attributed to the cost of production;

variable indirect costs - costs that depend on the volume of production and it is difficult to assess their contribution to the cost of production.

In relation to the production process:

production;

non-production.

Direct and indirect variable costs

Variable costs are either direct or indirect.

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

Production variable indirect costs are costs that are directly dependent or almost directly dependent on the change 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 manufactured products.

The concept of direct and indirect costs is disclosed in paragraph 1 of Article 318 of the Tax Code of the Russian Federation. Thus, according to tax legislation, direct expenses, in particular, include:

expenses for the purchase of raw materials, materials, components, semi-finished products;

wages of production personnel;

depreciation on fixed assets.

Note that enterprises can include in direct costs and other types of costs directly related to the production of products.

At the same time, direct expenses are taken into account when determining the tax base for income tax as products, works, services are sold, and written off to the tax cost as they are implemented.

Note that the concept of direct and indirect costs is conditional.

For example, if the main business is transport services, then drivers and depreciation of cars will be direct costs, while for other types of business, the maintenance of vehicles and the remuneration of drivers will be indirect costs.

If the cost object is a warehouse, then the salary of the storekeeper will be included in direct costs, and if the cost object is the cost of production and products sold, then these costs (the salary of the storekeeper) will be indirect costs due to the impossibility of uniquely and in the only way to attribute it to the cost object - the cost.

Examples of Direct Variable Costs and Indirect Variable Costs

Examples of direct variable costs are costs:

for the remuneration of workers involved in the production process, including accruals on their wages;

basic materials, raw materials and components;

electricity and fuel used in the operation of production mechanisms.

Examples of indirect variable costs:

raw materials used in complex production;

expenses for research and development, transportation, travel expenses, etc.

findings

Due to the fact that variable costs change in direct proportion to the production volume, and the same costs per unit of finished product usually remain unchanged, when analyzing this type of cost, the value per unit of production is initially taken into account. In connection with this property, variable costs are the basis for solving many production tasks related to planning.

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Variable Costs: Accountant Details

• Operational leverage in the main and paid activities of the BU

  They are useful. Management of fixed and variable costs, as well as their associated operational ... in the structure of the cost of fixed and variable costs. Effect operating lever arises ... variables and conditionally constants. Conditionally variable costs change in proportion to the change in the volume of provided ... constant. Conditionally fixed costs Conditionally variable costs Maintenance and maintenance of buildings and ... the price of the service falls below the variable costs, it remains only to curtail production, ...

Example 2. In reporting period variable costs for the production of finished products, reflected .... The cost of production includes variable costs in the amount of 5 million rubles... Debit Credit Amount, rub. Reflected variable costs 20 10, 69, 70, ... Part of general factory costs added to the variable costs that form the cost 20 25 1 ... Debit Credit Amount, rub. Variable costs are reflected 20 10, 69, 70, ... Part of general factory costs is added to the variable costs that form the cost price 20 25 1 ...

• Financing the state task: examples of calculations
• Does it make sense to divide costs into variable and fixed costs?

  It is the difference between revenue and variable costs, shows the level of reimbursement of fixed ... costs; PermZ - variable costs for the entire volume of production (sales); permS - variable costs per unit...increased. Accumulation and distribution of variable costs When choosing a simple direct costing ... semi-finished products own production accounted for as variable costs. Moreover, complex raw materials, with ... The total cost on the basis of the distribution of variable costs (for output) will be ...

• Dynamic (temporary) profitability threshold model

  For the first time he mentioned the concepts of "fixed costs", "variable costs", "progressive costs", "degressive costs". ... The intensity of variable costs or variable costs per working day (day) is equal to the product of the value of variable costs per unit ... total variable costs - the value of variable costs per unit of time, calculated as the product of variable costs by ... respectively, total costs, fixed costs, variable costs and sales. The above integration technology...

