Each enterprise, regardless of its size, uses certain resources in the course of economic and financial activities: labor, material, financial. These consumed resources are the production costs. They are categorized into fixed costs and variable costs. Implementation is impossible without them economic activity and making a profit. The division into variable and fixed costs allows you to competently and efficiently take the most optimal management decisions, which helps to increase the profitability of the enterprise.

Fixed costs are all types of resources aimed at production and independent of its volume. They also do not depend on the number of services provided or goods sold. These costs are almost always the same throughout the year. Even if the company temporarily stops production of products or ceases to provide services, these costs will not stop. You can distinguish such fixed costs inherent in almost any enterprise:

Permanent employees of the enterprise (salaries);

Social security contributions;

Rent, leasing;

Tax deductions for the property of the enterprise;

Payment for the services of various organizations (communications, security, advertising);

Calculated using the straight-line method.

Such expenses will always exist as long as the company carries out its economic and financial activities. They are, regardless of whether it receives income or not.

Variable costs- the costs of the enterprise, which vary in proportion to the volume of manufactured goods. They are directly related to production volumes. The main items of variable costs are:

Materials and raw materials required for production;

Piecework salary (by percentage of remuneration to sales agents;

The cost of a commercial product purchased from other enterprises and intended for resale.

The main point of variable costs is that when an enterprise has income, they may occur. From its income, the company spends part of the money for the purchase of raw materials, materials, goods. In this case, the money spent is transformed into liquid assets in the warehouse. The company also pays the percentage of remuneration to agents only from the income received.

This division into fixed costs and variables is necessary for the full management of the business. It is used to calculate the "break-even point" of the enterprise. The lower the fixed costs, the lower it is. Decrease specific gravity such costs also sharply reduce the entrepreneurial risk.

The division of costs into fixed and variable costs is widely used in the theory of microeconomics. It is also used to define specific types costs, since the company benefits from a reduction in fixed costs. An increase in the volume of production reduces the part of fixed costs included in the cost of a unit of production, thereby increasing the profitability of production. This growth in profits is due to the so-called "economies of scale", that is, the more commercial output is produced, the lower its cost becomes.

In practice, such a concept as conditionally fixed costs is also often used. They represent the kind of cost that is present during downtime, but their value can be changed depending on the period of time chosen by the enterprise. This type of cost intersects with indirect or overhead costs that accompany the main production, but are not directly related to it.

The size of which depends on the intensity of production. Variable costs are the opposite fixed costs... The key feature by which variable costs are identified is their disappearance when production is interrupted.

What is variable cost?

Variable costs include the following:

• Piecework wages of workers tied to personal results.

• Expenses for the purchase of raw materials and components for the maintenance of production.

• Percentage and bonuses paid to consultants and sales managers based on the completion of the plan.

• The amount of those taxes, the basis for the calculation of which are the volumes of production and sales. These are the following taxes: VAT, excise taxes, according to the STS.

• The costs of paying for the services of service organizations, for example, goods transportation services or sales outsourcing.

• The cost of fuel and electricity consumed directly in the shops. A distinction is important here: the energy used in administrative buildings and offices is a fixed cost.

Break-even point and types of variable costs

The VC value changes in proportion to the size total costs... When determining the break-even point, it is assumed that variable costs are proportional to the volume of production:

However, this is not always the case. An exception may be, for example, the introduction of a night shift. Since the night is higher, variable costs will increase at a faster rate than production volumes. On this basis, there are three types of VC:

• Proportional.

• Regressive variables - costs increase at a slower rate than. This effect is known as economies of scale.

• Progressive variables - the growth rate of costs is higher.

Calculation of the VC indicator

The classification of fixed and variable costs is not applied at all for accounting(in the balance sheet there is no line "variable costs"), but for management analysis. Calculation of variable costs is advisable because it gives the leader the ability to manage the profitability and profitability of the organization.

To determine the value of variable costs, methods such as algebraic, statistical, graphical, regression-correlation and others are used. The most famous and widespread is the algebraic method, according to which the following formula can be used to determine the VC value:

Algebraic analysis assumes that the research subject has information such as the volume of production in physical terms (X) and the amount of the corresponding costs (Z), at least for two points of production.

Also often used margin method, value-based margin income, which is the difference between the profit of the organization and the total variable costs.

Inflection Point: How to Minimize Variable Costs?

A popular strategy for minimizing variable costs is to define “ points fracture"- such a volume of production at which variable costs stop increasing proportionally and reduce the growth rate:

There may be several reasons for the manifestation of such an effect. Among them:

1. 1. Reducing the cost of remuneration of management personnel.

1. 2. Application of a focusing strategy, which is to increase the specialization of production.

1. 4. Integration innovative developments into the production process.

