You will need
- - Data on the volume of output in natural units
- - Data accounting on the costs of materials and components, equipment, wages, fuel and energy resources for the period.
Instructions
Based on documents on the write-off of raw materials and materials, acts on the performance of production work or services performed by auxiliary units or third-party organizations, determine the amount for production or services for. Exclude the amount of returnable waste from material costs.
Determine the amount of transportation and procurement costs and costs for packaging products.
By adding all the above sums, you will determine the common variables expenses for everything produced during the period. Knowing the number of products produced, find the sum by division variable costs per unit of production. Calculate the critical level of variable costs per unit of production using C–PZ/V, where C is the product price, PZ are constants expenses, V – volume of output in natural units.
note
In terms of taxes, fees, and other obligatory payments, the amount of which depends on the volume of production, a reduction in variable costs is possible only by changing legislative framework.
A decrease in variable costs will result from an increase in labor productivity, a decrease in the number of primary and auxiliary production, reducing the volume of raw material reserves and finished products, economical use of materials, use of energy-saving technological processes, introduction of progressive management schemes.
Sources:
- Practical magazine for accountants.
- what costs are not variable
- v - variable costs per unit of production, DE
What is the minimum capital you will need to open own business, depends on what exactly you want to open. But there are costs that are common to almost all types of business. Let's take a closer look at these costs.
Instructions
Currently, it is quite possible to open one with minimal or almost no investment. For example, online business. But if you are still inclined to the “traditional” form of business, then you can already identify at least three mandatory cost items: registration of a company or individual entrepreneur, rental of premises and purchase of goods (equipment).
If you are registering an LLC or individual entrepreneur, then all your costs are state fees and notary expenses. Government duty for registration legal entity currently amounts to 4,000 rubles. Individual can register himself as an entrepreneur by paying 800 rubles. Up to 1,500 rubles goes to the notary. However, by doing the registration yourself, you will save money, but will spend quite a lot of time, so it is more profitable to hire a specialized company to register your business. The company will register you for 5,000-10,000 rubles.
The cost of renting premises depends on the location of your office or. Accordingly, the closer to the center of Moscow or to elite areas, the higher the rental cost. On average per year square meter for rented premises you will pay from $400. This will be the cost of a class C office (a fairly low class) in the Central Administrative District. The cost of renting a Class A office can reach up to $1,500 per square meter per year - depending on the location. A room measuring 200 sq.m in the same Central Administrative District will cost you on average around 500,000 rubles.
Equipment costs or (if you decide to open a store) depend, of course, on the type of business you run. In any case, you will need to equip your office with at least one computer (if you don’t have employees yet), a telephone and other office equipment, as well as “little things” - paper, stationery. Owners should take care cash registers.
Sooner or later, your business will expand and you will need employees. Every office needs a secretary. His salary now starts at an average of 20,000 rubles per month. A part-time student can be hired for 15,000. Accordingly, the more qualified the employee, the more he will have to pay. Salaries of sellers and cashiers now start from 10,000-15,000 rubles, but this is the minimum for which low-skilled employees will work.
Sources:
- Small business website.
Variables are recognized costs, which directly depend on the volume of calculated production. Variables costs will depend on the cost of raw materials, materials, and the cost electrical energy, and on the amount of wages paid.
You will need
- calculator
- notepad and pen
- a complete list of enterprise costs with the indicated amount of costs
Instructions
Add it all up costs enterprises that directly depend on the volume of products produced. For example, the variables of a trading company selling consumer goods include:
Pp – volume of products purchased from suppliers. Expressed in rubles. Let trade Organization purchased goods from suppliers in the amount of 158 thousand rubles.
Uh – to electric. Let a trade organization pay 3,500 rubles for .
Z – the salary of sellers, which depends on the quantity of goods they sell. Let the average wage fund in a trade organization be 160 thousand rubles. Thus, the variables costs trade organization will be equal to:
VC = Pp + Ee + Z = 158+3.5+160 = 321.5 thousand rubles.
