The most important indicators expressing the cost of production are the cost of all commercial products, the cost of 1 ruble of commercial products, the cost of a unit of production.

Sources of information for the analysis of product costs are: Form 2 “” and Form 5 Appendix to the balance sheet of the enterprise’s annual report, costing of commercial products and costing of certain types of products, consumption rates of material, labor and financial resources, cost estimates for production of products and their actual implementation, as well as other accounting and reporting data.

As part of the cost of production, a distinction is made between variable and semi-fixed expenses (costs). The amount of variable costs changes with changes in the volume of products (works, services). Variables include the material costs of production, as well as the piecework wages of workers. The amount of semi-fixed costs does not change when the volume of production (work, services) changes. Conditionally fixed expenses include depreciation, rental of premises, time-based wages of administrative, managerial and service personnel and other costs.

So, the task of the business plan for the cost of all marketable products has not been completed. The above-plan increase in cost amounted to 58 thousand rubles, or 0.29% of the plan. This was due to comparable marketable products. (Comparable products are not new products that were already produced in the previous period, and therefore their output in the reporting period can be compared with the previous period).

Then it is necessary to establish how the plan for the cost of all marketable products has been fulfilled in the context of individual costing items and determine for which items there are savings and for which there is overexpenditure. Let's present the corresponding data in Table 16.

As we can see, the increase in the actual cost of marketable products compared to the planned one is caused by overexpenditure of raw materials, additional wages of production workers, an increase in other production costs against the plan and the presence of losses from defects. For the remaining items of calculation, savings occur.

We looked at the grouping of product costs by cost items (cost items). This grouping characterizes the purpose of the costs and the place of their occurrence. Another grouping is also used - according to homogeneous economic elements. Here costs are grouped according to economic content, i.e. regardless of their intended purpose and the place where they are used. These elements are the following:

• material costs;
• labor costs;
• insurance contributions;
• depreciation of fixed assets (funds);
• other costs (depreciation of intangible assets, rent, mandatory insurance payments, interest on bank loans, taxes included in the cost of production, deductions to extra-budgetary funds, travel expenses, etc.).

During the analysis, it is necessary to determine the deviations of actual production costs by element from the planned ones, which are contained in the production cost estimate.

So, analysis of the cost of production in the context of costing items and homogeneous economic elements allows us to determine the amounts of savings and overruns for individual types of costs and facilitates the search for reserves for reducing the cost of products (works, services).

Analysis of costs per 1 ruble of commercial products

- a relative indicator characterizing the share of cost in the wholesale price of products. It is calculated using the following formula:

Costs per 1 ruble of commercial products this is the total cost of commercial products divided by the cost of commercial products at wholesale prices (excluding value added tax).

This figure is expressed in kopecks. It gives an idea of ​​how many pennies are spent, i.e. cost, accounts for every ruble of the wholesale price of products.

Initial data for analysis.

Costs per 1 ruble of marketable products according to plan: 85.92 kopecks.

Costs per 1 ruble of actually produced commercial products:

• a) according to the plan, recalculated for actual output and product range: 85.23 kopecks.
• b) actually in prices in force in the reporting year: 85.53 kopecks.
• c) actually at the prices adopted in the plan: 85.14 kopecks.

Based on these data, we will determine the deviation of actual costs per 1 ruble of marketable products in prices in force in the reporting year from the costs according to the plan. To do this, subtract line 1 from line 2b:

85,53 — 85,92 =— 0.39 kopecks.

So, the actual figure is 0.39 kopecks less than the planned figure. Let us find the influence of individual factors on this deviation.

To determine the impact of a change in the structure of manufactured products, we compare the costs according to the plan, recalculated for the actual output and product range, and the costs according to the plan, i.e. lines 2a and 1:

85.23 - 85.92 = - 0.69 kopecks.

It means that by changing the product structure the analyzed indicator decreased. This is the result of an increase in the share of more profitable types of products that have a relatively low level of costs per ruble of products.

We will determine the impact of changes in the cost of individual types of products by comparing the actual costs in the prices adopted in the plan with the planned costs recalculated for the actual output and range of products, i.e. lines 2c and 2a:

85.14 - 85.23 = -0.09 kopecks.

So, by reducing the cost of certain types of products the cost indicator for 1 ruble of commercial products decreased by 0.09 kopecks.

To calculate the impact of changes in prices for materials and tariffs, we divide the amount of change in cost due to changes in these prices for actual marketable products in the wholesale prices adopted in the plan. In the example under consideration, due to an increase in prices for materials and tariffs, the cost of commercial products increased by + 79 thousand rubles. Consequently, costs per 1 ruble of commercial products due to this factor increased by:

(23,335 thousand rubles - actual marketable products at wholesale prices adopted in the plan).

