Which list contains only variable costs. Does it make sense to divide costs into variable and fixed costs? Variable and fixed costs

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Fixed Costs: Accountant Details

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• Actual strategic and tactical tasks of the management team of the enterprise

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In the activity of any enterprise, the adoption of correct management decisions is based on the analysis of its performance indicators. One of the objectives of such an analysis is to reduce production costs, and, consequently, increase the profitability of the business.

Fixed 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 purposes of analysis in computer programs at enterprises, it is convenient to provide for automatic allocation of costs to fixed and variable based on primary documents, in accordance with the principle adopted in the organization. This information is very important for determining the "break-even point" of the business, as well as evaluating the profitability of various types of products.

variable costs

to variable costs include costs that are constant per unit of output, but their total amount is proportional to the volume of output. These include the cost of raw materials, consumables, energy resources involved in the main production, the salary of the main production personnel (together with accruals) and the cost of transportation services. These costs are directly related to the cost of production. In value terms, variable costs change when the price of goods or services changes. Unit variable costs, for example, for raw materials in the physical dimension, may decrease with an increase in production volumes due, for example, to a decrease in losses or costs for energy resources and transport.

Variable costs are either direct or indirect. If, for example, the enterprise produces bread, then the cost of flour is a direct variable cost, which increases in direct proportion to the volume of bread produced. Direct variable costs may decrease with the improvement of the technological process, the introduction of new technologies. However, if the refinery refines oil and as a result receives, for example, gasoline, ethylene and fuel oil in one technological process, then the cost of oil for the production of ethylene will be variable, but indirect. Indirect variable costs in this case, it is usually taken into account in proportion to the physical volumes of production. So, for example, if during the processing of 100 tons of oil, 50 tons of gasoline, 20 tons of fuel oil and 20 tons of ethylene are obtained (10 tons are losses or waste), then the cost of 1.111 tons of oil (20 tons of ethylene + 2.22 tons of waste) is attributed to the production of one ton of ethylene /20 tons of ethylene). This is due to the fact that in a proportional calculation, 20 tons of ethylene account for 2.22 tons of waste. But sometimes all the waste is attributed to one product. For calculations, data from technological regulations are used, and for analysis, actual results for the previous period.

The division into direct and indirect variable costs is conditional and depends on the nature of the business.

Thus, the cost of gasoline for the transportation of raw materials during oil refining is indirect, and for a transport company it is direct, as it is directly proportional to the volume of transportation. The wages of production personnel with accruals are classified as variable costs with piecework wages. However, with time wages, these costs are conditionally variable. When calculating the cost of production, planned costs per unit of production are used, and in the analysis, actual costs, which may differ from planned costs, both upwards and downwards. Depreciation of fixed assets of production, referred to a unit of output, is also a variable cost. But this relative value is used only when calculating the cost of various types of products, since depreciation charges, in themselves, are fixed costs / costs.

Among the expenses of any manufacturing enterprise there are cost items - the so-called forced costs for the acquisition and (or) use of various factors necessary for the production of products.

These costs are of an economic nature and are responsible for the full range of payments that the company is obliged to repay to third-party suppliers.

Cost types

All economic costs of the enterprise for a short period of activity can be divided into fixed and variable.

Permanent costs - those types of payments that are permanent and do not affect the volume of output. These include the cost of renting premises, installing new production lines, maintaining the administration, industrial risk insurance services, paying interest on loans received, and so on.

Variables Costs are those types of costs that directly affect the volume of output. These include the purchase of raw materials, the remuneration of production workers, the purchase of packaging, containers, logistics costs, etc.

The most correct definition of variable costs is that they are absent when production is completely stopped, in contrast to fixed costs that exist throughout the life of the enterprise.

Separation of costs into fixed and variable is convenient in determining the development strategy enterprises for a certain period of time. In the long run, all types of costs can be attributed to variables - since all of them, directly or indirectly, are aimed at increasing the output of finished products and generating income from production.

For cost types, see the following video tutorial:

The value of variable costs

In a short period of time, an enterprise cannot radically change the way of producing products, change the parameters of production capacities, and launch the production of alternative goods.

But during this time, you can change the indexes of variable costs. This is the essence of the analysis of variable costs - by adjusting the individual parameters, change the volume of output.

It is impossible to globally increase the volume of production using this parameter - at a certain stage, a consistent increase in variable costs does not lead to a significant increase in the rate of output. To do this, you need to change part of the fixed costs - rent an additional production facility, for example, or launch another production line.

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Types of variable costs

Modern variable cost sharing includes such types of costs:

What applies to them

The main variable costs, the parameters of which affect the analysis of the production situation, can be changed, depending on the strategic goals that the company intends to achieve for a certain period.

material

This is the name of the share of costs in the final product.

In total, this type of cost reflects the cost:

• source materials and raw materials purchased from third party suppliers; these materials must be part of the product or be part of the components necessary to create it;
• services and works provided by third parties that are necessary for the production process of the final product. This includes the control system, carrying out the necessary tests, operating costs for the maintenance of buildings and industrial facilities, maintenance of other fixed assets, and so on.

