At the beginning of any course in economic theory, a great deal of attention is paid to the study of costs. This is due to the high importance of this element of the enterprise. In the long run, all resources are variable. In the short run, part of the resources remains unchanged, and part changes to reduce or increase output.

In this regard, it is customary to distinguish two types of costs: fixed and variable. Their sum is called total costs and is most often used in various calculations.

fixed costs

They are independent of the final release. That is, no matter what the company does, no matter how many customers it has, these costs will always have the same value. On the chart, they are in the form of a straight horizontal line and are designated FC (from English Fixed Cost).

Fixed costs include:

Insurance payments;
- salaries of management personnel;
- depreciation deductions;
- payment of interest on bank loans;
- payment of interest on bonds;
- rent, etc.

variable costs

They directly depend on the amount of products produced. It is not a fact that the maximum use of resources will allow the company to get the maximum profit, so the issue of studying variable costs is always relevant. On the chart, they are depicted as a curved line and are denoted by VC (from the English Variable Cost).

Variable costs include:

Raw material costs;
- the cost of materials;
- electricity costs;
- fare;
- etc.

Other types of costs

Explicit (accounting) costs are all costs associated with the purchase of resources that are not owned by a particular firm. For example, labor, fuel, materials, etc. Implicit costs are the cost of all the resources that are used in production and that the firm already owns. An example is the salary of an entrepreneur, which he could receive by working for hire.

There are also return costs. Recoverable costs are costs whose value can be recovered in the course of the company's activities. The company cannot receive irrevocable even if it completely ceases its activities. For example, the costs associated with registering a company. In a narrower sense, sunk costs are costs that have no opportunity cost. For example, a machine that was custom-made specifically for this company.

The sum of all costs associated with the manufacture of goods is called the cost price. To make the cost of goods lower, it is necessary, first of all, to reduce production costs. To do this, it is necessary to decompose the amount of expenses into components, for example: raw materials, materials, electricity, wages, rent of premises, etc. It is necessary to consider each component separately, and reduce the costs of those expense items where possible.

Reducing costs in the production cycle is one of the important factors in the competitiveness of the product in the market. It is important to understand that it is necessary to reduce the cost without compromising the quality of the product. For example, if according to technology the thickness of steel should be 10 millimeters, then you should not reduce it to 9 millimeters. Consumers will immediately notice excessive savings, in which case the low price of the goods will not always be a winning position. Competitors with higher quality will have an advantage, despite the fact that their price will be slightly higher.

Types of production costs

From an accounting point of view, all costs can be divided into the following categories:

• direct costs;
• indirect costs.

Direct costs include all fixed costs that remain unchanged with an increase / decrease in the volume or quantity of goods produced, for example: renting an office building for management, loans and leasing, payroll for top management, accounting, managers.

Indirect costs include all costs incurred by the manufacturer in the manufacture of goods in all production cycles. These can be the costs of components, materials, energy resources, wage fund for workers, rent of a workshop, and so on.

It is important to understand that indirect costs will always increase with an increase in production capacity and, as a result, the quantity of goods produced will increase. Conversely, when the quantity of goods produced decreases, indirect costs decrease.

Efficient production

Each enterprise has a financial production plan for a certain period of time. Production always tries to stick to the plan, otherwise it threatens to increase the cost of production. This is due to the fact that direct (fixed) costs are distributed over the number of products produced for a certain period of time. If the production did not fulfill the plan, and made a smaller amount of goods, then the total amount of fixed costs will be divided by the amount of goods produced, which will lead to an increase in its cost. Indirect costs do not have a strong influence on the formation of the cost if the plan is not fulfilled or vice versa, it is overfulfilled, since the number of components or energy expended will be proportionally more or less.

The essence of any manufacturing business is to make a profit. The task of any enterprise is not only in the manufacture of a product, but also in effective management, so that the amount of income is always greater than the total costs, otherwise the enterprise will not be able to be profitable. The greater the difference between the cost of goods and its price, the higher the margin of the business. Therefore, it is so important to conduct business with minimization of all production costs.