The influence of changes in wholesale prices for the products of a given enterprise on the cost indicator for 1 ruble of marketable products will be determined as follows. First, let's determine the overall influence of factors 3 and 4. To do this, let’s compare the actual costs per 1 ruble of marketable products, respectively, in the prices in force in the reporting year and in the prices adopted in the plan, i.e. lines 2b and 2c, we determine the impact of price changes on both materials and products:

85.53 - 85.14 = + 0.39 kopecks.

Of this value, the influence of prices on materials is + 0.33 kopecks. Consequently, the impact of product prices accounts for + 0.39 - (+ 0.33) = + 0.06 kopecks. This means that a decrease in wholesale prices for the products of this enterprise increased the costs of 1 ruble of marketable products by + 0.06 kopecks. The total influence of all factors (balance of factors) is:

0.69 kopecks — 0.09 kopecks + 0.33 kop. + 0.06 kop. = - 0.39 kop.

Thus, the decrease in the cost indicator per 1 ruble of commercial products took place mainly due to changes in the structure of manufactured products, as well as due to a decrease in the cost of certain types of products. At the same time, an increase in prices for materials and tariffs, as well as a decrease in wholesale prices for the products of this enterprise, increased costs per 1 ruble of marketable products.

Material Cost Analysis

The main place in the cost of industrial products is occupied by material costs, i.e. costs of raw materials, supplies, purchased semi-finished products, components, fuel and energy, equal to material costs.

The share of material costs is about three-quarters of the cost of production. It follows that saving material costs to a decisive extent ensures a reduction in production costs, which means an increase in profits and an increase in profitability.

The most important source of information for analysis is the costing of products, as well as the costing of individual products.

The analysis begins with a comparison of actual material costs with planned ones, adjusted for the actual volume of production.

Material costs at the enterprise increased compared to their stipulated value by 94 thousand rubles. This increased the cost of production by the same amount.

The amount of material costs is influenced by three main factors:

• change in specific consumption of materials per unit of production;
• change in the procurement cost per unit of material;
• replacing one material with another material.

1) A change (reduction) in the specific consumption of materials per unit of production is achieved by reducing the material intensity of products, as well as by reducing waste of materials in the production process.

The material intensity of products, which is the share of material costs in the price of products, is determined at the stage of product design. Directly in the course of the current activities of the enterprise, the reduction in specific consumption of materials depends on the reduction in the amount of waste in the production process.

There are two types of waste: returnable and irrecoverable. Returnable waste materials are subsequently used in production or sold externally. Irrevocable waste is not subject to further use. Returnable waste is excluded from production costs, since it is returned to the warehouse as materials, but the waste is not received at the price of full-fledged waste, i.e. source materials, but at the price of their possible use, which is significantly less.

Consequently, the violation of the specified specific consumption of materials, which caused the presence of excess waste, increased the cost of production by the amount:

57.4 thousand rubles. — 7 thousand rubles. = 50.4 thousand rubles.

The main reasons for changes in specific material consumption are:

• a) changes in materials processing technology;
• b) change in the quality of materials;
• c) replacing missing materials with other materials.

2. Change in the procurement cost of a unit of material. The procurement cost of materials includes the following main elements:

• a) supplier’s wholesale price (purchase price);
• b) transportation and procurement costs. The value of purchase prices for materials does not directly depend on the current activities of the enterprise, but the amount of transportation and procurement costs does, since these expenses are usually borne by the buyer. They are influenced by the following factors: a) changes in the composition of suppliers located at different distances from the buyer; b) changes in the method of delivery of materials;
• c) changes in the degree of mechanization of loading and unloading operations.

Suppliers' wholesale prices for materials increased by 79 thousand rubles against those provided for in the plan. So, the overall increase in the procurement cost of materials due to an increase in supplier wholesale prices for materials and an increase in transportation and procurement costs is 79 + 19 = 98 thousand rubles.

3) replacing one material with another material also leads to a change in the cost of materials for production. This can be caused by both different specific consumption and different procurement costs of the replaced and replacement materials. We will determine the influence of the replacement factor using the balance method, as the difference between the total amount of deviation of actual material costs from the planned ones and the influence of already known factors, i.e. specific consumption and procurement cost:

94 - 50.4 - 98 = - 54.4 thousand rubles.

So, the replacement of materials led to savings in material costs for production in the amount of 54.4 thousand rubles. Substitutions of materials can be of two types: 1) forced replacements, unprofitable for the enterprise.

After considering the total amount of material costs, the analysis should be detailed for individual types of materials and for individual products made from them in order to specifically identify ways to save various types of materials.

Let us determine by the method of differences the influence of individual factors on the cost of material (steel) for product A:

The influence on the amount of material costs of individual factors is: 1) change in specific material consumption:

1.5 * 5.0 = 7.5 rub.