Expenses required for the sale of products

This includes all logistics costs:

• transfer of finished products to the warehouses of the enterprise;
• accounting, transfer and write-off;
• forwarding costs for the delivery of finished products to distributors' warehouses or retail outlets.

Depreciation

During operation, all production lines gradually reduce their efficiency due to moral or physical wear and tear. To avoid the negative impact of depreciation, each company is required to transfer certain funds to a special account so that at the end of the service it will be possible to upgrade obsolete equipment or buy new ones.

The deduction procedure is established by depreciation rates and is charged according to the book value. The cost of depreciation must be included in the cost of finished products.

Wages in production

The labor of workers employed in the production of products also refers to the variable costs of the enterprise. This should also include all mandatory payments and deductions accrued in accordance with applicable law.

Calculation procedure

A simple procedure for calculating variable costs - summary method. Add up all variable costs over a given period of time.

Let's take the simplest version of calculating variable costs.

Let's say that during the year the company incurred the following expenses:

1. 35 000 rub. – raw materials and materials necessary for the production of products;
2. 20 000 rub. – packaging and logistics costs;
3. 100 000 rub. - wage fund for production workers.

The total total indicator of variable costs will be equal to the sum of all listed. Thus, the sum of variable costs for this period will be 155,000 rubles.

During this period, 500 thousand units of finished products were produced and sold. In this way, unit variable costs in this case will be equal:

155,000/ 500,000=0.31 rub.

If the company managed to produce more than the norm - for example, 600,000 units of products, cost price of each product will be equal to 155,000 / 600,000 \u003d 0.26 rubles.

The larger the output parameter, the lower the unit cost index.

Data analysis

The balance of variable and fixed costs forms - the state when the company produces products without harming itself, but without making a profit. It is important to determine this ratio even during the production planning process in order to obtain a figure for the minimum volume of output at which the enterprise will not incur losses.

Let's supplement our previous example: with a given volume of sales, the amount of fixed costs will be 80,000 rubles, and the planned cost of a unit of production is 1.5 rubles.

In this case all company costs are 40,000 + 155,000 = 195,000 rubles.

In this case break even calculated as

TBU \u003d 195000 / (1.5-0.31) \u003d 163,870 units of production.

As you can see from the example, to cover all organizational costs, you need to produce more than 160 thousand units of goods and successfully sell it.

Variable cost rate

The rate of variable costs in the financial activity of the enterprise is determined by the indicators of the estimated profit when the level of production costs changes.

For example, the introduction of new equipment can reduce the size of the payroll due to a decrease in the number of employees in production. Based on the above example, the wage fund indicator decreased by a quarter and amounted to 75,000 rubles. At the same time, the break-even point amounted to 109,243 thousand units of output. Based on this calculation, you can inversely determine the rate of variable costs required to make a profit.

Market economies use the variable cost method as the most indicative pricing index finished products.

To benefits such a method may include:

• reliability - all calculations are based on reliable indicators of variable costs;
• there are no problems with the calculation of fixed costs, which are directly tied to the cost;
• allow you to solve the issue of pricing and help to carry out management accounting.

To shortcomings this method can include:

• lack of indicators of demand and competitiveness;
• the impossibility of applying the method for enterprises where management personnel is more than 50% of all employees of the company;
• forced rise in prices caused by technical failures of production lines.

For costing the formula is used:

Price = Unit Variable Costs. + Surcharge for 1 unit.

In our case variable unit costs amounted to 0.31 rubles,

Unit fixed costs- fixed costs of 40,000 rubles, divided by the quantity of goods produced in 500,000 pieces. = 0.08 rub.

Let the target profit be $2.

Surcharge it will be calculated according to the formula:

Supplement for 1 unit = Target profit per unit + Fixed unit costs.

The allowance was 2 +0.08 = 2.08 rubles

In this case, the unit price is

0.31 + 2.08= 2.39 rubles

As you can see, the method really works and can predict the approximate selling price of finished products. But this end result must be adjusted by market indicators - the cost of products from competitors, for example.

For information on what fixed and variable costs are, and what are the rules for calculating them, see the following video lecture:

Production costs are in fact the payment for the acquired factors. Their research should provide certain volumes of production in order to completely cover costs and provide an acceptable profit. Income is a dynamic motivation of organizational activity, costs are an important component for economic analysis. Organizations approach profits and costs differently. Income should provide maximum production opportunities for a given value of costs. The greatest efficiency of production will be at the lowest cost. They will include the cost of producing the product. For example, the purchase of raw materials, electricity, payment of working hours, depreciation, organization of production. Part of the proceeds will be used to pay off the incurred costs of production, and the rest will remain profit. This allows us to assert that the costs are less than the price of products by the amount of profit.

The above statements lead to the conclusion: production costs are the costs of obtaining goods, and one-time costs arise only during the initial organization of production.

Before the company there are many ways to make a profit and convert it into cash. For each method, the leading factors will be costs - the real costs that the organization incurs during production activities in order to obtain a positive income. If management ignores spending, then financial and economic activity becomes unpredictable. Profit in such an enterprise begins to decrease, and eventually becomes negative, which means a loss.

In practice, this happens due to the inability to describe production costs in detail. Even an experienced economist will not always understand the structure of costs, the existing relationships and the main factors of production.