One of the key factors in reducing costs is the timely renewal of the equipment and machine tools. Modern equipment is many times higher than the performance of similar machines and machines of the past decades, both in terms of energy efficiency, and in terms of accuracy, productivity and other parameters. It is important to go along with the progress and make upgrades where possible. The installation of robots, smart electronics and other equipment that can replace human labor or increase line productivity is an integral part of a modern and efficient enterprise. In the long term, such a business will have advantages over competitors.

short term - this is the period of time during which some factors of production are constant, while others are variable.

Fixed factors include fixed assets, the number of firms operating in the industry. In this period, the company has the opportunity to vary only the degree of utilization of production capacities.

Long term is the length of time during which all factors are variable. In the long run, the firm has the ability to change the overall dimensions of buildings, structures, the amount of equipment, and the industry - the number of firms operating in it.

Fixed Costs (FC) - these are costs, the value of which in the short run does not change with an increase or decrease in the volume of production.

Fixed costs include costs associated with the use of buildings and structures, machinery and production equipment, rent, major repairs, as well as administrative costs.

Because As production increases, total revenue increases, then average fixed costs (AFC) are a decreasing value.

Variable Costs (VC) - These are costs, the value of which varies depending on the increase or decrease in the volume of production.

Variable costs include the cost of raw materials, electricity, auxiliary materials, labor costs.

Average Variable Costs (AVC) are:

Total Cost (TC) - a set of fixed and variable costs of the company.

Total costs are a function of the output produced:

TC = f(Q), TC = FC + VC.

Graphically, the total costs are obtained by summing the curves of fixed and variable costs (Figure 6.1).

The average total cost is: ATC = TC/Q or AFC +AVC = (FC + VC)/Q.

Graphically, ATC can be obtained by summing the AFC and AVC curves.

Marginal Cost (MC) is the increase in total cost due to an infinitesimal increase in production. Marginal cost is usually understood as the cost associated with the production of an additional unit of output.

20. Production costs in the long run

The main feature of costs in the long run is the fact that they are all variable - the firm can increase or decrease capacity, and it also has enough time to decide to leave this market or enter it from another industry. Therefore, in the long run, they do not single out average fixed and average variable costs, but analyze the average cost per unit of output (LATC), which in essence are both average variable costs.

To illustrate the situation with costs in the long run, consider a conditional example. Some enterprise has been expanding for quite a long period of time, increasing its production volumes. We will conditionally divide the process of expanding the scale of activities into three stages within the analyzed long-term period, three short-term ones, each of which corresponds to different sizes of the enterprise and volumes of output. For each of the three short-term periods, short-term average cost curves can be constructed for different enterprise sizes - ATC 1, ATC 2 and ATC 3. The general curve of average costs for any volume of production will be a line consisting of the outer parts of all three parabolas - graphs of short-term average costs.

In our example, we used the situation with a 3-stage expansion of the enterprise. A similar situation can be assumed not for 3, but for 10, 50, 100, etc. short-term periods within a given long-term one. Moreover, for each of them, you can draw the corresponding graphs of the ATS. That is, we actually get a lot of parabolas, a large set of which will lead to the alignment of the outer line of the graph of average costs, and it will turn into a smooth curve - LATC. Thus, long run average cost curve (LATC) is a curve enveloping an infinite number of curves of short-term average production costs that are in contact with it at their minimum points. The long-run average cost curve shows the lowest cost of producing a unit of output at which any level of output can be provided, provided that the firm has time to change all factors of production.

There are also marginal costs in the long run. Long Run Marginal Cost (LMC) show the change in the total cost of the enterprise in connection with a change in the volume of output of finished products by one unit in the case when the company is free to change all types of costs.

The long-run average and marginal cost curves are related to each other in the same way as the short-run cost curves: if LMC is below LATC, then LATC falls, and if LMC is above laTC, then laTC rises. The rising part of the LMC curve intersects the LATC curve at a minimum point.