Keep up to date with all the important events of United Traders - subscribe to our

As you know, costs are called the costs of the enterprise, expressed in monetary form, for the production of goods.

It is very important for any company to have the most full information about costs. This allows you to correctly set the price of manufactured products, calculate the level of efficiency of processes, learn about the efficiency of resource use by specific departments, etc.

Definition

In general, specialists separate costs into fixed and variable e. Fixed costs do not depend on the level of production. They include the rent of premises, the cost of retraining personnel, payment utilities etc.

The value of variable costs depends on the volume of products. The main feature: when production stops, this type of waste disappears.

It should be noted that this division is very arbitrary. For example, conditionally variable costs are also distinguished. Their value depends on the business activity of the company, but this dependence is not direct. These include, for example, long distance calls as part of the subscription fee for telephone services.

As a rule, variable expenses can be attributed to direct... This means that, firstly, they are directly related to the production of a product or service, and secondly, they can be included in the cost of goods on the basis of primary documentation without any additional calculations.

You can find out detailed information about these indicators from the following video:

Varieties

Without going deep into the essence of the problem, one can decide that the growth of such costs grows with an increase in the volume of production, with an increase in sales of products, etc. However, this is not entirely true. Depending on the nature of the volume of output, among the variable costs, there are:

• proportional, which increase with an increase in the volume of production (if the production of goods increases by 20%, then expenses will proportionally increase by 20%);
• regressive variables the growth rate of which lags somewhat behind the growth rate of production (if production increases by 20%, spending may increase by only 15%);
• progressive variables, which increase somewhat faster than the increase in production and sales of goods (if production increases by 20%, spending increases by 25%).

Thus, we see that the value of variable costs is not always directly proportional to the volume of production. For example, if, in the event of an expansion of the enterprise and an increase in the volume of production, night shift, then the payment for it will be higher.

Direct and indirect costs among the variables are rather conditionally distinguished:

• Usually to direct include the costs that may be associated with the production of a particular product. They relate directly to the cost of goods. This can be spending on raw materials, fuel or wages for workers.
• To indirect can be attributed to general shop, general plant expenses, that is, those that are associated with the manufacture of a group of goods. Due to factors such as technological specificity or economic feasibility, they cannot be directly attributed to the cost price. The most common example is the procurement of raw materials in integrated industries.

In statistical documentation, costs are divided into general and average. This division makes sense in the reporting documents of enterprises:

• Average calculated by dividing variable costs by the volume of goods produced.
• Are common Is the sum of the fixed and variable costs of the organization.

You can also talk about production and non-production types. This division is directly related to the process of manufacturing products:

• Production are included in the cost of goods. They are tangible and amenable to inventory.
• Non-production they no longer depend on the volume of production, but on the duration. Therefore, it is impossible to inventory them.

Thus, the following are the most common examples of variable costs in production:

• wages of employees, depending on the volume of goods produced by them;
• the cost of raw materials and other materials required for the manufacture of products;
• expenses for warehousing, transportation and storage of goods;
• interest paid to sales managers;
• taxes related to production volumes: VAT, excise taxes, etc .;
• services of other organizations related to the maintenance of production;
• the cost of energy resources at enterprises.

How to count them?

For convenience, variable costs can be schematically expressed as follows:

• Variable spending = Raw materials + Materials + Fuel + Percentage of wages, etc.

For the convenience of calculating the dependence of costs on production volume, the German economist Mellerovich introduced cost responsiveness (K)... The formula showing the relationship between cost change and productivity gain looks like this:

K = Y / X, where:

• K is the cost responsiveness;
• Y is the growth rate of costs (in percent);
• X - the rate of growth of production (trade, business activity), also calculated as a percentage.

• 110% / 110% = 1

The response rate of progressive spending will be more than one:

• 150% / 100% = 1,5

Therefore, the coefficient of regressive spending is less than 1, but more than 0:

• 70% / 100% = 0,7

The cost of any unit of production can be expressed by the following formula:

Y = A + bX, where:

• Y denotes total costs (in any currency, for example, rubles);
• A is a constant part (that is, the one that does not depend on the volume of production);
• b - variable costs, which are calculated per unit of product (cost response rate);
• X is an indicator of the business activity of the enterprise, presented in natural units.

AVC = VC / Q, where:

• AVC - average variable costs;
• VC - variable costs;
• Q is the volume of products manufactured.

The chart shows averages variable costs are presented, as a rule, in the form of an increasing curved line.

In the activities of any enterprise, making the right management decisions is based on the analysis of its performance indicators. One of the tasks 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 not only of calculating the cost of production, but also of analyzing 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 analysis purposes in computer programs it is convenient for enterprises to provide for the automatic separation of costs into 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 assessing the profitability different types products.