Divide the resulting amount of variable costs by the volume of products sold. This indicator can be found by a trade organization. The volume of goods sold in the above example will be expressed in quantitative terms, that is, by piece. Suppose a trading organization was able to sell 10,500 units of goods. Then the variables costs taking into account the quantity of goods sold are equal to:
VC = 321.5 / 10.5 = 30 rubles per unit of goods sold. Thus, variable costs are made not only by adding the organization’s costs for the purchase and goods, but also by dividing the resulting amount by the unit of goods. Variables costs with an increase in the quantity of goods sold, they decrease, which may indicate efficiency. Variables depending on the type of company activity costs and their types may change - added to those indicated above in the example (costs of raw materials, water, one-time transportation of products and other expenses of the organization).
Sources:
- "Economic theory", E.F. Borisov, 1999
Variables costs represent types of expenses, the value of which can change only in proportion to changes in the volume of production. They are contrasted with fixed costs, which add up to total costs. The main sign by which it is possible to determine whether any costs are variable is their disappearance when production stops.
Instructions
According to IFRS standards, there are only two types of variable costs: production variable indirect costs and production variable direct costs. Production variable indirect costs - which are almost or completely directly dependent on changes in volume, however, due to production technological features, they are not economically feasible or cannot be directly classified as produced. Production variable direct costs are those costs that can be directly attributed to specific products in the primary data. Indirect variable costs of the first group are: all the costs of raw materials necessary for complex production. Direct variable costs are: fuel and energy costs; expenses for basic materials and raw materials; workers' wages.
To find the average of the variables costs, you need shared variables costs divide by required amount manufactured products.
Let's calculate the variables costs using an example: Price per unit of output A: materials - 140 rubles, wages for one manufactured product - 70 rubles, other costs - 20 rubles.
Price per unit of manufactured product B: materials - 260 rubles, wages for one manufactured product - 130 rubles, other costs - 30 rubles. Variables costs for one unit of product A will be equal to 230 rubles. (add up all costs). Accordingly, variable costs for one unit of product B will be equal to 420 rubles. Keep in mind that variable costs are always associated with the production of each unit of the product produced. Variables costs - those quantities that change only when the quantity of a given product changes and includes different types of costs.
Sources:
- how to open variables in 2019
In the absence of a real idea of the material costs of producing goods (cost), it is impossible to determine the profitability of production, which, in turn, is a fundamental characteristic for the development of the business as a whole.
Instructions
Familiarize yourself with the three main methods of calculating material costs: boiler, custom and distribution. Select one of the methods, depending on the costing object. So, with the boiler method, such an object is production as a whole, in the case of the order method - only a separate order or type of product, and with the cross-cut method - a separate segment (technological process). Accordingly, everything material is either not, or correlated by products (orders), or by segments (processes) of production.
Use various units calculation when using each of the calculation methods (natural, conditionally natural, cost, units of time and work).
When using the boiler calculation method, do not forget about its low information content. The information obtained in boiler calculations can only be justified in the case of accounting for single-product production (for example, at mining enterprises to calculate its cost). Material expenses calculated by division total amount existing costs for the entire volume of production in physical terms (barrels of oil in question).
Use the order-to-order method per unit of production for small-scale or even single-piece production. This method is also well suited for calculating the cost of large or technologically complex products, when each segment of the production process is physically impossible. Material expenses are calculated by dividing the cost of each order by the number of units produced and delivered in accordance with that order. The result of calculating the cost using this method is to obtain information about the implementation of each order.
Use the incremental method if you are the cost of production in mass production, characterized by a sequence of technological processes and repeatability of individual operations. Material expenses are calculated by dividing the sum of all costs for a certain period of time (or for the duration of each individual process or operation) by the number of units of products produced for this period (or for the duration of the process or operation). The total cost of production is the sum of material costs for each of the technological processes.
In production, there are costs that remain the same even with hundreds or tens of thousands of dollars in profit. They do not depend on the volume of products produced. These are called fixed costs. How to calculate fixed costs?
Instructions
Determine the formula for calculating fixed costs. It calculates the fixed costs of all organizations. The formula will be equal to the ratio of all fixed expenses to the total cost of works and services sold, multiplied by the basic income from the sale of works and services.