Three segments can be distinguished on the LATC curve. On the first of them, long-term average costs are reduced, on the third, on the contrary, they increase. It is also possible that there will be an intermediate segment on the LATC chart with approximately the same level of costs per unit of output for different values ​​of output - Q x . The arcuate nature of the long-run average cost curve (the presence of decreasing and increasing sections) can be explained using patterns called positive and negative effects of growth in scale of production, or simply economies of scale.

Positive economies of scale (mass production, economies of scale, increasing returns to scale) are associated with lower unit costs as output increases. Increasing returns to scale (positive returns to scale) takes place in a situation where the volume of production (Q x) grows faster than the costs rise, and, consequently, the LATC of enterprises fall. The existence of a positive effect of scale of production explains the downward character of the LATS graph in the first segment. This is explained by the expansion of the scope of activities, which entails:

1. Growth of labor specialization. The specialization of labor implies that the diverse production duties are divided among different workers. Instead of performing several different production operations simultaneously, which would be the case with a small scale of enterprise activity, in conditions of mass production, each worker can be limited to one single function. Hence the growth of labor productivity, and consequently, the reduction of costs per unit of output.

2. The growth of specialization of managerial work. As the size of the enterprise grows, the opportunities to take advantage of the specialization in management increase, when each manager can focus on one task and perform it more efficiently. This ultimately increases the efficiency of the enterprise and entails a reduction in costs per unit of output.

3. Efficient use of capital (means of production). From a technological point of view, the most efficient equipment is sold in the form of large, expensive kits and requires large production volumes. The use of this equipment by large manufacturers can reduce costs per unit of output. Such equipment is not available to small firms due to small production volumes.

4. Savings from the use of secondary resources. A large enterprise has more opportunities for the production of by-products than a small firm. A large firm, therefore, uses the resources involved in production more efficiently. Hence the lower cost per unit of output.

The positive scale effect of production in the long run is not unlimited. Over time, the expansion of the enterprise can lead to negative economic consequences, cause a negative effect of scale of production, when the expansion of the volume of the company's activities is associated with an increase in production costs per unit of output. Negative economies of scale occurs when the cost of production rises faster than its volume and, therefore, LATC rises as output increases. Over time, an expanding company may face negative economic facts due to the complexity of the enterprise management structure - the management floors that separate the administrative apparatus and the production process proper are multiplying, top management is significantly distant from the production process at the enterprise. There are problems associated with the exchange and transfer of information, poor coordination of decisions, bureaucratic red tape. The effectiveness of interaction between individual divisions of the company decreases, management flexibility is lost, control over the implementation of decisions made by the management of the company becomes more complicated and difficult. As a result, the efficiency of the functioning of the enterprise decreases, the average production costs increase. Therefore, the firm, when planning its production activities, needs to determine the limits of scaling up production.

In practice, there are cases when the LATC curve is parallel to the abscissa axis at a certain interval - there is an intermediate segment on the graph of long-term average costs with approximately the same level of costs per unit of output for different values ​​of Q x . Here we are dealing with constant returns to scale. Constant returns to scale occurs when costs and output increase at the same rate and, therefore, LATC remains constant at all outputs.

The appearance of the long-run cost curve allows us to draw some conclusions about the optimal size of the enterprise for different sectors of the economy. Minimum effective scale (size) of the enterprise- the level of output, starting from which the effect of economies due to the increase in the scale of production ceases. In other words, we are talking about such values ​​of Q x at which the firm achieves the lowest costs per unit of output. The level of long-term average costs caused by the effect of economies of scale influences the formation of the effective size of the enterprise, which, in turn, affects the structure of the industry. To understand, consider the following three cases.