2) change in the procurement cost of a unit of material:

0.2 * 11.5 = + 2.3 rub.

The total influence of two factors (balance of factors) is: +7.5 + 2.3 = + 9.8 rub.

So, the excess of the actual costs of this type of material over the planned ones is caused mainly by the above-planned specific consumption, as well as by an increase in procurement costs. Both should be regarded negatively.

The analysis of material costs should be completed by calculating reserves for reducing production costs. At the analyzed enterprise, reserves for reducing production costs in terms of material costs are:

• elimination of the causes of excess returnable waste of materials during the production process: 50.4 thousand rubles.
• reduction of transportation and procurement costs to the planned level: 19 thousand rubles.
• implementation of organizational and technical measures aimed at saving raw materials (there is no reserve amount, since the planned measures have been fully completed).

Total reserves for reducing production costs in terms of material costs: 69.4 thousand rubles.

Payroll Cost Analysis

During the analysis, it is necessary to assess the degree of validity of the forms and systems of remuneration used at the enterprise, check compliance with the regime of economy in spending funds on labor costs, study the ratio of the growth rate of labor productivity and average wages, and also identify reserves for further reducing production costs by eliminating the causes unproductive payments.

Sources of information for analysis are calculations of product costs, data from the statistical form of the labor report f. No. 1-t, application data to the balance f. No. 5, accounting materials on accrued wages, etc.

At the analyzed enterprise, planned and actual data on the wage fund can be seen from the following table:

Table No. 18

(thousand roubles.)

This table separates out the wages of workers who receive mainly piecework wages, the amount of which depends on changes in the volume of production, and the wages of other categories of personnel, which does not depend on the volume of production. Therefore, the wages of workers are variable, and the wages of other categories of personnel are constant.

In the analysis, we first determine the absolute and relative deviation in the wage fund of industrial production personnel. The absolute deviation is equal to the difference between the actual and basic (planned) wage funds:

6282.4 - 6790.0 = + 192.4 thousand rubles.

The relative deviation is the difference between the actual wage fund and the base (planned) fund, recalculated (adjusted) by the percentage change in production volume, taking into account a special conversion factor. This coefficient characterizes the share of variable (piece-rate) wages, depending on changes in the volume of production, in the total amount of the wage fund. At the analyzed enterprise this coefficient is 0.6. The actual volume of production is 102.4% of the base (planned) output. Based on this, the relative deviation in the wage fund of industrial and production personnel is:

So, the absolute overexpenditure on the wage fund of industrial and production personnel is equal to 192.4 thousand rubles, and taking into account the change in production volume, the relative overexpenditure amounted to 94.6 thousand rubles.

Then you should analyze the wage fund of workers, the value of which is mainly variable. The absolute deviation here is:

5560.0 - 5447.5 = + 112.5 thousand rubles.

Let us determine by the method of absolute differences the influence on this deviation of two factors:

• change in the number of workers; (quantitative, extensive factor);
• change in the average annual wage of one worker (qualitative, intensive factor);

Initial data:

Table No. 19

(thousand roubles.)

The influence of individual factors on the deviation of the actual wage fund of workers from the planned one is:

Change in the number of workers:

51* 1610.3 = 82125.3 rub.

Change in average annual salary per worker:

8.8 * 3434 = + 30219.2 rub.

The total influence of two factors (balance of factors) is:

82125.3 rub. + 30219.2 rub. = + 112344.5 rub. = + 112.3 thousand rubles.

Consequently, the overexpenditure on the workers' wage fund was formed mainly due to an increase in the number of workers. The increase in the average annual wage of one worker also influenced the formation of this overexpenditure, but to a lesser extent.

The relative deviation in the wage fund of workers is calculated without taking into account the conversion factor, since for the sake of simplicity it is assumed that all workers receive piecework wages, the size of which depends on changes in the volume of production. Consequently, this relative deviation is equal to the difference between the actual wage fund of workers and the basic (planned) fund, recalculated (adjusted) by the percentage change in production volume:

So, according to the workers’ wage fund, there is an absolute overexpenditure in the amount of + 112.5 thousand rubles, and taking into account the change in production volume, there is a relative saving in the amount of 18.2 thousand rubles.

• additional payments to piece workers due to changes in working conditions;
• additional payments for working overtime;
• payment for all-day downtime and hours of intra-shift downtime.

At the analyzed enterprise there are unproductive payments of the second type in the amount of 12.5 thousand rubles. and the third type for 2.7 thousand rubles.

So, the reserves for reducing production costs in terms of labor costs are eliminating the causes of unproductive payments in the amount of: 12.5 + 2.7 = 15.2 thousand rubles.

