2.3.1. Production costs in a market economy.

production costs - It is the monetary cost of acquiring the factors of production used. Most cost effective method production is considered to be the one at which production costs are minimized. Production costs are measured in terms of costs incurred.

production costs - costs that are directly related to the production of goods.

Distribution costs - costs associated with the sale of manufactured products.

The economic essence of costs is based on the problem of limited resources and alternative use, i.e. the use of resources in this production excludes the possibility of using it for another purpose.

The task of economists is to choose the most optimal variant of the use of factors of production and minimize costs.

Internal (implicit) costs - this is the cash income that the company donates, independently using its own resources, i.e. These are the returns that could be received by the firm for its own use of resources under the best of possible ways their applications. opportunity cost Lost Opportunity is the amount of money required to divert a specific resource from the production of good B and use it to produce good A.

Thus, the costs in monetary form, which the company has carried out in favor of suppliers (labor, services, fuel, raw materials) is called external (explicit) costs.

The division of costs into explicit and implicit there are two approaches to understanding the nature of costs.

1. Accounting approach: production costs should include all real, actual costs in cash (wages, rent, opportunity costs, raw materials, fuel, depreciation, social contributions).

2. Economic approach: production costs should include not only actual costs in cash, but also unpaid costs; related to the missed opportunity for the most optimal use of these resources.

short term(SR) - the length of time during which some factors of production are constant, while others are variable.

Constant factors - the total size of buildings, structures, the number of machines and equipment, the number of firms that operate in the industry. Therefore, the possibility of free access of firms in the industry in the short run is limited. Variables - raw materials, the number of workers.

Long term(LR) is the length of time during which all factors of production are variable. Those. during this period, you can change the size of buildings, equipment, the number of firms. In this period, the firm can change all production parameters.

Cost classification

fixed costs (FC) - costs, the value of which in the short term does not change with an increase or decrease in production volume, i.e. they do not depend on the volume of output.

Example: building rent, equipment maintenance, administration salary.

S is the cost.

The fixed cost graph is a straight line parallel to the x-axis.

Medium fixed costs (A F C) – fixed costs per unit of output and is determined by the formula: A.F.C. = FC/ Q

As Q increases, they decrease. This is called overhead allocation. They serve as an incentive for the firm to increase production.

The graph of average fixed costs is a curve that has a decreasing character, because as the volume of production increases, the total revenue grows, then the average fixed costs are an ever smaller amount that falls on a unit of products.

variable costs (VC) - costs, the value of which varies depending on the increase or decrease in the volume of production, i.e. they depend on the volume of output.

Example: the cost of raw materials, electricity, auxiliary materials, wages (workers). The bulk of the costs associated with the use of capital.

The graph is a curve proportional to the volume of output, which has an increasing character. But its nature can change. Initial period variable costs grow at a faster rate than the output. As the optimal size of production (Q 1) is reached, there is a relative saving of VC.

Average variable costs (AVC) – the amount of variable costs per unit of output. They are determined by the following formula: by dividing VC by the volume of output: AVC = VC/Q. First, the curve falls, then it is horizontal and sharply increases.

A graph is a curve that does not start from the origin. The general character of the curve is increasing. The technologically optimal output size is reached when AVCs become minimal (p. Q - 1).

Total Costs (TC or C) – a set of fixed and variable costs of the firm, in connection with the production of products in the short run. They are determined by the formula: TC = FC + VC

Another formula (function of volume production products): TC = f(Q).

Depreciation and amortization

Wear is the gradual loss of value by capital resources.

Physical deterioration- loss of consumer qualities by means of labor, i.e. technical and production properties.

The decrease in the value of capital goods may not be associated with the loss of their consumer qualities, then they speak of obsolescence. It is due to an increase in the efficiency of production of capital goods, i.e. the emergence of similar, but cheaper new means of labor, performing similar functions, but more advanced.

Obsolescence is a consequence of scientific and technological progress, but for the company it turns into an increase in costs. Obsolescence refers to changes in fixed costs. Physical wear and tear - to variable costs. Capital goods last more than one year. Their value is transferred to finished products gradually as it wears out - this is called depreciation. Part of the proceeds for depreciation is formed in the depreciation fund.

Depreciation deductions:

Reflect the assessment of the amount of depreciation of capital resources, i.e. are one of the cost items;

Serves as a source of reproduction of capital goods.

The state legislates depreciation rates, i.e. the percentage of the value of capital goods by which they are considered depreciated in a year. It shows how many years the cost of fixed assets should be reimbursed.

Average total cost (ATC) – the sum of the total costs per unit of production:

ATC = TC/Q = (FC + VC)/Q = (FC/Q) + (VC/Q)

The curve is V-shaped. The output corresponding to the minimum average total cost is called the technological optimism point.

Marginal Cost (MC) – the increase in total costs caused by an increase in production by the next unit of output.

Determined by the following formula: MC = ∆TC/ ∆Q.