1. The long-term average cost curve has a long intermediate segment, for which the LATC value corresponds to a certain constant (Figure a). This situation is characterized by the situation when enterprises with production volumes from Q A to Q B have the same amount of costs. This is typical for industries that include enterprises of different sizes, and the level of average production costs will be the same for them. Examples of such industries: woodworking, forestry, food production, clothing, furniture, textiles, petrochemicals.

2. The LATC curve has a rather long first (descending) segment, on which a positive effect of the scale of production operates (Figure b). The minimum value of costs is achieved with large volumes of production (Q c). If the technological features of the production of certain goods generate a long-run average cost curve of the described form, then large enterprises will be present in the market for these goods. This is typical, first of all, for capital-intensive industries - metallurgy, engineering, automotive, etc. Significant economies of scale are also observed in the production of standardized products - beer, confectionery, etc.

3. The falling segment of the graph of long-term average costs is very insignificant, the negative effect of scale of production quickly begins to work (figure c). In this situation, the optimal volume of production (Q D) is achieved with a small amount of output. In the presence of a large-capacity market, one can assume the possibility of the existence of many small enterprises that produce this type of product. This situation is typical for many sectors of the light and food industries. Here we are talking about non-capital-intensive industries - many types of retail trade, farms, etc.

Selection of factors of production that minimize production

Let's start by looking at a fundamental problem that all firms face: how to choose the right combination of factors to achieve a given level of output at the lowest possible cost. To simplify, let's take two variables: labor (measured in hours of work) and capital (measured in hours of use of machinery and equipment). We start from the assumption that both labor and capital can be hired or rented in competitive markets. The price of labor is equal to the wage rate w, and the price of capital is equal to the equipment rent r. We assume that capital is "leased" rather than acquired, and therefore can put all business decisions on a comparative basis. Since labor and capital are attracted on a competitive basis, we assume that the price of these factors is constant. We can then focus on the optimal combination of factors of production without worrying that large purchases will cause a jump in the prices of the factors of production used.

22 Determining Price and Output in a Competitive Industry and Under Pure Monopoly A pure monopoly increases inequality in the distribution of income in society as a result of monopoly market power and charging higher prices at the same cost than in pure competition, which allows monopoly profit. Under conditions of market power, it is possible for a monopolist to use price discrimination when different prices are assigned to different buyers. Many of the purely monopoly firms are natural monopolies subject to mandatory government regulation under antitrust laws. To study the case of a regulated monopoly, we use graphs of demand, marginal revenue and costs of a natural monopoly, which operates in an industry where economies of scale are manifested at all output volumes. The higher the firm's output, the lower its average cost ATC. In connection with such a change in average costs, the marginal cost of MC at all outputs will be lower than average costs. This is due to the fact that, as we have established, the marginal cost graph intersects the average cost graph at the point of minimum ATC, which is absent in this case. The determination of the optimal volume of production by a monopolist and the possible methods of its regulation will be shown in Fig. Price, marginal revenue (marginal income) and costs of a regulated monopoly As can be seen from the graphs, if this natural monopoly were unregulated, then the monopolist, in accordance with the rule MR = MC and the demand curve for his products, chose the quantity of production Qm and the price Pm, which allowed to get the maximum gross profit. However, the price Pm would exceed the socially optimal price. The socially optimal price is the price that ensures the most efficient distribution of resources in society. As we established earlier in Topic 4, it must correspond to marginal cost (P = MC). On fig. is the price Po at the point of intersection of the demand curve D and the marginal cost curve MC (point O). The output at this price is Qo. However, if the state authorities fixed the price at the level of the socially optimal price Po, then this would lead the monopolist to losses, since the price Po does not cover the average gross costs of the ATS. To solve this problem, the following main options for regulating a monopolist are possible: Allocation of state subsidies from the budget of the monopoly industry to cover the gross loss if a fixed price is set at the socially optimal level. Giving the monopoly industry the right to conduct price discrimination in order to obtain additional income from more solvent consumers to cover the loss of the monopolist. Setting a regulated price at a level that provides a normal profit. In this case, the price is equal to the average gross cost. In the figure, this is the price Pn at the point of intersection of the demand curve D and the ATC average gross cost curve. Output at a regulated price Pn is equal to Qn. The price Pn allows the monopolist to recover all economic costs, including a normal profit.