Next, the wage fund of other categories of personnel is analyzed, i.e. managers, specialists and other employees. This salary is a semi-fixed expense that does not depend on the degree of change in production volume, since these employees receive certain salaries. Therefore, only the absolute deviation is determined here. Exceeding the basic value of the wage fund is recognized as an unjustified overexpenditure, the elimination of the causes of which is a reserve for reducing the cost of production. At the analyzed enterprise, the reserve for reducing costs is the amount of 99.4 thousand rubles, which can be mobilized by eliminating the causes of overexpenditures in the wage funds of managers, specialists and other employees.

A necessary condition for reducing production costs in terms of wage costs is for the growth rate of labor productivity to outpace the growth rate of average wages. At the analyzed enterprise, labor productivity, i.e. The average annual output per worker increased compared to the plan by 1.2%, and the average annual wage per worker increased by 1.6%. Therefore, the advance coefficient is:

The faster growth of wages compared to labor productivity (this is the case in the example under consideration) leads to an increase in production costs. The impact on the cost of production of the relationship between the growth of labor productivity and average wages can be determined by the following formula:

Y wages - Y produces labor multiplied by Y, divided by Y produces. labor.

where, Y is the share of wage costs in the total cost of marketable products.

The increase in production costs due to the faster growth of average wages compared to labor productivity amounts to:

101,6 — 101,2 * 0,33 = + 0,013 %

or (+0.013) * 19888 = +2.6 thousand rubles.

At the end of the analysis of wage costs, reserves for reducing production costs in terms of labor costs identified as a result of the analysis should be calculated:

• 1) Elimination of reasons causing unproductive payments: 15.2 thousand rubles.
• 2) Elimination of the causes of unjustified overexpenditure in the wage funds of managers, specialists and other employees 99.4 thousand rubles.
• 3) Implementation of organizational and technical measures to reduce labor costs, and therefore wages for production: -

Total reserves for reducing production costs in terms of wage costs: 114.6 thousand rubles.

Analysis of production maintenance and management costs

These expenses mainly include the following items of product cost calculation:

• a) costs of maintaining and operating equipment;
• b) general production expenses;
• c) general business expenses;

Each of these items consists of different cost elements. The main purpose of the analysis is to find reserves (opportunities) for reducing costs for each item.

Sources of information for the analysis are the calculation of product costs, as well as analytical accounting registers - statement No. 12, which records the costs of maintaining and operating equipment and general production expenses, and statement No. 15, where general business expenses are recorded.

The costs of maintaining and operating equipment are variable, i.e., they directly depend on changes in the volume of production. Therefore, the basic (as a rule, planned) amounts of these expenses should first be recalculated (adjusted) by the percentage of fulfillment of the production plan (102.4%). However, these expenses include conditionally constant items that do not depend on changes in production volume: “Depreciation of equipment and intra-shop transport”, “Depreciation of intangible assets”. These items are not subject to recalculation.

The actual expense amounts are then compared with the recalculated base amounts and variances are determined.

Expenses for maintenance and operation of equipment

Table No. 21

(thousand roubles.)

In general, there is an overexpenditure for this type of expense compared to the adjusted plan in the amount of 12.8 thousand rubles. However, if we do not take into account savings on individual expense items, then the amount of unjustified overexpenditure on depreciation, operation of equipment and its repair will be 60 + 4.8 + 17 = 81.8 thousand rubles. Eliminating the causes of this unlawful overspending is a reserve for reducing production costs.

General production and general business expenses are semi-fixed, i.e. they do not directly depend on changes in the volume of production.

General production expenses

Table No. 22

(thousand roubles.)

In general, for this type of expense there is a saving of 1 thousand rubles. At the same time, for certain items there is an excess of the estimate in the amount of 1+1+15+3+26=46 thousand rubles.

Eliminating the causes of this unjustified cost overrun will reduce production costs. Particularly negative is the presence of non-productive expenses (shortages, losses from spoilage and downtime).

Then we will analyze general business expenses.

General running costs

Table No. 23

(thousand roubles.)

In general, there is an overexpenditure in the amount of 47 thousand rubles for general business expenses. However, the amount of unbalanced overexpenditure (that is, without taking into account savings available on individual items) is 15+24+3+8+7+12=69 thousand rubles. Eliminating the causes of this overexpenditure will reduce production costs.

Savings on certain items of general production and general business expenses may be unjustified. This includes items such as costs for labor protection, testing, experiments, research, and personnel training. If there are savings on these items, you should check what caused them. There may be two reasons: 1) the corresponding costs are incurred more economically. In this case, the savings are justified. 2) Most often, savings are the result of the fact that planned measures for labor protection, experiments and research, etc., have not been carried out. Such savings are unjustified.

At the analyzed enterprise, as part of general business expenses, there is unjustified savings under the item “Training” in the amount of 13 thousand rubles. It is caused by incomplete implementation of planned personnel training activities.