To analyze the costs should begin with the classification. It will provide a comprehensive understanding of the main characteristics and properties of costs. Costs are a complex phenomenon and it is impossible to represent them with the help of one classification. Generally speaking, each enterprise can be considered trading, manufacturing or servicing. The information presented applies to all enterprises, but to a greater extent - production, as they have a more complex cost structure.

The main differences in the general classification will be the place where the costs appear, their relation to the areas of activity. The above classification is used to systematize expenses in profit reports, for a comparative analysis of the required types of expenses.

Primary types of expenses:

• Production

1. production invoices;
2. direct materials;
3. direct labor.

• non-production

1. selling expenses;
2. administrative expenses.

Direct costs are always variable. But in general production, commercial and general business costs, constant and variable costs coexist. A simple example: paying for a mobile phone. The constant component will be the subscription fee, and the variable is determined by the amount of time agreed and the availability of long-distance calls. When accounting for costs, it is necessary to clearly understand the classification of costs and correctly separate them.

According to the classification used, there are non-production and production costs. Production costs include: payment of direct labor, use of direct materials, production overheads. Spending on direct materials consists of the costs that the company had when purchasing raw materials and components, in other words, what is directly related to production and transferred to finished products.

Under the costs of direct labor is meant the payment of production personnel and the efforts associated with the manufacture of goods. The payment of shop foremen, managers and equipment adjusters is a production overhead. It is worth considering the accepted convention in the definition in modern production, where "real direct" labor is rapidly declining in highly automated production. In some enterprises, production is fully automated, which does not require direct labor. But the designation "basic production workers" is retained, the payment is considered to be the cost of direct labor of the enterprise.

Production overheads include the remaining costs of providing production. In practice, the structure is polysyllabic, the volumes are scattered over a wide range. Typical production overheads are considered to be indirect materials, electricity, indirect labor, equipment maintenance, heat energy, repair of premises, part of the tax payments that are included in gross costs and others that are immanently related to the production of products in the company.

Non-manufacturing costs are divided into implementation costs and administrative costs. The cost of selling a product consists of expenses that were directed to the safety of products, promotion on the market and delivery. Administrative costs are the totality of all expenses for the management of the company - the maintenance of the management apparatus: the planning and financial department, accounting.

Financial analysis implies a gradation of costs: variable and fixed. The division is justified by a contradictory reaction to a change in production volume. Western theory and practice of management accounting takes into account a number of distinguishing features:

• cost sharing method;
• conditional classification of costs;
• the impact of production volume on cost behavior.

Systematization is important for planning and analyzing production. Fixed costs remain relatively constant in magnitude. With an increase in production, they turn out to be an important component of cost reduction, with an increase in volume, their share in a unit of finished goods decreases.

variable costs

Variable costs will be costs, one hundred percent of which is directly proportional to the production volume. Variable costs are directly proportional to production volumes. Growth occurs with an increase in output and vice versa. However, per unit of output, variable costs will remain constant. They are usually classified by percentage changes depending on the volume of production:

• progressive;
• degressive;
• proportional.

Variable management should be based on economy. It is achieved with the help of organizational and technical measures that reduce the share of costs per unit of goods:

• productivity growth;
• reducing the number of workers;
• decrease in stocks of materials, finished products in a difficult economic period.

Variable costs are used in the analysis of the break-even production, the choice of economic policy, and the planning of economic activity.

Fixed costs are costs that are not 100% determined by production. Fixed costs per unit of output will decrease when the volume of production is multiplied, and vice versa, increase when the volume decreases.

Fixed costs are associated with the existence of the organization and are paid even in the absence of production - rent, payment for management activities, depreciation of buildings. Fixed costs, in other words, are called overhead, indirect.

The high level of fixed costs is determined by labor characteristics, which depend on mechanization and automation, capital intensity of products. Fixed costs are less prone to sudden changes. In the presence of objective constraints, there is a great potential for reducing fixed costs: the sale of unnecessary assets. Reduction of administrative and management expenses, reduction of utility bills due to energy savings, registration of equipment for rent or leasing.

mixed costs

In addition to variable and fixed costs, there are other costs that do not lend themselves to the above classification. They will be constant and variable, called "mixed". The following methods of classifying mixed costs into variable and fixed parts are accepted in economics:

• method of experimental estimates;
• engineering or analytical method;
• graphical method: the dependence of the volume on the cost of goods is established (supplemented with an analytical calculation);
• economic and mathematical methods: least squares method; correlation method, the method of the lowest and highest point.

Each industry has its own dependence of each type of cost on production volume. It may turn out that some expenses in one industry are considered variable, and in another - fixed.

It is impossible to use a single classification of the division of costs into variables or constants for all industries. The nomenclature of fixed costs cannot be the same for different industries. It should take into account the specifics of production, the enterprise and the procedure for attributing costs to prime cost. The classification is created individually for each area, technology or production organization.

The standards allow differentiating costs by changing the volume of production.

Fixed and variable costs are the basis of a common economic method. It was first proposed by Walter Rauthenstrauch in 1930. This was a planning option, which in the future was called the break-even schedule.

It is actively used by modern economists in various modifications. The main advantage of the method is that it allows you to quickly and accurately predict the main performance indicators of the company when market conditions change.