Calculate deductions for depreciation of fixed assets in non-current assets, such as land, for land improvement, buildings, structures, transmission devices, machinery and equipment, etc. Don't forget about library collections, natural resources, rental items, as well as capital investments in facilities that have not been put into operation.
Calculate the entire cost of completed work and services. This will include revenue from the main sale or from services provided, for example, and work performed, for example, construction organizations.
Calculate the basic income from the sale of works and services. Basic income is the conditional profitability for the month in value terms per unit of physical indicator. Please note that services classified as “domestic” have a single physical indicator, and services of a “non-domestic” nature, for example, housing rental and passenger transportation, have their own physical indicators.
Substitute the obtained data into the formula and get fixed costs.
In progress economic activity In some organizations, some managers are forced to send their employees on business trips. In general, the concept of “business trip” is a trip outside the workplace to resolve work-related issues. As a rule, the decision to send an employee on a business trip is made by CEO. The accountant must calculate and subsequently pay the employee travel allowances.
You will need
- - production calendar;
- - time sheet;
- - pay slips;
- - tickets.
Instructions
To calculate travel allowances, calculate the employee's average daily earnings for the last 12 calendar months. If wages are different every month, then first determine the total amount of all payments for billing period, this number includes both bonuses and allowances. Please note that any financial assistance, as well as cash payments in the form of gifts must be deducted from the total amount.
Calculate the actual number of days worked over 12 months. Please remember that this number does not include weekends and holidays. If for any reason, even if it is valid, the employee was not present at the workplace, then exclude these days as well.
Then divide the amount of payments for 12 months by the days actually worked. The resulting number will be the average daily earnings.
For example, manager Ivanov worked for the period from September 1, 2010 to August 31, 2011. According to the production calendar, with a five-day work week, the total number of days in the billing period is 249 days. But Ivanov took a vacation at his own expense in 2011, the duration of which was 10 days. Thus, 249 days – 10 days = 239 days. During this period, the manager earned 192 thousand rubles. To calculate the average daily earnings you need to divide 192 thousand rubles by 239 days, you get 803.35 rubles.
After the average daily earnings have been calculated, determine the number of business trip days. The beginning and end of a business trip is the date of departure and arrival of the vehicle.
Calculate travel allowances by multiplying your average daily earnings by the number of travel days. For example, the same manager Ivanov was on a business trip for 12 days. Thus, 12 days * 803.35 rubles = 9640.2 rubles (travel allowances).
Video on the topic
In the process of economic activity, company managers spend cash for certain needs. All these expenses can be divided into two groups: variables and permanent. The first group includes those costs that depend on the volume of products produced or sold, while the second group does not change depending on the volume of production.
Instructions
To determine variables costs, look at their purpose. For example, you purchased some material that goes into the production of products, that is, it directly takes part in the production. Let it be wood from which lumber of various sections is made. The volume of lumber produced will depend on the amount of wood purchased. Such expenses classified as variables.
In addition to wood, you use electricity, the amount of which also depends on the volume of production (the more you produce, the more you spend), for example, when working with a sawmill. All expenses that you pay to the electricity supply company are also classified as variable costs.
To release products, you use labor which must be paid wages. These expenses classify them as variables.
If you do not have your own production, but act as an intermediary, that is, you resell previously purchased goods, then classify the total cost of the purchase as variable expenses.
If the definition of cost itself seems intuitive, then the formulas for its calculation are already strict mathematical expressions. To understand them, it is necessary to study the analysis methodology used in each specific case.
The first stage cost calculation always involves determining the costs of producing a product or service. This process is designated by the economic term: “product costing.” Costing can be planned, standard or actual. The first and second express an idea of how the economic process should be structured. The actual calculation is made based on real data.
Calculation of product costs in the Republic of Belarus is a process regulated by many legislative and industry standards. This happens due to the practice of setting prices based on the value of the declared cost. In many cases, instead of market price changes, enterprises have to resort to regulating the cost calculation system through the redistribution of costs from one type of product to another in order to have the legal opportunity to raise/lower the price.