Variable costs

To variable costs includes costs that are unchanged per unit of production, but their total amount is proportional to the volume of production. These include raw material costs, Consumables, energy resources involved in the main production, the salary of the main production personnel (together with accruals) and the cost transport 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 physical terms, can decrease with increasing production volumes due to, for example, reduced losses or costs of energy resources and transportation.

Variable costs are direct and indirect. If, for example, an enterprise produces bread, then the costs of flour are direct variable costs that increase in direct proportion to the volume of bread production. Direct variable costs may decrease with the improvement of the technological process, the introduction of new technologies. However, if a refinery refines oil and, as a result, receives in one technological process, for example, gasoline, ethylene and fuel oil, 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 products. 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 (10 tons - losses or waste) are obtained, then the cost of 1,111 tons of oil is attributed to the production of one ton of ethylene (20 tons of ethylene + 2.22 tons of waste / 20 tons of ethylene). This is due to the fact that, when calculated proportionally, there is 2.22 tons of waste per 20 tons of ethylene. But sometimes all waste is attributed to one product. For calculations, the data of technological regulations are used, and for analysis, the actual results for the previous period.

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

Thus, the costs of gasoline for the transportation of raw materials in oil refining are indirect, and for transport company direct, since they are directly proportional to the volume of traffic. Wages production personnel with accruals are attributed to variable costs with piecework wages. However, with time wages, these costs are conditionally variable. When calculating the cost of production, the planned costs per unit of production are used, and when analyzing the actual costs, which may differ from the planned costs both upward and downward. Depreciation of fixed assets per unit of output is also variable costs. But this relative magnitude it is used only when calculating the cost of various types of products, since depreciation deductions, in themselves, are fixed costs / costs.

Read also: What is a letter of credit form of payment: advantages and disadvantages

In this way, total variable costs can be calculated by the formula:

Rperm = C + ZPP + E + TR + X,

C is the cost of raw materials;

ZPP - salary of production personnel with deductions;

E is the cost of energy resources;

TR - transportation costs;

X - other variable costs that depend on the profile of the company.

If an enterprise produces several types of products in quantities W1 ... Wn and, per unit of production, variable costs are P1 ... Pn, then the total volume of variable costs will be:

Pvar = W1P1 + W2P2 +… + WnPn

If an organization provides services and pays agents (for example, sales agents) as a percentage of sales, then agent remuneration is attributed to variable costs.

Fixed costs

The fixed costs of production of an enterprise are those that do not change in proportion to the volume of production.

Share fixed costs decreases with increasing production (scaling effect).

This effect is not inversely proportional to the volume of production. For example, an increase in the volume of production may require an increase in the number of accounting and sales departments. Therefore, they often talk about conditionally fixed costs. Fixed costs also include expenses for management personnel, maintenance of the main production personnel (cleaning, security, laundry, etc.), organization of production (communications, advertising, bank expenses, travel expenses, etc.), as well as depreciation charges. Fixed costs are expenses, for example, for renting premises, and the rental price may change due to changes in market conditions. Fixed costs include some taxes. This, for example, is the unified imputed income tax (UTII) and property tax. The amounts of these taxes may change due to changes in the rates of such taxes. Fixed costs can be calculated using the formula:

Ppost = Zaup + AR + AM + N + OR

Manufacturing costs are actually payment for the purchased factors. Their research should provide certain volumes of production in order to completely cover the costs and ensure an acceptable profit. Income is a dynamic motivation organizational activities, costs are an important component for economic analysis. Organizations have different approaches to profit and cost. Income should provide maximum production opportunities for a given value of costs. The highest production efficiency will be at the lowest cost. They will include the cost of manufacturing the goods. For example, the purchase of raw materials, electricity, payment for working hours, depreciation, organization of production. Part of the proceeds will be used to pay off the incurred production costs, while the rest will remain profit. This allows us to assert that the costs are less than the price of the product by the amount of profit.

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

There are many ways for the enterprise to make a profit and transfer 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 receive a positive income. If management ignores spending, then financial and economic activities become unpredictable. Profit in such an enterprise begins to decrease, and over time it becomes negative, which means a loss.

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

Analyzing costs should start with classification. It will provide a comprehensive understanding of the main characteristics and properties of costs. Costs are complex and cannot be represented using a single classification. Generally speaking, each enterprise can be considered trading, manufacturing or service. The information provided applies to all enterprises, but to a greater extent - to production ones, since they have a more complex cost structure.

The main differences in general classification there will be a place of emergence of costs, their relation to spheres of activity. The above classification is used to systematize expenses in profit statements, for comparative analysis required cost elements.

The first types of expenses:

• Production

1. production waybills;
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 costs, there are fixed costs with variable costs. A simple example: pay for mobile phone... The constant component will be the subscription fee, and the variable is determined by the amount of time spent and the presence of long-distance calls. When accounting for costs, it is required 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: direct labor, use of direct materials, production invoices. 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 passed into finished products.