23. This principle is based on two main points. First, the firm must decide whether it will produce the good. It should be produced if the firm can make either a profit or a loss that is less than fixed costs. Secondly, it is necessary to decide how much goods should be produced. This output must either maximize profits or minimize losses. Formulas (1.1) and (1.2) are used in this technique. Next, you should produce such a volume of production Qj, at which the profit R is maximized, i.e.: R(Q) ^max. The analytical definition of the optimal production volume is as follows R, (Qj) = PMj Qj - (TFCj + UVCj QY). Let us equate the partial derivative with respect to Qj to zero: dR, (Q,) = 0 dQ, " (1.3) RMg - UVCj Y Qj-1 = 0. where Y is the coefficient of change in variable costs. The value of gross variable costs varies depending on the change in volume production. The increase in the amount of variable costs associated with an increase in production by one unit is not constant. It is assumed that variable costs increase at an accelerating rate. This is because fixed resources are fixed, and variable resources increase in the process of production growth. Thus, marginal productivity falls and, consequently, variable costs increase at an increasing pace. "To calculate variable costs, it is proposed to apply a formula, and according to the results of statistical analysis, it has been established that the coefficient of change in variable costs (Y) is limited to the interval 1< Y < 1,5" . При Y = 1 переменные издержки растут линейно: TVCг = UVCjQY, г = ЇЯ (1.4) где TVCг - переменные издержки на производство продукции i-го вида. Из (1.3) получаем оптимальный объем производства товара i-го вида: 1 f РМг } Y-1 QOPt = v UVCjY , После этого сравнивается объем Qг с максимально возможным объемом производства Qjmax: Если Qг < Qjmax, то базовая цена Рг = РМг. Если Qг >Qjmax, then if there is a production volume Qg, at which: Rj(Qj) > 0, then Рg = PMh Rj(Qj)< 0, то возможны два варианта: отказ от производства i-го товара; установление Рг >RMg. The difference between this technique and approach 1.2 is that it determines the optimal sales volume at a given price. It is then also compared to the maximum "market" sales volume. The disadvantage of this technique is the same as that of 1.2 - it does not take into account the entire possible composition of the enterprise's products in conjunction with its technological capabilities.

Fixed costs (TFC), variable costs (TVC) and their schedules. Determination of total costs

In the short run, some resources remain unchanged, while others change to increase or decrease total output.

In accordance with this, the economic costs of the short-term period are divided into fixed and variable costs. In the long run, this division loses its meaning, since all costs can change (i.e., they are variable).

Fixed Costs (FC) are costs that do not depend in the short run on how much the firm produces. They represent the costs of its fixed factors of production.

Fixed costs include:

• - payment of interest on bank loans;
• - depreciation deductions;
• - payment of interest on bonds;
• - salaries of management personnel;
• - rent;
• - insurance payments;

Variable Costs(VC) These are costs that depend on the firm's output. They represent the costs of the firm's variable factors of production.

Variable costs include:

• - wage;
• - fare;
• - electricity costs;
• - the cost of raw materials and materials.

From the graph we see that the wavy line depicting variable costs rises with an increase in production volume.

This means that as production increases, variable costs increase:

initially they rise in proportion to the change in output (until point A is reached)

then savings in variable costs are achieved in mass production, and the rate of their growth decreases (until point B is reached)

the third period, reflecting the change in variable costs (moving to the right from point B), is characterized by an increase in variable costs due to violation of the optimal size of the enterprise. This is possible with an increase in transportation costs due to the increased volumes of imported raw materials, the volumes of finished products that need to be sent to the warehouse.