• Director's questions to which the chief accountant should know the answers

  Equality: revenue = fixed costs + variable costs + operating profit. We are looking for... products = fixed cost / (price - variable cost/unit) = fixed cost: marginal... fixed cost + target profit) : (price - variable cost/unit) = (fixed cost + target profit ... equation: price = ((fixed costs + variable costs + target profit) / target sales ... , in which only variable costs are taken into account. Marginal profit - revenue ...

To determine total costs production of various volumes of output and costs per unit of output, it is necessary to combine production data included in the law of diminishing returns with information on resource prices. As already noted, in the short term, some resources associated with technical equipment businesses remain unchanged. The number of other resources may vary. It follows that in the short run different kinds costs can be classified as either fixed or variable.

fixed costs. Fixed costs are those costs that do not change with changes in the volume of production. Fixed costs associated with existence itself production equipment company and must be paid even if the firm does not produce anything. Fixed costs typically include bond payments, bank loans, rent payments, enterprise security, utility bills (telephone, lighting, sewerage), as well as time wages for employees of the enterprise.

variable costs. Variables are called such costs, the value of which varies depending on changes in the volume of production. These include the costs of raw materials, fuel, energy, transport services, most labor resources etc. The amount of variable costs varies depending on the volume of production.

General costs is the sum of fixed and variable costs for any given volume of production.

General, fixed and variable costs will be shown on the graph (see Fig. 1).

At zero output, the total cost is equal to the firm's fixed costs. Then, for the production of each additional unit of output (from 1 to 10), the total cost changes by the same amount as the sum of variable costs.

The sum of variable costs varies from the origin, and the sum of fixed costs is added to the vertical dimension of the sum of variable costs each time to obtain a total cost curve.

The distinction between fixed and variable costs is significant. Variable costs are costs that can be managed quickly, their value can be changed over a short period of time by changing the volume of production. On the other hand, fixed costs are obviously out of the control of the firm's management. Such costs are mandatory and must be paid regardless of the volume of production.

Reading 8 min. Views 30 Published on 03/25/2018

Almost every person dreams of quitting "work for an uncle" and starting their own business, which will bring pleasure and stable income. However, in order to become an aspiring entrepreneur, you will need to create a business plan containing a financial model of the future enterprise. Only this approach to business development will allow you to find out whether the investment in starting your own business can pay off. In this article, we propose to learn about what fixed and variable costs are and how they affect the profit of an enterprise.

Variable and fixed costs are the two main types of costs.

The importance of drawing up a financial model

Have you ever wondered why you need to write a business plan containing a financial model before starting your own business. Creating a business plan allows a novice entrepreneur to obtain information about the expected revenue of the enterprise, as well as determine fixed and variable costs. All these measures are aimed at choosing a development strategy financial policy future business.

The commercial component is one of the basic foundations of a successful enterprise. Economic theory says that finances are a blessing, which should bring a new blessing. It is this theory that should be guided in the early stages of entrepreneurial activity. At the heart of every enterprise is the rule that profit is the value of paramount importance. Otherwise, your entire business model will turn into patronage.

After we have taken as a rule the theory that working at a loss is unacceptable, we should move on to the financial model itself. The profit of the enterprise is the difference between income and production costs. The latter are divided into two groups: variable and fixed costs of the organization. In a situation where the level of expenses exceeds current income, the company is considered unprofitable.

The main task of entrepreneurial activity is to extract maximum benefit subject to the minimum use of financial resources.

Based on this, we can conclude that in order to increase income, it is necessary to sell as many finished products as possible. However, there is another method of profit, which is to reduce production costs. It is quite difficult to understand this scheme, since the cost optimization process has many different nuances. It is important to mention that these economic terms as "cost level", "cost item" and "production costs" are synonymous. Let's look at all types of existing production costs.

Varieties of expenses

All expenses of the organization are divided into two groups: variable and fixed costs. This division helps to systematize the budgeting process, and also helps in planning a business development strategy.