When constructing, the following conventions are used:

• the price of raw materials is taken as a constant value for the considered planning period;
• fixed costs remain unchanged in a certain range of sales;
• variable costs remain constant per unit of goods when the volume of sales changes;
• uniformity of sales is accepted.

The horizontal axis indicates production volumes as a percentage of the used capacity or per unit of goods produced. The verticals indicate income, production costs. All costs on the chart are usually divided into variable (PI) and fixed (POI). Additionally, gross costs (VI), sales proceeds (VR) are applied.

The intersection of revenue and gross costs forms the break-even point (K). In this place, the company will not make a profit, but also does not incur losses. The volume at the break-even point is called critical. If the real value is less than the critical value, then the organization works in the "minus". If production volumes are greater than the critical value, then profit is formed.

You can determine the break-even point using calculations. Revenue is the total value of costs and profits (P):

VR \u003d P + PI + POI,

AT break-even point P=0, respectively, the expression takes a simplified form:

BP = PI + POI

Revenue will be the product of the cost of production and the volume of goods sold. Variable costs are rewritten through the issued volume and SPI. Given the above, the formula will look like:

Ts * Vkr \u003d POI + Vkr * SPI

• where SPI- variable costs per unit of output;
• C- the cost of a unit of goods;
• Tue- critical volume.

Vcr \u003d POI / (C-SPI)

Break-even analysis allows you to determine not only the critical volume, but also the volume to obtain the planned income. The method allows you to compare several technologies and choose the most optimal one.

Cost and Cost Reduction Factors

The analysis of the actual cost of production, the determination of reserves, the economic effect of the reduction is based on calculations of economic factors. The latter allow you to cover most of the processes: labor, its objects, means. They characterize the main areas of work to reduce the cost of goods: productivity growth, efficient use of equipment, introduction of new technologies, modernization of production, cheaper procurement, reduction of administrative staff, reduction of marriage, non-production losses, expenses.

Savings on cost reduction is determined by the following factors:

• The growth of the technical level. This happens with the introduction of more advanced technologies, automation and mechanization of production, better use of raw materials and new materials, revision of technological characteristics and product design.
• Modernization of labor organization and productivity. Cost reduction occurs when the production organization, methods and forms of labor are changed, which is facilitated by specialization. Improve management while minimizing costs. Reconsider the use of fixed assets, improve logistics and minimize transportation costs.
• Reduction of semi-fixed costs by means of changing the structure and volume of production. This reduces depreciation, changes the range, quality of goods. The volume of output does not directly affect the semi-fixed costs. With an increase in volumes, the share of semi-fixed costs per unit of goods will decrease, and, accordingly, the cost will also decrease.
• Better use of natural resources is required. It is necessary to take into account the composition and quality of the source material, changes in the methods of extraction and finding deposits. This is an important factor that shows the influence of natural conditions on variable costs. The analysis should be based on sectoral methods of the extractive industry.
• Industry factors, etc. This group includes the development of new shops, production and production units, as well as preparation for them. Reserves for cost reduction are periodically reviewed in case of liquidation of old and commissioning of new industries, which will improve economic factors.

Reducing fixed costs:

• reduction of administrative and commercial expenses;
• reduction of commercial services;
• load increase;
• sale of unused intangible and current assets.

Variable Cost Reduction:

• reducing the number of main and auxiliary workers by increasing labor productivity;
• use of a time-based form of payment;
• preference for resource-saving technologies;
• using more economical materials.

The listed methods lead to the following conclusion: cost reduction should mainly occur due to minimization of preparatory processes, development of a new range of technologies.

Changing the range of products to become an important factor in determining the level of production costs. With excellent profitability, a shift in the assortment should be associated with improving the structure and increasing production efficiency. This can either increase or decrease production costs.

The classification of costs into variable and fixed has a number of advantages, which are actively used by many enterprises. In parallel with it, accounting and grouping of costs by cost is used.

Let's start with a few definitions:

Costs are the costs of living and materialized labor for the production and sale of products, works, services:

Expenses- consumed resources or money that needs to be paid for goods or services (in domestic economic practice, the term "costs" is often used to characterize all the costs of an enterprise for a certain period);

Expenses this is only that part of the costs that was incurred in connection with the receipt of income, and in accordance with the International Accounting Standards, expenses include losses and costs that arise in the course of the main activity of the enterprise in connection with the receipt of income, that is, in accounting, income should be correlated with the costs of obtaining them, which in this case will be called expenses.

Let's take a closer look main types of costs:

In accordance with the accounting rules: costs are accumulated on the accounts of section 3 of the Chart of Accounts (primarily on account 20 “Main production”) and, as products are released, they are transferred to account 43 “Finished products”, and costs are converted into expenses only after the sale of products , that is, when moving from account 43 to account 90 "Sales".

And in a simplified way, we can say that expenses are essentially the total cost of goods sold.

Thus, if the costs incurred correspond to certain income, they can be considered expenses and reflected in the income statement. If the income as a result of the costs incurred has not yet been received, the costs should be recognized as assets and reflected in the balance sheet as costs in work in progress or finished products (unsold).