Direct labor costs mean the payment of production personnel and the efforts associated with the manufacture of goods. Paying shop foremen, managers and equipment adjusters is a production overhead. It is worth considering the accepted convention when determining 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 "main production workers" remains, the payment is considered the cost of direct labor of the enterprise.

Production overhead includes the remaining production support costs. In practice, the structure is polysyllabic; volumes are scattered over a wide range. Typical production overheads include indirect materials, electricity, indirect labor, equipment maintenance, thermal energy, renovation of premises, part of tax payments that are included in gross costs and other, connected immanently with the release of products in the company.

Non-production costs are divided into sales and administrative costs. The cost of selling a product consists of spending that was spent on product safety, promotion, and delivery. Administrative costs are the totality of all expenses on company management - the maintenance of the management apparatus: planning and financial department, accounting.

Financial analysis implies a gradation of costs: variable and constant. The division is justified by a contradictory reaction to the change in production volume. Western theory and practice of management accounting takes into account a number of distinction 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 reducing the cost, with an increase in volume, their share in the unit of finished goods decreases.

Variable costs

Variable costs will be costs, one hundred percent value 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, in units of production, 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 to reduce the share of costs per unit of goods:

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

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

Fixed costs will be costs, one hundred percent of which is not determined by production. Fixed costs per unit of output will decrease with increasing production volume, and vice versa, increase with decreasing volume.

Fixed costs associated with the existence of the organization and are paid even in the absence of production - rent, payment 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 production. 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. Reducing administrative and management costs, reducing utility bills by saving energy, 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". In economics, the following methods are adopted for classifying mixed costs into variable and constant parts:

• experimental evaluation method;
• engineering or analytical method;
• graphical method: the dependence of the volume on the cost of goods is established (supplemented with analytical calculations);
• economic and mathematical methods: method least squares; correlation method, low and high point method.

Each industry has its own dependence of each type of costs on production volume. It may be that some spending is considered variable in one industry and fixed in another.

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

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

Fixed and variable costs are the basis of common economic method... Walter Rautenstrauch was the first to suggest it 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 key performance indicators of a company under changing market conditions.

When constructing, 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 the production volumes as a percentage of the used capacity or in the unit of goods produced. The vertical indicates income, production costs. It is customary to distinguish all costs on the chart into variables (PI) and constant (PR). Additionally, gross costs (VI), sales proceeds (BP) 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 it also does not incur losses. The volume at the break-even point is called critical. If the real value is less than the critical one, then the organization is working in the minus. If production volumes are greater than the critical value, then a profit is generated.

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

VR = P + PI + POI,

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

BP = PI + POI

Revenue will be the product of the value of products and the volume of goods sold. Variable costs are rewritten through the volume released and the SPI. Taking into account the above, the formula will look like:

Ts * Vkr = POI + Vkr * SPI

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

Vkr = POI / (Ts-SPI)

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

Cost and cost reduction factors

Analysis of the actual cost of production, determination of reserves, economic effect from the decrease is based on calculations based on 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 equipment, introduction of new technologies, modernization of production, reduction in the cost of blanks, reduction of the management staff, reduction of rejects, non-production losses, costs.

Cost savings are 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, best use raw materials and new materials, revision technological characteristics and product designs.
• Modernization of labor organization and productivity. A decrease in cost occurs when there is a change production organization, methods and forms of labor, which is facilitated by specialization. Improves management while minimizing costs. Reviewing the use of fixed assets, improving logistics and minimizing transportation costs.
• Reduction of conditionally fixed costs by means of changes in the structure and volume of products. This reduces amortization, changes the assortment, product quality. The volume of output does not directly affect the conditionally fixed costs. With an increase in volumes, the share of conditionally fixed costs per unit of goods will decrease, and, accordingly, the cost price will also decrease.
• Better use of natural resources is required. It is worth considering the composition and quality source material, changing the methods of mining and finding deposits. This is an important factor that shows the impact natural conditions for variable costs. The analysis should be based on industry-specific methodologies in the extractive industry.
• Industry factors, etc. This group includes the development of new workshops, production and production units, as well as preparation for them. The reserves for reducing the cost during the liquidation of old and commissioning of new industries, which will improve economic factors, are periodically reviewed.

Reduced fixed costs:

• reduction of administrative and selling costs;
• reduction in commercial services;
• increasing the load;
• sale of unused intangible and current assets.

Reducing variable costs:

• reducing the number of basic 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 by minimizing preparatory processes, mastering a new assortment and technologies.

Changes in the assortment of products are becoming an important factor determining the level of production costs... With excellent profitability, a shift in the assortment should be associated with an improvement in the structure, an increase in production efficiency. This can both increase and decrease production costs.

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