Fixed costs are expenses that are not related to the production capacity of the enterprise.. This means that this amount does not depend on how much product will be manufactured.

Variable costs are costs that change in proportion to changes in the volume of production.

Variable costs are conditionally fixed costs associated with entrepreneurial activity. Such expenses can change their properties and value, depending on the impact of internal and external economic factors.

What are the different types of expenses?

The salary of members of the administration of the enterprise can be considered among the fixed costs, but only in the situation when these employees receive payments regardless of the financial condition of the organization. It is important to note that in foreign countries managers earn income from their organizational skills by expanding their customer base and exploring new market areas. On the territory of Russia, the situation is completely different. Most department heads receive high salary, which is not tied to the effectiveness of their activities.

This approach to the organization of the production process leads to a loss of incentive to achieve better results. This may explain the low productivity labor indicators many commercial institutions, as the desire to learn new technological processes at the top of the company is simply missing.

Speaking about what fixed costs are, it should be mentioned that this article includes rent.. Let's pretend private company, which does not have its own real estate and is forced to rent a small room. In this situation, the administration of the company must monthly transfer a certain amount to the landlord. This situation is considered standard, since it is quite difficult to recoup the purchase of real estate. Some small and middle class entities will need at least five years to return the invested capital.

It is this factor that explains the fact that many entrepreneurs prefer to conclude an agreement on the lease of the necessary square meters. As mentioned above, the cost of paying rent is fixed, since the owner of the premises is not interested in financial condition your firm. For this person, only the timely receipt of payment fixed in the contract is important.

Fixed costs include depreciation costs. Any funds must be amortized monthly until their initial value is equal to zero. There are many various ways depreciation, which are regulated by current legislation. According to experts, there are more than a dozen various examples fixed costs. These include communal payments, payment for the removal and processing of garbage and spending on providing the conditions necessary for the implementation labor activity. A key feature of such expenses is the ease of calculating both present and future costs.

Fixed costs - costs, the value of which almost does not depend on changes in the volume of production

The concept of "variable costs" includes those types of costs that depend on the proportional volume of manufactured goods. For example, consider a balance sheet item, where there is an item related to raw materials and materials. In this paragraph, you should indicate the amount of funds that the company will need for production purposes. As an example, consider the activities of a company engaged in the manufacture of wooden pallets. For the manufacture of one unit of goods, it is required to spend two squares of processed wood. This means that it takes two hundred square meters of material to make one hundred pallets. It is these costs that are classified as variables.

It should be noted that the remuneration of the labor activity of employees can be included in both fixed and variable expenses. Similar cases seen in the following situations:

1. With an increase in the production capacity of the enterprise, it is required to attract additional workers that will be employed in the manufacturing process of products.
2. The salary of employees is a percentage that depends on various deviations in the production process.

Under these conditions, it is very difficult to make a forecast about the necessary expenses in order to pay salaries to employees, since its volume will depend on many different factors. The division of costs into fixed and variable is carried out in order to analyze the profitability of the enterprise, as well as to determine the degree of unprofitability of the production process. It should be noted that for any production activities companies spend various energetic resources. These resources include fuel, electricity, water and gas. Since their use is an integral part of production, an increase in output leads to an increase in the cost of these resources.

What are fixed and variable costs used for?

One of the goals of this classification of costs is the optimization of production costs. Taking into account such details during the creation of the financial model of the enterprise allows you to identify those positions that can be reduced to replenish income. Also, such data will help to find out how the cost reduction will affect the production capacity of the enterprise.

Below we propose to consider fixed and variable cost examples based on an organization engaged in the production of kitchen furniture. To carry out production activities, the management of such a company needs to invest in the payment of a lease agreement, utility costs, depreciation costs, purchase Supplies and raw materials, as well as the salaries of employees. After the list of total costs is compiled, all items on this list should be divided into variable and fixed costs.

Knowing and understanding the essence of fixed and variable costs is very important for competent business management.