This means that the concept of costs is narrower than the concept of costs. And the concepts of "costs" and "costs" are often used as synonyms, and the term "costs" is more typical for economic theory, and "costs" - for accounting and management.

Cost price- is the cost of production and sale of products, works, services, expressed in monetary terms. It consists of all costs associated with the use of natural resources, raw materials, materials, fuel, energy, fixed assets, labor resources, as well as other costs for production and sale in the production process (performance of work, provision of services).

Cost accounting and calculation (calculation) of the cost of each type of products (works, services) produced by an enterprise is one of the key problems of management accounting for a number of reasons, including the following:

• knowledge of the cost of production is necessary in order to make an assessment of the balance of work in progress and finished products in financial accounting, as well as to determine the cost of goods sold and, as a result, profit from sales;
• the level of unit cost of production is a very important factor in the formation of the price and assortment policy of the enterprise;
• cost control and identification of ways to reduce it are one of the main ways to improve the efficiency of the company.

The system of accounting for production costs and calculating the cost of production is organized at each enterprise in different ways, depending on the choice of cost accounting objects - signs according to which production costs are grouped for the purposes of cost management. In order to effectively manage costs, it is generally necessary to have control data by cost direction, cost center and cost driver. At the same time, cost centers are understood as structural subdivisions of the enterprise in which the initial consumption of resources takes place (for example, a workshop, site, team, stage, process, etc.), and cost carriers are the types of products (works, services) produced ( performed, rendered) by this organization. In addition, there are different types of costs depending on the purpose of their accounting.

Basic and overhead costs

Based on the economic role in the production process, costs are divided into basic and overhead.

The main costs are directly related to the production (technological) process of manufacturing products, performing work or providing services. In other words, the main costs include the spent resources, the consumption of which is associated with the release of products (works, services), - for example, materials, wages of production workers, depreciation of fixed assets, etc.

Overhead costs are those incurred in connection with the organization, maintenance of production and management.

For example, general production and general business expenses - maintenance of the management apparatus, depreciation and repair of fixed assets for workshop or general plant purposes, taxes, expenses for recruitment and advanced training of personnel, etc.

Direct and indirect costs

Classification of costs according to the method of their inclusion in the cost of products, works and services into direct and indirect. It is this classification that determines the procedure for reflecting costs on certain synthetic accounts, sub-accounts and analytical accounts.

Direct costs are those that can be directly, directly and economically attributed to a specific type of product or to a specific batch of products (to work performed or services rendered). In practice, this category includes:

• direct costs of materials (that is, raw materials and basic materials used in the manufacture of products);
• direct labor costs (remuneration of personnel employed in the production of specific types of products).

However, if an enterprise produces only one type of product or provides only one type of service, all production costs will automatically be direct.

Indirect costs are recognized as costs that cannot be directly, directly and economically attributed to specific products, so they should first be collected separately (on a separate account), and then - based on the results of the month - distributed by type of product (work performed, services provided) based on the selected methods.

Among the production costs, indirect ones include auxiliary materials and components, labor costs for auxiliary workers, adjusters, repairmen, vacation pay, extra pay for overtime, downtime, costs for maintaining shop equipment and buildings, for property insurance, etc. d.

We emphasize - indirect costs are associated simultaneously with the manufacture of several types of products, and they either cannot be “attributed” to a specific type of manufactured product at all, or in principle it is possible, but impractical due to the insignificance of the amount of this type of cost and the difficulty of accurately determining the part of them that falls on each product type.

In practice, the separation of direct and indirect costs is very important for organizing the work of accounting in terms of cost accounting. Direct costs should be based on primary documents plus possibly additional calculations, as, for example, if the same type of raw material is used to produce several types of products in one unit and it is impossible to provide an accurate primary account of how much of this raw material was spent on each from the types of products, be attributed directly to the cost of each type of product, formed on the debit of account 20 "Main production". But indirect costs are collected on separate accounts - for example, shop expenses during the month are debited to account 25 “General production costs”.

If we talk about the relationship between the two considered classifications, we can note the following:

• all direct costs are basic (because they are necessary for the production of specific types of products);
• overhead costs are always indirect;
• some types of fixed costs, in terms of the order in which they are included in the cost, are not direct, but indirect - such as, for example, the depreciation of fixed assets used in the production of several types of products.

Product costs, period costs

This classification is very important precisely from the point of view of management accounting, since it is the only one used in Western countries, where many of the management accounting methods used today were developed, and such a classification is usually required in both management and financial accounting.

Figure 2. Classification of costs in management accounting

Product costs (production costs) are considered only those costs that should be included in the cost of production, for which it should be taken into account in the shops and in the warehouse, and if it remained unsold, reflected in the balance sheet. These are "reserve-intensive" costs directly related to the manufacture of products and, therefore, are subject to accounting as part of its cost.

• raw materials and basic materials;
• remuneration of personnel employed in the production of specific types of products;
• overhead costs (overhead production costs), including: auxiliary materials and components; indirect labor costs (salaries of auxiliary workers and repairmen, extra pay for overtime, vacation pay, etc.); other expenses - maintenance of workshop buildings, depreciation and insurance of workshop property, etc.