After determining the amount of costs and their distribution among expense items, it is time to calculate their specific value. Cost calculation formulas are used precisely for this purpose.
Costing is a universal procedure for any economic process. Such calculations are most difficult to perform when analyzing industrial production. It also applies here greatest number different types cost calculation formulas. These formulas can be adapted for other economic processes.
Total cost formula
For general evaluation economic efficiency Enterprises often use the full cost formula. In the very simple version it looks like this:
Total cost = sum of production costs + sales costs.
The full cost shows the largest amount of planned or actual expenses. The results of all other cost formulas are parts of this total value.
What is of great importance is not just the products produced, but the products sold. Therefore, the cost formula takes the following form:
Cost of goods sold = total cost - cost of unsold goods.
An example of calculating the full cost in expanded form, i.e. with highlighting individual elements, will look something like this:
Total cost = Costs of raw materials and supplies + Energy costs + Depreciation charges + Salaries of key personnel + Salaries of management and support staff+ Payroll deductions + Sales and sales service costs + Transportation costs + Other costs.
Special formulas for calculating costs
Knowing the total cost of producing and selling a product or service does not provide sufficient information to understand and evaluate the individual elements of this system. Thus, the total cost does not show the cost per unit of production. The costs of an individual process remain uncertain. For this purpose, many specific cost formulas have been developed that calculate individual quantities.
Given that some costs depend on production volume, and some do not, it is customary to distinguish between variable and fixed costs.
Size fixed costs is calculated by summing up the values of some unavoidable costs of the enterprise. Calculation example:
Fixed costs = Fixed part of the salary + Expenses for rent and maintenance of premises + Depreciation deductions + Property taxes + Advertising expenses.
Methodology for calculating variable costs in general view can be represented by the following formula:
Variable costs = Variable part of wages + Cost of raw materials and supplies + Cost of energy resources + Costs of transporting products + Variable part of business expenses.
The cost per unit of production in general can be found simple division the amount of costs per volume of output in physical terms:
Unit cost = Total costs/Number of units.
For realities commercial organization A more complex version of the same formula is more suitable:
Unit cost = Manufacturing costs/No. of units produced + Selling costs/No. of units sold.
There are many other formulas for calculating cost. Their exact amount difficult to determine, because each of them is formed according to the requirements of the accepted calculation methodology.
Product costing is a rather important and responsible process. The efficiency of the company will largely depend on how correctly the costing is calculated, as well as how correctly the price is set.
How to create a cost estimate
Almost all economists are familiar with the term calculation. All production costs are calculated through costing. This process is necessary for most economic plan calculations. Each enterprise is characterized by its own characteristics, so the form of calculation may differ from company to company. In order to understand the form in more detail, you can download a sample product cost calculation. How to create a PSC?
Let’s take, for example, an enterprise that engages in metal processing. Thanks to a special form, you can identify the costing for the product that a given company produces, as well as determine prices for the buyer, wholesale or retail. You can also calculate maximum size discounts that the organization can provide. In the appropriate sections of the form you need to enter the name of those materials, as well as services that are used to produce the product. For all types of expenses, it is necessary to enter consumption norms and price categories. The preparation of consumption standards is usually carried out by employees of the technology department. Price data can be obtained from the accounting department if raw materials for products are purchased on a regular basis. In the case of new items, data can be obtained from the department that deals with purchasing.
Sample calculation
Product costing is necessary for many enterprises. This process is often labor-intensive, so you can’t do it without help. Special programs can help cope with this task. Calculations can be made on paper, but it will take a lot of time. If it is not possible to use specialized programs You can use a sample product cost calculation in Excel format. The cost calculation includes not only direct costs, but also indirect ones. Direct expenses include wages to employees and costs of raw materials.
Indirect costs include payment for transport, planned profit and others. Many people wonder how easy it is to learn how to determine cost? The best place to start is with the trading area. In this area, the cost items are somewhat lower. In the calculation table you can notice different sections. It is necessary to take any group of goods and calculate the cost for each type of product. The last column in the form refers to the planned cost factor. Thanks to this coefficient, you can determine the level of costs. We are talking about the costs that the company will incur to deliver goods.