So, as a result of the analysis, unjustified overexpenditures were identified in terms of costs for the maintenance and operation of equipment (81.8 thousand rubles), in general production expenses (46 thousand rubles) and in general business expenses (69 thousand rubles).

The total amount of unjustified cost overruns for these cost items is: 81.8+46+69=196.8 thousand rubles.

However, as a reserve for reducing costs in terms of production maintenance and management costs, it is advisable to accept only 50% of this unjustified cost overrun, i.e.

196.8 * 50% = 98.4 thousand rubles.

Here, only 50% of unjustified overexpenditure is conditionally accepted as a reserve in order to eliminate double-accounting of costs (materials, wages). When analyzing material costs and wages, reserves for reducing these costs have already been identified. But both material costs and wages are included in the costs of production maintenance and management.

At the end of the analysis, we will summarize the identified reserves for reducing production costs:

in terms of material costs, the reserve amount is 69.4 thousand rubles. by eliminating excess returnable waste of materials and reducing transportation and procurement costs to the planned level;

in terms of wage costs - the amount of the reserve is 114.6 thousand rubles. by eliminating the reasons causing unproductive payments and the reasons for unjustified overspending on the wage funds of managers, specialists and other employees;

in terms of production maintenance and management costs - the amount of the reserve is 98.4 thousand rubles. by eliminating the causes of unjustified cost overruns in the costs of maintaining and operating equipment, general production and general business expenses.

So, the cost of production can decrease by 69.4 +114.6+98.4=282.4 thousand rubles. The profit of the analyzed enterprise will increase by the same amount.

The release of any product (as well as the provision of a service) is associated with preliminary production investments. In modern economic theory, the totality of relevant types of costs is considered to be cost. What are the approaches of Russian economists to studying this phenomenon? What is cost in terms of business efficiency? What are the key conditions for its optimization?

Cost: theory

First, let's define what cost is. By this term, modern economists understand the financial expression of an enterprise’s expenses directly related to the production and sale of goods. The fact is that almost any production includes costs for raw materials, electricity, fuel, payment of labor compensation (and accompanying social obligations), depreciation reimbursement, etc. The firm's total costs are the total cost of its products.

Cost and profit

Reducing the corresponding costs of producing goods directly affects the organization's profit. The most important criterion here is to maintain the proper level of quality of the products produced. If it does not meet the current needs of consumers and clients, then demand will fall and problems with revenue will arise.

Thus, the cost calculation methods used by the company are extremely important criteria for business efficiency. Many economists consider it, however, not a quantitative, but a qualitative indicator. Cost, therefore, reflects the total range of resources that the company possesses.

Cost Components

What is cost in terms of the components that form it? Modern economists include the following types of costs:

• costs associated with preparing production facilities and putting them into operation;
• costs reflecting investments in the production of goods, the use of certain technologies, and the implementation of management decisions;
• costs associated with the company's investments in the development of the scientific and technical base, various kinds of development projects, and research;
• costs reflecting the service component of the process of releasing goods;
• investments in improving working conditions;
• salary, vacation pay, social contributions;
• insurance payments;
• acquisition of fixed assets, depreciation;
• purchase of raw materials.

Within a typical production structure, which product costs account for the largest share? This, as many economists believe, is precisely the purchase of raw materials and materials that are subject to further processing. In some industries, this expense item exceeds 80% of total costs. In a number of cases, the production cost of an enterprise includes moments when the factory is running “idle” (production defects, various types of technological downtime, etc.).

What is not included in the cost?

What, in turn, is not an integral part of the cost, based on modern economic theories? These components usually include, in particular, costs and lost profits associated with the implementation of projects suspended due to objective or independent of the will of the company management. Also, production costs, as a rule, do not include resources spent on servicing mothballed capacities.

The cost of releasing a product usually does not include costs associated with lawsuits, fines and other sanctions provided by law. Some economists also prefer not to include written-off or uncollectible receivables in the cost of production.

Classification of costs

The costs that form the cost of a product are usually classified into two categories. There are homogeneous cost components (they may include, for example, personnel salaries), and there are complex ones (they may reflect, in particular, the costs of purchasing equipment).

There are costs of a fixed nature, the value of which does not directly depend on the number of goods produced (including rent for premises), and there are variable costs, which, in turn, are proportional to the rate of production (purchase of raw materials, payment of personnel - new personnel are hired) .

Analytical aspect

How is product cost analysis carried out? Several key indicators are used. Among these, for example, is the cost estimate (total), the number of costs per one commodity unit, as well as per one ruble of products sold.

The first indicator reflects the total amount of costs recorded by the company during the use of all types of production facilities, payment for related services (engineering, installation), and launching the production of new products. This figure can be divided by the number of units produced, and also be the basis for calculating a coefficient correlated with one ruble of the product’s selling price.