Period costs (periodic costs) include those types of costs, the size of which does not depend on the volume of production, but rather on the length of the period. In practice, they are represented by two articles:

• commercial expenses - expenses associated with the sale and supply of products (goods, works, services);
• general and administrative expenses - expenses for managing the enterprise as a whole (in Russian practice they are called "general expenses").

Such costs are not included in the cost of finished products, because they are not directly related to the production process, therefore they are always related to the period during which they were produced, and never attributed to the remains of finished products.

When applying this classification, the total cost of goods sold is formed in the following order.

Figure 3. Formation of cost in classical management accounting

If we apply this classification to domestic practice, guided by the Russian Chart of Accounts, it is necessary to organize cost accounting as follows:

1) in terms of product costs:

• direct material and labor costs are collected directly on account 20 “Main production” (under sub-accounts and analytical accounts for each type of product, work, service);
• overhead costs during the reporting period are collected on a separate account (according to the Russian Chart of Accounts, account 25 "General production costs" is used for these purposes), and at the end of the period they are distributed and written off to account 20 "Main production" (by type of products, works, services );
• as a result, all costs recorded on the debit of account 20 “Main production” for a certain period represent the total production costs that may relate to manufactured products, forming the production cost of finished products (or to work performed, services rendered, forming their cost accordingly), or may refer to work-in-progress, if any;

2) in terms of period costs:

• it is necessary to proceed from the postulate that periodic expenses are always related to the month, quarter or year during which they were incurred, that is, at the end of the period they are fully written off to reduce the financial result (profit), and they are never attributed to the balance of finished products on warehouse and work in progress;
• this means that they must be collected on accounts intended for these purposes (in Russia these are accounts 26 “General expenses” and 44 “Sales expenses”), and at the end of each month, the entire amount of the costs collected for the month must be written off from the credit of these accounts to the debit of the account 90 "Sales".

Note that this option is allowed by the current Russian legislation (in particular, PBU 10/99 "Organization's expenses" and the Instructions for using the Chart of Accounts). So every manager and accountant can implement this technique in the practice of their organization.

However, in Russia, unlike IFRS and the accounting requirements of many foreign countries, this is not the only permitted option.

Thus, account 44 “Sales expenses” in Russian practice may not be completely closed “month after month”, depending on the accounting policy of the organization, a carry-over debit balance may be formed on this account - for example, in terms of expenses for packaging and transportation of shipped products, if it has not yet passed into the ownership of the buyer, or in part of the transportation costs in trade organizations (if part of the goods remained unsold at the end of the month).

And account 26 “General business expenses” is allowed to be closed not to account 90 “Sales”, but to account 20 “Main production” (as well as 23 “Auxiliary production” and 29 “Service production and farms”, if their products, works and services are outsourced). It was this option that was used until the early nineties, and it was not canceled or completely replaced by a new option using account 90 “Sales”.

The logic of such an application of the 26th account, which involves the inclusion of general business expenses in the cost of specific types of manufactured products, works, services (including for the purpose of assessing the balance of unsold products), is based on the traditional approach, according to which, in domestic practice, production costs and Today, in addition to material costs, labor costs and overhead costs, many also include general business costs (and, accordingly, non-production costs include the costs of selling products, as well as the maintenance of social facilities).

With this approach, the meaning invested in the concept of "production cost" also changes:

• a Western accountant or manager considers this type of cost as the sum of “product costs”, and in his view, management costs cannot be included in the production cost;
• in domestic practice, to this day, not two (production and full), but three types of cost are often distinguished - workshop, production and full, while:
• it is the sum of the “product costs” that is considered to be the shop cost (that is, in our country, the shop cost is what Western experts call the production cost);
• in Russia, production costs are often understood as the sum of shop costs and general business expenses, that is, in addition to “product costs” (direct and general production costs), it also includes management costs, which Western experts unambiguously classify as “period costs” that are subject to accounting only in full cost and never included in the production cost;
• the concept of the total cost of sold products conceptually coincides in both systems, although its value, other things being equal, may not coincide (if there are remnants of unsold products, because then a part of management expenses for a Russian accountant can “settle” in the balance sheet in the value of the remnants of finished products, and for a Western accountant, the entire amount of management expenses will be attributed monthly to a decrease in profit).

Total and specific costs

First of all, we note that costs are cumulative and specific - depending on the volume they are calculated for (for the entire set of products, for the entire batch of products or for a unit of production).

Total costs - costs calculated for the entire output of the enterprise or for a separate batch of products. In other words, these are total, general expenses for a certain amount of products of one type or even for a certain volume of products of a different assortment.

Unit costs are costs calculated per unit of output.

Accordingly, the cost price can be calculated per unit of production or for the entire batch, or we can talk about a generalized cost indicator for all types of products, works, services for a certain period.

Depending on what kind of management task is to be solved, in some cases it is important to know the amount of total costs, and in others it is important to have detailed information about unit costs (for example, when making decisions in the field of pricing and assortment policy).

Variable and fixed costs

Depending on how the costs react to changes in the organization's business activity - to an increase or decrease in production volumes - they can be conditionally divided into variables and constants.