Making a calculation
A special formula is used to calculate the cost. You will need to use data such as the purchase price, to which the amount for transportation costs is added, and the duty in financial terms is also added. Each company defines target cost differently. Much depends on what type of activity the organization is engaged in. The costs incurred by the company will also depend on this.
The product can be fully developed and in this case it remains to launch its sale. There is only one left before the product is released important stage. It is necessary to calculate the selling price of the goods as accurately as possible. It is extremely difficult to use one calculation method, since many different theories and methods are used to determine the price of a product. In order to identify the most competitive price, you will need to take into account all, even the most insignificant nuances. It is also necessary to set a price that will not scare potential clients and buyers.
How to fill out the sample
The costing process can also cause certain difficulties. A sample of filling out a product cost calculation will help you understand this process. Accountants, businessmen and people working in the economic or financial field must have this skill. Cost calculation skills will help determine the results of the company’s economic functioning. As for financial accounting, the cost of services provided, as well as products sold or produced, is an integral and important part.
Before a product is developed, its creation must be planned. Before developing new products, it is necessary to calculate the economics of the project in advance. This process consists of calculating the cost, establishing the desired selling price, determining the approximate sales volume, and determining the desired profit. The final cost of the product cannot be calculated in advance as accurately as possible. Even if a rather rough calculation is performed, several useful steps can still be performed. First, it will be possible to identify expectations for sales levels. Secondly, it will be possible to determine a price that will make the product competitive. Thirdly, you will be able to answer for yourself the question of how much you want to earn per month from product sales.
It will also be possible at the idea stage to estimate the approximate level of costs. It will also be important to find out whether potential buyers are willing to pay a certain amount for the product. Every entrepreneur uses various techniques for cost calculation. Businessmen often turn to professionals for help, who can be trusted with this process for a fee.
Every organization strives to achieve maximum profit. Any production incurs costs for the purchase of factors of production. At the same time, the organization strives to achieve such a level that a given volume of production is provided at the lowest possible cost. The firm cannot influence the prices of resources. But, knowing the dependence of production volumes on the number of variable costs, costs can be calculated. Cost formulas will be presented below.
Types of costs
From an organizational point of view, expenses are divided into the following groups:
- individual (expenses of a particular enterprise) and social (costs of manufacturing a specific type of product incurred by the entire economy);
- alternative;
- production;
- are common.
The second group is further divided into several elements.
Total expenses
Before studying how costs and cost formulas are calculated, let's look at the basic terms.
Total costs (TC) are the total costs of producing a certain volume of products. In the short term, a number of factors (for example, capital) do not change, and some costs do not depend on output volumes. This is called total fixed costs (TFC). The amount of costs that changes with output is called total variable costs (TVC). How to calculate total costs? Formula:
Fixed costs, the calculation formula for which will be presented below, include: interest on loans, depreciation, insurance premiums, rent, wages. Even if the organization does not work, it must pay rent and loan debt. Variable expenses include salaries, costs of purchasing materials, paying for electricity, etc.
With an increase in output volumes, variable production costs, the calculation formulas for which were presented earlier:
- grow proportionally;
- slow down growth when reaching the maximum profitable production volume;
- resume growth due to disruption optimal sizes enterprises.
Average expenses
Wanting to maximize profits, the organization seeks to reduce costs per unit of product. This ratio shows a parameter such as (ATC) average cost. Formula:
ATC = TC\Q.
ATC = AFC + AVC.
Marginal costs
The change in total costs when production volume increases or decreases by one unit shows marginal costs. Formula:
From an economic point of view, marginal costs are very important in determining the behavior of an organization in market conditions.
Relationship
Marginal cost must be less than total average cost (per unit). Failure to comply with this ratio indicates a violation of the optimal size of the enterprise. Average costs will change in the same way as marginal costs. It is impossible to constantly increase production volume. This is the law of diminishing returns. At a certain level, variable costs, the calculation formula for which was presented earlier, will reach their maximum. After this critical level, an increase in production volumes even by one will lead to an increase in all types of costs.
Example
Having information about the volume of production and the level of fixed costs, you can calculate everything existing species costs.