Cost components can be classified according to a number of other criteria. This may be the composition of costs (expenses for a specific area of ​​the company’s activities - workshop, scientific department, retail, etc.), the duration of the period of use of funds (month, quarter, year and longer intervals), type of reporting (current , forecast, etc.).

Costing aspect

How is cost calculation carried out when the task is to calculate coefficients for specific expense items? That is, when the total indicator in the form of an estimate does not interest us, we need an analysis of costs relative to their specific purpose. Very simple.

First we define the calculation objects. These can be single products, product groups, and if we are interested in the cost of services, then we specify the types of services to be studied. Then we select the calculation criteria (as a rule, this is some kind of natural indicator - kilogram, meter, etc.), and they may not coincide in content with the object in the form of a single product. But this is completely normal - just the same, grouping individual goods, based on the equal applicability of calculation criteria, is much more convenient from the point of view of cost analysis than operating with individual units of production.

The cost of production is the enterprise's costs for its production and sale, measured in monetary terms (Fig. 1). Without calculation and analysis of costs, it is impossible to make effective management decisions at all levels. Let's look at what types of costs there are and typical accounting entries.

Rice. 1. List of enterprise costs that form the cost.

Cost indicators can be planned and actual. Planned ones are calculated based on planned resource consumption rates. Actual expenses are determined after all expenses have actually been incurred.

Depending on the sequence of formation, the cost is divided:

• operational or technological;
• workshop;
• production;
• complete.

Technological

Technological cost serves to determine comparative economic efficiency when choosing the most effective of several technology upgrade options, and includes the costs of all technological operations with the product. It is formed on account 20 without taking into account general workshop and.

Shop

Workshop cost , in addition to technological costs, includes costs for organizing and managing the work of the workshop, which cannot be clearly attributed to a specific type of product. These costs are accumulated in the account and distributed monthly by type of product when calculating their workshop, production and full costs.

Production

Production cost , in addition to the shop floor, includes the costs of managing the enterprise (general business expenses), which accumulate in the account and are also written off monthly for certain types of products.

Full

IN full cost , in addition to production costs, non-production costs associated with are also included.

According to their economic essence, they distinguish between cost, determined by economic elements, or by costing items.

By summing up costs by economic elements, it is impossible to determine the costs of producing a specific product; therefore, costing items are used to determine the cost of individual types of products.

Reflection of cost on products

In general, the cost of production is formed using the following entries:

Postings for the release of finished products

The output of finished products can be accounted for by the accounting department at actual or standard cost. In the first case, the write-off goes directly to. When two entries are made:

How to reflect the sale of finished products in transactions

When accounting without using an account, the actual cost of production is written off to account 90.02. If an account is used to account for finished products at their standard cost, then another entry is made to correct deviations of the actual cost from the planned one.

In management analysis, the full cost is calculated in order to determine all the costs of manufacturing products. This indicator allows you to understand how profitably the organization operates and how to price goods. Let's figure out exactly what costs for manufacturing products are included in the full cost price and in what order such calculations are carried out.

The total total cost of a GP shows the total volume of all resources spent on production and commercial, that is, associated with sales, expenses. Figuratively speaking, this is an assessment of all costs of manufacturing a product and its sale - from the initial production stage to final delivery to the consumer. The total cost usually includes the following types of costs:

• Production – consist of material, raw materials, fuel and energy, labor, depreciation, social and other costs directly spent in the production of the state product and its delivery to the organization’s warehouse. This group also includes amounts of taxes, credit interest, rent, consulting, advertising, legal, auditing and other services received from outside.
• Commercial - consist of costs associated with transportation, packaging, storage, advertising for the purpose of marketing the produced GP and bringing it to the end consumer market.
• General production – for the maintenance of main, auxiliary and service industries.
• General economic – to ensure the successful operation of the entire enterprise. They may not directly relate to production cycles, but without them, the successful functioning of a business is impossible.

Regardless of which classification group the costs belong to, calculating the full production cost of a product means taking into account all costs - be they fixed or variable, overhead or direct costs. For calculation purposes, indirect costs are distributed depending on the selected distribution base. The total cost of products sold is a gross indicator, characterizing the costs of the entire volume of manufactured products, or a unit indicator, showing how much expenses are spent on the production of one product.

Reduced cost is the calculation of products based only on direct, variable costs associated with the production of GP. With this accounting option, general business expenses, which are considered semi-fixed, like ordinary expenses, are directly included in the financial results, without using accounts 20, 29 or 23 (PBU 10/99). Such indirect costs are reflected in the account by the accountant. 44 or 26 depending on the type of activity of the organization. At the end of the period, the collected amounts are subject to complete debiting to the account. 90.

A shortened version of product costing greatly simplifies accounting and does not in any way affect the determination of the final result of business activities. But this method distorts the data and does not always allow one to accurately calculate how much money it cost the company to produce a product or provide a service. In addition, only the full cost of goods sold allows managers to perform long-term planning, analysis and production control to increase the profitability and profitability of the business. The method used should be fixed in the company's accounting policy.