Variable costs increase or decrease in proportion to the change in the volume of production, that is, they depend on the business activity of the organization. They, in turn, can be divided into:

• production variable costs: direct materials, direct labor, as well as part of general production costs, such as the cost of auxiliary materials;
• non-manufacturing variable costs (expenses for packaging and transportation of finished products, commission fees to intermediaries for the sale of goods, etc.).

Fixed costs in the total amount do not depend on the volume of production and remain unchanged during the reporting period. Examples of fixed costs are rent, depreciation of fixed assets, advertising costs, security costs, etc.

The point is that the total amount of fixed costs usually does not depend on how many and what products the company releases in a given month. For example, if a company has rented a building for a manufacturing facility or a retail outlet, it will have to pay the agreed rent every month, even if nothing is produced or sold at all in one of the months, but, on the other hand, if this premises will work around the clock, instead of eight hours a day, the rent will not increase from this. The same is true when advertising is done - of course, the goal is to sell more products, but the amount of advertising costs (for example, the cost of an advertising agency, the cost of advertising on television or in a newspaper, etc.) is directly related to the amount products sold in the current month will not be affected.

But variable costs clearly respond to changes in production and sales volumes. They did not produce products - they did not have to purchase materials, pay wages to workers, etc. The intermediary did not sell the goods - no commission should be paid to him (if it is set depending on the number of goods sold, as is usually done). Conversely, if production volumes increase, more raw materials must be purchased, more workers must be recruited, and so on.

Of course, in practice, especially in the long run, all costs tend to increase (for example, rent may increase, depreciation may increase due to the acquisition of additional fixed assets, etc.). Therefore, sometimes the costs are called conditionally variable and conditionally fixed. But the growth of fixed costs, as a rule, occurs abruptly (stepwise), that is, after an increase in the amount of costs, they remain at the achieved level for some time - and the reason for their growth is either an increase in prices, tariffs, etc., or a change in production volumes and sales in excess of the "relevant level", resulting in an increase or decrease in production space and equipment.

Normative and actual expenses

From the point of view of the efficiency of accounting and cost control, there are standard and actual costs.

Actual costs, as their name implies, are the costs actually incurred by the enterprise in the manufacture of products (works, services), reflected in the primary accounting documents and accounts. It is them that accountants take into account, and based on them, the cost of production is formed. And then they are analyzed, compared with planned indicators or indicators of previous periods, and conclusions are drawn.

Standard costs are predetermined realistic costs per unit of finished product. In other words, these are expenses (most often - per unit of production), calculated on the basis of certain norms and standards.

Alternative (imputed) costs

Unlike financial accounting, which operates only with fait accompli and actually incurred costs, management accounting attaches great importance to alternative options, because, making one management decision, the manager automatically refuses other options for the development of events, and therefore, in addition to real income and expenses, that will be received and implemented in the course of the implementation of the decision taken, alternative (imputed) costs inevitably arise, including in the face of lost profits due to the fact that the decision ruled out the possibility of alternative use of resources.

The concept of opportunity costs also makes it possible to simplify decision-making in some situations.

Let's consider a small example. A new potential client approached the bakery - the director of a recently opened restaurant nearby. He would like the bakery to deliver buns to his restaurant every day, which must be baked according to a specific recipe. Of course, he is interested in the price - how much the bakery would like to receive for the execution of such an order.

Suppose that at the moment the bakery is already operating at the limit of its capacity and cannot simply bake buns for the restaurant in addition to the products that it already produces and sells to current customers, in order to start cooperation with this restaurant, you will have to reduce the production of some of the current types of products and, accordingly, reduce the supply to current customers or retail sales.

Applying the concept of opportunity cost, you can use an elegant and simple way to solve this problem:

• of course, the price must cover the real costs of the bakery - which means that you need to calculate the production cost of the buns that the restaurant director would like to receive; in addition, of course, the goal of the bakery is to make as much profit as possible, but this does not mean that you can lay down any level of profitability and ask for any price, although some amount of profit must be included in the price that will eventually be set;
• since in order to fulfill the order of the restaurant, it will be necessary to reduce the current production of other types of products, there are opportunity (imputed) costs - in this case, this is the amount of profit that the bakery will lose if you accept this order and reduce the supply and sales of the same products, that is this is the “lost” profit that the bakery would continue to receive if it refused to cooperate with the restaurant director and worked according to the previous program;
• This means that to set the price of buns for a restaurant, you need to add the sum of the costs of producing these buns (their projected cost) and the “forgone” profit from the sale of those products whose production will be reduced due to the acceptance of an order from the restaurant.

Let's illustrate with numbers. Suppose a restaurant wants to receive 1000 rolls. To be able to bake them, you will have to reduce the production and sales of French baguettes by 400 units. Suppose that the production cost of a baguette is 10 rubles, and its selling price is 19 rubles. In accordance with the calculation, based on the recipe for making buns, their production cost should be 4 rubles.