Issue, Q, pcs. | Total costs, TC in rubles | ||||||
Without engaging in production, the organization incurs fixed costs of 60 thousand rubles.
Variable costs are calculated using the formula: VC = TC - FC.
If the organization is not engaged in production, the amount of variable costs will be zero. With an increase in production by 1 piece, VC will be: 130 - 60 = 70 rubles, etc.
Marginal costs are calculated using the formula:
MC = ΔTC / 1 = ΔTC = TC(n) - TC(n-1).
The denominator of the fraction is 1, since each time the volume of production increases by 1 piece. All other costs are calculated using standard formulas.
Opportunity Cost
Accounting expenses are the cost of the resources used in their purchase prices. They are also called explicit. The amount of these costs can always be calculated and justified with a specific document. These include:
- salary;
- equipment rental costs;
- fare;
- payment for materials, bank services, etc.
Economic costs are the cost of other assets that could be obtained from alternative uses of resources. Economic costs = Explicit + Implicit costs. These two types of expenses most often do not coincide.
Implicit costs include payments that a firm could receive if it used its resources more profitably. If they were bought in a competitive market, their price would be the best among the alternatives. But pricing is influenced by the state and market imperfections. Therefore, the market price may not reflect the true cost of the resource and may be higher or lower than the opportunity cost. Let us analyze in more detail the economic costs and cost formulas.
Examples
An entrepreneur, working for himself, receives a certain profit from his activities. If the sum of all expenses incurred is higher than the income received, then the entrepreneur ultimately suffers a net loss. It, together with net profit, is recorded in documents and refers to explicit costs. If an entrepreneur worked from home and received an income that exceeded his net profit, then the difference between these values would constitute implicit costs. For example, an entrepreneur receives a net profit of 15 thousand rubles, and if he were employed, he would have 20,000. in this case there are implicit costs. Cost formulas:
NI = Salary - Net profit = 20 - 15 = 5 thousand rubles.
Another example: an organization uses in its activities premises that belong to it by right of ownership. Explicit expenses in this case include the amount of utility costs (for example, 2 thousand rubles). If the organization rented out this premises, it would receive an income of 2.5 thousand rubles. It is clear that in this case the company would also pay utility bills monthly. But she would also receive net income. There are implicit costs here. Cost formulas:
NI = Rent - Utilities = 2.5 - 2 = 0.5 thousand rubles.
Returnable and sunk costs
The cost for an organization to enter and exit a market is called sunk costs. Expenses for registering an enterprise, obtaining a license, payment advertising campaign no one will return it, even if the company goes out of business. In a narrower sense, sunk costs include costs for resources that cannot be used in alternative ways, such as the purchase of specialized equipment. This category expenses do not relate to economic costs and do not affect Current state companies.
Costs and price
If the organization's average costs are market price, then the firm earns zero profit. If favorable conditions increase the price, the organization makes a profit. If the price corresponds to the minimum average cost, then the question arises about the feasibility of production. If the price does not cover even the minimum variable costs, then the losses from the liquidation of the company will be less than from its functioning.
International distribution of labor (IDL)
The world economy is based on MRI - the specialization of countries in the production individual species goods. This is the basis of any type of cooperation between all states of the world. The essence of MRI is revealed in its division and unification.
One manufacturing process cannot be divided into several separate ones. At the same time, such a division will make it possible to unite separate industries and territorial complexes and establish interconnections between countries. This is the essence of MRI. It is based on the economically advantageous specialization of individual countries in the production certain types goods and their exchange in quantitative and qualitative relationships.
Development factors
The following factors encourage countries to participate in MRI:
- Volume of the domestic market. U large countries there is greater opportunity to find the necessary factors of production and less need to engage in international specialization. At the same time, market relations are developing, import purchases are compensated by export specialization.
- The lower the state's potential, the greater the need to participate in MRT.
- High provision of the country with mono-resources (for example, oil) and low level provision of mineral resources encourages active participation in MRI.
- The more specific gravity basic industries in the structure of the economy, the less the need for MRI.
Each participant finds economic benefit in the process itself.