General (gross) costs (TC)- is all the costs at a given point in time, necessary for the production of a product. TC = FC + VC

Formation of the curve of average long-term costs, its schedule

The scale effect is a phenomenon of the long run, when all resources are variable. This phenomenon should not be confused with the known law of diminishing returns. The latter is a phenomenon of an exceptionally short period, when fixed and variable resources interact.

At constant prices for resources, economies of scale determine the dynamics of costs in the long run. After all, it is he who shows whether the increase in production capacity leads to a decrease or increase in returns.

It is convenient to analyze the efficiency of resource use in a given period using the long-term average cost function LATC. What is this feature? Suppose that the Moscow government decides to expand the city-owned AZLK plant. With the existing production capacity, cost minimization is achieved with a production volume of 100,000 vehicles per year. This state of affairs is shown by the ATC1 short-run average cost curve corresponding to a given scale of production (Fig. 6.15). Suppose that the introduction of new models, which are scheduled to be released jointly with Renault, increased the demand for cars. The local design institute proposed two plant expansion projects corresponding to two possible scales of production. Curves ATC2 and ATC3 are short run average cost curves for this large scale of production. When deciding on an option to expand production, the management of the plant, in addition to taking into account the financial possibilities of investment, will take into account two main factors, the amount of demand and the value of the costs with which the required production volume can be produced. It is necessary to choose the scale of production that will ensure the satisfaction of demand at the lowest cost per unit of output.

ILong run average cost curve for a specific project

Here, the points of intersection of neighboring curves of short-term average costs (points A and B in Fig. 6.15) are of fundamental importance. Comparison of the volumes of production corresponding to these points and the magnitude of demand determines the need to increase the scale of production. In our example, if the amount of demand does not exceed 120 thousand cars per year, it is advisable to carry out production on a scale described by the ATC1 curve, i.e., at existing capacities. In this case, the achievable unit costs are minimal. If demand rises to 280,000 vehicles per year, then a plant with a production scale described by the ATC2 curve would be the most suitable. So, it is expedient to carry out the first investment project. If demand exceeds 280,000 vehicles per year, a second investment project will have to be implemented, i.e., to expand the scale of production to the size described by the ATC3 curve.

In the long term, there will be enough time to implement any possible investment project. Therefore, in our example, the long-run average cost curve will consist of successive segments of short-run average cost curves up to the points of their intersection with the next such curve (thick wavy line in Fig. 6.15).

Thus, each point of the LATC long-run cost curve determines the minimum achievable cost per unit of output at a given volume of production, taking into account the possibility of changing the scale of production.

In the limiting case, when a plant of the appropriate scale is built for any amount of demand, i.e., there are infinitely many curves of short-term average costs, the curve of long-term average costs from a wave-like one changes into a smooth line that envelops all curves of short-term average costs. Each point of the LATC curve is a point of contact with a certain ATCn curve (Fig. 6.16).

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 of an enterprise 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 the main 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;

salary of the main production personnel (together with accruals);

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 company's products, you should divide the total amount of variable costs incurred by the total amount of finished products, expressed in physical terms.

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 transportation services, then drivers and car depreciation will be direct costs, while for other types of business, maintaining vehicles and remunerating drivers will be indirect costs.

If the cost object is a warehouse, then the storekeeper's wages will be included in direct costs, and if the cost object is the cost of manufactured and sold products, then these costs (storekeeper's wages) will be indirect costs due to the impossibility of unambiguously and in the only way to attribute it to the object costs - 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 problems related to planning.

Still have questions about accounting and taxes? Ask them on the accounting forum.

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 accompanying operational ... in the structure of the cost of fixed and variable costs. The effect of operating leverage arises... variable and conditionally constant. Conditionally variable costs change in proportion to the change in the volume of provided ... constant. Conditionally fixed costs Conditionally variable costs Maintaining and maintaining buildings and ... the price of the service falls below the variable costs, it remains only to curtail production, ...

Example 2. In the reporting period, variable costs for the release 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 of own production are taken into account at 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 volume ... , in which only variable costs are taken into account. Marginal profit - revenue ...