We make the following calculations:

1. profit from the sale of one baguette is: 19 - 10 \u003d 9 rubles;
2. the opportunity cost - the profit that could have been received from the sale of 400 baguettes if the restaurant's order had been rejected - is 9 rubles. x 400 pcs. = 3600 rubles;
3. the minimum price level for buns, at which it generally makes sense to talk about the possibility of accepting this order (replacing part of the baguettes with buns), is the sum of the cost of buns and this forgone profit from baguettes, that is, for a batch of 1000 buns, the restaurant must pay at least : 4 rub. x 1000 pcs. + 3600 rub. = 7600 rubles;
4. the minimum price of one bun should not be lower than: 7600 rubles. / 1000 pcs. = 7.60 rubles.

It's minimum. If the director of the restaurant is not ready to pay such an amount (for example, in a neighboring bakery he will be offered better conditions), it is better to refuse cooperation and continue to produce the products that you are already producing at the moment. After all, if you agree to a lower price, it turns out that in the end the bakery will receive less profit than it did before.

Plus, there are other factors to consider. For example, weigh whether it makes sense to spoil or break relationships with your current customers, because reducing the production of baguettes by 400 pieces. means that someone who the bakery sold them to before will not get these baguettes now! And therefore, setting the price for buns at exactly 7.60 rubles, in fact, does not make sense - this price only makes up for the same profit that you already receive with the current production program, but for this you should not sacrifice existing relationships with customers.

Sunk costs

The next important type of costs that must be taken into account by a manager and an accountant who prepares information for making managerial decisions is sunk costs. From their name it is clear that this refers to expenses that have already been incurred in the past (as a result of the execution of one or more earlier management decisions) and which now cannot be returned or compensated in any way. You can only deal with them.

It is extremely important to learn how to identify such sunk costs and mercilessly “cut off” information about them when making decisions. This approach can also simplify the analysis of alternatives and make the calculations more concise and elegant.

Relevant and irrelevant costs

The concepts of alternative (imputed) and sunk costs, as well as the peculiarities of the behavior of various types of costs, lead us to the need to distinguish between relevant and irrelevant costs and to introduce the concept of the relevance of information used to justify decisions.

Relevant information is considered to be information that distinguishes one alternative from another and, therefore, is subject to analysis and consideration in decision-making. Accordingly, relevant costs are those costs, the value of which will change depending on which of the alternatives will be chosen as a result of the decision.

In other words, if any income, expenses or other indicators remain unchanged in any of the possible decisions, they are irrelevant and should not be taken into account when considering such a decision.

Of course, a significant part of the irrelevant costs are the sunk costs we have already considered, that is, costs that were made in the past and which no decision can change (such as the cost of geological exploration if minerals are not have been discovered or the development of the deposit is unpromising).

Also, fixed costs are often irrelevant - but here, of course, everything depends on the nature of the problem and the decision being made. For example, if the question is what is more profitable to sew for the winter season - leather jackets or leather coats - information on the amount of depreciation of equipment, rent for production premises or the cost of electricity consumed to light the workshop and ensure the operation of sewing machines has no effect. values, because these amounts will be the same regardless of what they decided to sew in the end. But if a more global question is being decided about whether to stop tailoring and switch to trading in fabrics, threads and accessories, information on fixed costs may become relevant - if, for example, in the end a decision can be made to terminate the lease of the production premises and sell sewing machines.

The concept of relevance is perhaps the most important, fundamental principle of preparing information for analysis and management decision-making.

Controlled and uncontrolled spending

Well, in conclusion, there is another important classification related to the implementation of such a management (management) function as control.

In order to effectively control the activities of all departments and managers at all levels, as well as to ensure a normally functioning system of motivation for managerial personnel, the principle of management by responsibility centers has been increasingly used recently, that is, by correlating costs and revenues with the actions of those responsible for their implementation.

Agree, it is foolish to deprive all employees of the bonus because the profit of the organization turned out to be lower than planned. After all, there can be many reasons, and it may even turn out that most of the employees worked for wear and tear, and the cause of the problem is the wrong decision made by only one manager. In addition, in fact, no employee of the organization, as a rule, can not control absolutely all the processes taking place in it. And therefore, it is simply stupid, for example, to punish the head of the sales department with a ruble for not fulfilling the sales plan, if the reason for the situation lies in the fact that the head of the production department committed technology violations and, as a result, low-quality products were produced, and the quality control department did not noticed, and customers were dissatisfied and decided to stop buying your products, filed claims, demanded to replace the goods, etc. On the other hand, it is unlikely that the head of the production department will be motivated to work effectively if he is punished for poor product quality, if the main reason for the situation was the poor quality of raw materials and materials purchased from outside, the quality of which was supposed to be carried out by the company's procurement department.

We will also talk more about the concept of management by responsibility centers and the features of the organization of planning, intra-company reporting and control, taking into account this system, in future publications. In the meantime, we note that from the standpoint of control, costs can be divided into two types:

1. regulated (controlled) expenses are expenses that are subject to the influence of the manager of the responsibility center (department), that is, are within his competence and powers (for example, overspending of materials due to violation of labor discipline or production technology is a regulated expense for the shop manager);
2. unregulated (uncontrolled) costs - these are costs that the manager of the responsibility center (department) cannot influence (for example, overspending of materials due to their poor quality is regulated not for the shop manager, but for the head of the supply department).

The practical application of this classification of costs makes it possible to increase the motivation of the work of managerial personnel, since rewards and punishments in this method directly depend on the actual results of its activities.

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