The category of fixed costs includes depreciation costs, as well as the salary of the administration of the enterprise, including the accountant and director of the company. In addition, this item includes the cost of paying electrical energy used to illuminate the room. Variable costs include the purchase of raw materials and consumables needed to manufacture an incoming order. In addition, this article includes spending on utility bills, since some energy resources are used only in the production process itself. This category may include wages employees involved in the furniture manufacturing process, since the rate directly depends on the volume of products produced. Transportation costs are also included in the category of variables financial costs organizations.

How do manufacturing costs affect the cost of a product?

After it was created financial model future enterprise, it is necessary to analyze the impact of variable and fixed costs on the cost of manufactured goods. This allows you to reorganize the company's activities in order to optimize the production process. Such an analysis will help to understand how many personnel will be required to perform a particular task.

The division of costs into fixed and variable is one of the most important tasks of the financial departments of companies.

Such a plan allows required level investments in the development of the organization. It is possible to reduce the cost of energy resources by using alternative sources, as well as by purchasing more modernized equipment with a high coefficient useful action. Further, it is recommended to analyze variable costs in order to determine their dependence on external factors.

There are a large number of ways in which a company makes a profit, and the fact of cost is important. Costs are the real costs incurred by the company in its operation. If a company is unable to pay attention to the category of costs, then the situation may become unpredictable and the profit margin may decrease.

Fixed production costs must be analyzed when constructing their classification, with which you can determine the idea of ​​their properties and main characteristics. The main classification of production costs includes fixed, variable, general costs.

Fixed costs of production

Fixed costs of production are an element of the break-even point model. They are costs regardless of the volume of output and are opposed to variable costs. The sum of fixed and variable costs represent the total costs of the enterprise. Fixed costs can be made up of several elements:

1. room rental,
2. deductions for depreciation,
3. management and administrative staff costs,
4. the cost of machines, machinery and equipment,
5. security of premises for production,
6. payment of interest on loans to banks.

Fixed costs are the costs of businesses that brief periods are unchanged and do not depend on changes in production volumes. This type of cost must be paid even if the enterprise does not produce anything.

Average fixed costs

Average fixed costs can be obtained by calculating the ratio of fixed costs and output. Thus, average fixed costs represent the fixed cost of producing products. In sum, fixed costs do not depend on production volumes. For this reason, average fixed costs will tend to decrease as the number of products produced increases. This is due to the fact that with an increase in production volumes, the amount of fixed costs is distributed over a larger number of products.

Features of fixed costs

Fixed costs in the short run do not change with changes in output. Fixed costs are sometimes referred to as sunk costs or overheads. Fixed costs include the costs of maintaining buildings, space, and purchasing equipment. The fixed cost category is used in several formulas.

Thus, when determining total costs (TC), a combination of fixed and variable costs is needed. The total costs are calculated by the formula:

This type of cost increases with the increase in production volumes. There is also a formula for determining total fixed costs, which are calculated by dividing fixed costs by a certain volume of manufactured products. The formula looks like this:

Average fixed costs are used to calculate average total costs. Average total costs are found through the sum of average fixed and variable costs according to the formula:

Fixed costs in the short run

In the production of products, living and past labor has been expended. In this case, each enterprise seeks to obtain the greatest profit from its operation. In this case, each company can go in two ways - to sell products more expensive or to reduce their production costs.

In accordance with the time it takes to change the amount used in production processes resources, it is customary to distinguish between long-term and short-term periods of the enterprise. The short-term interval is the time interval during which the size of the enterprise, its output and costs change. At this time, the change in the volume of products occurs through a change in the volume of variable costs. In short-term periods, an enterprise can quickly change only variable factors, including raw materials, labor, fuel, and auxiliary materials. short term divides costs into fixed and variable. During such periods, fixed costs are mainly provided, determined by fixed costs.

The fixed costs of production get their name in accordance with their invariable nature and independence in relation to the volume of production.