How to find the total cost

The total cost of manufactured products of an enterprise is equal to the monetary expression of total costs. The calculations estimate the raw materials, financial, labor and other resources spent in the production process, as well as the costs of selling and storing goods. The obtained value helps to understand how expensive the production of the GP cost the enterprise. To know how to calculate the total cost of production, it is necessary to determine the financial indicator by summation.

Costing is performed by adding production and commercial costs, as well as general business costs (if any). After calculations, it becomes clear at what level to set prices for goods or services so that the enterprise can recoup production costs and start a new production cycle, that is, operate at break-even. Conducting an in-depth analysis of the cost structure allows you to identify reserves for saving resources and using them more efficiently. Next, let's look at examples and formulas to determine how the total cost of a GP is determined.

How to calculate the total cost of production - formula

We decided that the total cost of production is all the costs of the enterprise. Therefore, in order to make a correct calculation, it is necessary to sum up all costs. To do this, use the following general formula for calculating the total cost of production:

Total cost = PS + SR, where:

PS is the value of production costs, and SR is the volume of sales costs.

The given formula is generalized and understandable to those who have already encountered product calculation. If you don’t know what the terms are made of, check out the expanded formula, which looks like this:

Total cost = construction and installation work + PF + TER + ZOP + ZAP + A + SV + PPR + SR + TR + PSR, where:

Construction and installation work – material and raw material costs;

PF – semi-finished products spent in production;

FER – fuel and energy costs;

PDO – salaries of personnel of main and auxiliary production;

ZAUP – salary of the company’s administrative and management personnel;

A is the accrued amount of depreciation of the fixed assets used;

SV – the amount of accrued insurance premiums;

PPR – the value of all other production costs;

SR – the amount of sales expenses;

TR – transport costs;

RSP – the amount of other sales expenses.

An example of calculating the total cost of a GP

To make it clear what the total cost of an enterprise’s products is, let’s look at an example of a specific organization. Let's say a company manufactures electrical equipment. The expenses incurred during the period are shown in the table below. We will calculate products in two ways - at full cost and also at reduced cost. At the end, we will calculate financial indicators from activities.

Table of economic indicators for calculations

Cost calculation table - calculation done in two ways

Table for calculating profit for the production activities of an organization

Thus, from the example it is clear that the full cost of products sold allows us to take into account all the expenses incurred by the enterprise and more accurately set the price indicator in order to ultimately obtain greater profits.

Features of the full cost method

When estimating current costs, the full cost accounting method is developed in order to establish a fair price for manufactured products. If the enterprise produces various products (types of goods), the responsible employees first need to divide all costs according to the centers of responsibility, that is, the places of occurrence. Then the cost carriers for their distribution are established. And finally, for each specific product, costs are allocated depending on production needs.

The calculation process is quite complex and usually combines the work of several specialists. To ensure accurate calculations for products, estimates and cost write-off standards are developed, prices at which costs are written off are determined, and at the final stage, indicators are analyzed and monitored. Like other methods, the full cost method has its advantages and disadvantages. The advantages include the elimination of market monopolization, since with this option for calculating goods, the price for the consumer is set on average at the same level. At the same time, sellers have the opportunity to realistically assess their costs and calculate the optimal cost of products to make a profit.

Among the disadvantages, it should be noted that this methodology does not take into account the existing competition in the current market, therefore, the existing demand for products is not taken into account in the calculations. And changes in the level of costs when production volumes fluctuate cannot be planned. In addition, attributing the amount of fixed costs to the cost of products or services may somewhat distort the impact of a particular product on the financial result of the organization. Each organization decides independently which method of calculating manufactured products to choose.

It is possible that for some purposes (or external users) it will be necessary to calculate the cost using traditional full indicators, and for others - according to reduced or combined ones. When choosing, you should take into account the specifics of the activity, the nature of the products produced, seasonality, planning time and other factors. The method of full cost accounting is most widely used in small companies, as well as where a narrow range of products are produced. If the product range is significant and the business is large-scale, it is recommended to use aggregate methods and techniques for calculating the cost of the enterprise.

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Theoretically, it is quite acceptable to use the term “costs” as a synonym for cost. Both are the valuation of all invested funds necessary for the manufacture and marketing of products. They directly affect the profit of the enterprise: when they grow, the profitability of the business falls.

What it is?

The total costs of an enterprise consist of two parts:

• costs directly for production – production cost;
• costs of selling finished products – cost of sales.

These two indicators add up to full cost, which is also called average. It is calculated for the entire volume of production and sales. If it is divided by the number of units manufactured, the costs for an individual product will be determined. They determine the production costs of each subsequent unit. This marginal cost.

Production costs comprise all expenses for organizing the production process. Mainly they include:

• costs of raw materials, materials used;
• payments for fuel, electricity;
• salaries of all employees of the enterprise;
• deductions for the repair of fixed assets and their maintenance;
• costs of insurance, storage of goods in warehouses;
• depreciation of fixed assets;
• mandatory contributions to various state funds (pension, etc.).

Sales costs include costs at the stage of marketing finished products. This is first of all:

• expenses for packaging finished products;
• transportation costs for delivering them to the distribution warehouse or to the buyer;
• marketing costs and other expenses.

Calculation methods

There are many ways to calculate the indicator. Each one approaches a specific enterprise taking into account its production technology, specifics, and characteristics of the products produced. Accounting selects the most suitable option.

For ongoing cost analysis, the two most common methods are used. All the rest are their varieties.

Process method

It is used in industries with a massive continuous type of production: primarily by energy, transport, and mining industries. They are characterized by the following factors:

• Limited nomenclature.
• Products have uniform properties and characteristics.
• Short production cycle.
• Insignificant volumes of work in progress, semi-finished products or their complete absence.
• The object of calculation is the final product.

In the absence of finished product inventories, as, for example, in energy enterprises, it is convenient to use a simple calculation formula:

C=Z/X, Where

• C – unit cost of production;
• Z – total costs for a specific period;
• X is the number of units of production produced during the same period of time.

Normative method

Used in serial and mass production with constantly repeating operations. There, every month, quarter, year, the ratio of standard and planned costs is checked, and if they do not correspond, appropriate adjustments are made.

Cost standards are usually developed based on data from previous years. The advantage of the method is to prevent the waste of financial, material and labor resources.

Custom method

Here, the object of calculation is a separate order or work that is performed to meet the customer’s requirements. This method is used:

• in single or small-scale production, in which each unit of expenditure is different from all others made previously;
• in the manufacture of large, complex products with long production cycles.

It is used by enterprises in heavy engineering, construction, science, furniture industry, and repair work. For each individual order, costs are individually determined using a costing card, which is constantly adjusted in connection with current changes in any costs.

The disadvantage of this method is that there is no operational control over the level of spending, and the complexity of inventory of work in progress.

Calculation method

It is selected by each enterprise depending on the characteristics of its production and product. For example, in a confectionery factory, when choosing a costing method, the shelf life of the products and the associated energy costs are of paramount importance. For a furniture manufacturing company, the most important factors are the high costs of materials, as well as the transportation of large goods.

Costing is a statement for calculating costs for an individual unit of production. In it, all expenses for homogeneous elements are grouped into separate items, of which the most important are:

• Payment for the energy and fuel needed to produce.
• Cost of semi-finished products supplied from other enterprises.
• Depreciation of equipment, wear of fixtures, tools.
• Salaries, social benefits for employees.
• Total production costs for the workshop.

The itemized calculation method is used to calculate the so-called shop cost. To do this, the sum of all costing costs should be divided by the number of units of the product produced. This, in fact, will be the production costs of each individual product.

They are inversely related to production volumes. The more products a workshop produces, the lower the production costs per unit product. This is the essence of the so-called economies of scale.

Transverse method

It is acceptable for production with several completed stages of processing of raw materials and materials. At each stage, semi-finished products are produced, which are used internally or sold to other enterprises.

Costs are calculated at each stage, but there is only one indicator for the finished final product.

Method of averages

Its essence is in calculating the share of specific costing items in the structure of the total cost. This allows you to determine how changes in certain costs affect the efficiency of the entire production.

If, for example, the share of transport costs is the highest, then their variability will have the greatest impact on the overall final result.

You can get detailed information about how to calculate the indicator from the following video:

Cost of services

The calculation of an indicator in the service sector can include many variable economic factors. The final service product does not always require costs for materials, components, and transportation to the point of consumption. Often its profitability depends on the availability of clientele and their orders.

The cost of a service is all the contractor’s expenses without which the work cannot be completed. They include:

• Direct costs that depend directly on the performance of the service. This is primarily the salary of the staff.
• Indirect costs are management salaries.
• Constant payments that do not depend on the volume of services performed. These include utility bills, equipment depreciation, and contributions to the pension fund.
• Variable expenses - for example, the purchase of materials - are directly dependent on the number of services provided.

The need to analyze the indicator

Cost calculation is mandatory, since on its basis the following is carried out:

• planning work and monitoring the implementation of plans;
• preparation of financial statements;
• analysis of the economic efficiency of the enterprise and all its structural divisions;
• compiling data for financial reporting on finished and sold products and work in progress.

Without calculation it is impossible to make effective management decisions. On its basis, a competitive price for the manufactured product and a successful assortment policy are developed, which will ensure high production profitability and business profitability.