The purpose of most business entities is to make a profit from the sale of goods and the provision of services. However, in order to sell a product, you first need to purchase it from another company or produce it yourself. In both cases, the matter is not without costs.

Costs are the cost of the means consumed in the production process (in particular, materials, raw materials, labor of workers, etc.). In other words, these are all economic resources that were used to produce certain goods, expressed in a single monetary equivalent.

Costs that create value final product, services rendered or work performed in a certain period and can be reliably estimated, constitute production costs.

Cost classification

The growing unprofitability of business entities in various industries indicates the need to improve the efficiency of cost management. For their rational management, the costs of the enterprise are classified according to various criteria.

Each manufacturer, due to limited resources in the course of their activities, is faced with the need to compare several alternatives and stop at one of them. This choice is permanent. The costs play key role in solving this problem. They allow you to estimate the cost of production of a particular product. That part of the costs, the value of which depends on a particular option, is taken into account. These costs are called relevant. It is them that the leadership takes into account for adoption. optimal solution. Unlike them, irrelevant costs do not depend on the chosen alternative and will be incurred by the enterprise in any case.

In management accounting, there are also sunk costs. None of the decisions taken can affect their value.

For the purpose of effective management, incremental and marginal costs are calculated. The first company bears when releasing an unplanned batch of products. The cost that a company incurs in producing one additional unit of output is called the marginal cost.

The costs of the enterprise are planned taking into account the expected production volumes, norms and limits. They refer to the planned cost of production. However, there are unplanned costs that actually arise. An example would be marriage.

Depending on whether the amount of costs incurred changes with output volumes, they are classified into fixed and variable production costs.

fixed costs

The peculiarity of the first is that they do not change in a short period of time. If the company decides to increase or, conversely, reduce output, such costs remain at the same level. Fixed costs are rent for production facilities, warehouses, outlets; salaries of administrative staff; building maintenance costs, in particular public utilities. However, it must be taken into account that only the size of the total costs for the entire output is constant. Costs calculated per unit of output will decrease in direct proportion to the increase in production volumes. This is a regularity.

Variable production costs

As soon as a business entity begins to produce products, variable costs arise. Their main share is formed by the used working capital. While fixed costs remain relatively stable for the enterprise, variables directly depend on output volumes. The higher the volume of production, the higher the costs, respectively.

Composition of variable costs

Variable production costs include the cost of materials and raw materials. In the course of their planning, material consumption rates are used for the calculation relative to a unit of the finished product.

The next item of variable costs is labor costs. These include the salary of the main personnel involved in production, auxiliary employees, craftsmen, technologists, as well as service personnel (loaders, cleaners). In addition to the basic salary, bonuses, compensation and incentive amounts, as well as the remuneration of employees who are not in the main state, are taken into account here.

In addition to materials and raw materials, most business entities incur costs for the purchase of auxiliary materials, semi-finished products, spare parts, components and fuel, without which, in most cases, the production process is impossible.

Classification of variable costs

As noted earlier, the value of variable costs depends on the volume of output. However, these indicators do not always change in equal proportions. According to the nature of the dependence of costs on the quantity of products produced, they are classified into progressive, digressive and proportional.

According to the method of including variable costs in the cost of production, they are divided into direct and indirect. If the former are immediately transferred to the value of the issued good, then the latter are distributed among different types of products. For this, a distribution base is selected. It can be the cost of raw materials or the salary of the main workers. Indirect production costs are represented by administrative and management costs, the cost of staff development, social sphere and production infrastructure.

For effective management calculate the total and average variable costs of production. To determine the latter indicator, the total cost is divided by the number of products produced.

Gross production costs of the enterprise

In order to assess the profitability of the production of a particular product, the company needs to calculate the gross (total) costs. In the short term, they are formed by a combination of variable and fixed costs. If, for some reason, the enterprise does not produce products, then the gross costs are equal to the fixed ones. As production increased during economic activity total costs increase by the sum of variables depending on the quantity of manufactured products.