It can be seen that fixed costs do not affect the value of MC. And MC depends on the increment in VC associated with an increase or decrease in output (Q).

Marginal cost measures how much it will cost a firm to increase output per unit. They decisively influence the choice of the volume of production by the firm, since. this is exactly the indicator that the firm can influence.

The graph is similar to AVC. The MC curve intersects the ATC curve at the point corresponding to the minimum total cost.

In the short run, the company's costs are both fixed and variable. This follows from the fact that production capacity firms remain unchanged and the dynamics of indicators is determined by the growth in equipment utilization.

Based on this graph, one can new schedule. Which allows you to visualize the capabilities of the company, maximize profits and view the boundaries of the existence of the company in general.

For the decision of the company, the most important characteristic is the average values, the average fixed costs fall as the volume of production increases.

Therefore, the dependence of variable costs on the function of production growth is considered.

At stage I, average variable costs decrease, and then begin to grow under the influence of economies of scale. For this period, it is necessary to determine the break-even point of production (TB).

TB is the level of physical volume of sales over the estimated period of time at which the proceeds from the sale of products coincide with production costs.

Point A - TB, where revenue (TR) = TS

Restrictions that must be observed when calculating TB

1. The volume of production is equal to the volume of sales.

2. Fixed costs are the same for any volume of production.

3. Variable costs change in proportion to the volume of production.

4. The price does not change during the period for which the TB is determined.

5. The price of a unit of production and the cost of a unit of resources remains constant.

Law of diminishing returns is not absolute, but relative, and it operates only in the short term, when at least one of the factors of production remains unchanged.

Law: with an increase in the use of one factor of production, while the rest remain unchanged, sooner or later a point is reached, starting from which the additional use of variable factors leads to a decrease in the increase in production.

The action of this law assumes the immutability of the state of technically and technologically production. And therefore technical progress can change the scope of this law.

The long run is characterized by the fact that the firm is able to change all the factors of production used. In this period variable character of all applied factors of production allows the firm to use the most optimal options for their combination. This will be reflected in the magnitude and dynamics of average costs (costs per unit of output). If the company decided to increase the volume of production, but at the initial stage (ATS) will first decrease, and then, when more and more new capacities are involved in production, they will begin to increase.

The graph of long-term total costs shows seven different options (1 - 7) for the behavior of ATS in the short term, since The long run is the sum of the short runs.

The long run cost curve consists of options called growth steps. In each stage (I - III) the firm operates in the short run. The dynamics of the long-run cost curve can be explained using scale effect. Change by the firm of the parameters of its activities, i.e. the transition from one version of the size of the enterprise to another is called change in the scale of production.

I - on this time interval, long-term costs decrease with an increase in the volume of output, i.e. there is economies of scale - a positive effect of scale (from 0 to Q 1).

II - (this is from Q 1 to Q 2), at this time interval of production, the long-term ATS does not react in any way to an increase in production volume, i.e. remains unchanged. And the firm will have constant returns to scale (constant returns to scale).

III - long-term ATS with an increase in output grow and there is a loss from the increase in the scale of production or negative scale effect(from Q 2 to Q 3).

3. IN general view profit is defined as the difference between total revenue and total costs for a certain period of time:

SP = TR –TS

TR ( total revenue) - the amount of cash receipts by the firm from the sale of a certain amount goods:

TR = P* Q

AR(average revenue) is the amount of cash receipts per unit of product sold.

Average revenue is equal to the market price:

AR = TR/ Q = PQ/ Q = P

MR(marginal revenue) is the increase in revenue that arises from the sale of the next unit of production. In the condition perfect competition it is equal to the market price:

MR = ∆ TR/∆ Q = ∆(PQ) /∆ Q =∆ P

In connection with the classification of costs into external (explicit) and internal (implicit) different concepts of profit are assumed.

Explicit costs (external) determined by the amount of expenses of the enterprise to pay for the purchased factors of production from the outside.

Implicit costs (internal) determined by the cost of resources owned by the enterprise.

If we subtract external costs from total revenue, we get accounting profit - takes into account external costs, but does not take into account internal ones.

If we subtract internal costs from accounting profit, we get economic profit.

Unlike accounting profit, economic profit takes into account both external and internal costs.

Normal profit appears in the case when the total revenue of an enterprise or firm is equal to the total costs, calculated as alternative. The minimum level of profitability is when it is profitable for an entrepreneur to do business. "0" - zero economic profit.

economic profit(net) - its presence means that resources are used more efficiently at this enterprise.

Accounting profit exceeds the economic one by the amount of implicit costs. Economic profit serves as a criterion for the success of the enterprise.

Its presence or absence is an incentive to attract additional resources or transfer them to other areas of use.

The purpose of the firm is to maximize profit, which is the difference between total revenue and total costs. Since both costs and income are a function of the volume of production, the main problem for the firm is to determine the optimal (best) volume of production. The firm will maximize profit at the level of output at which the difference between total revenue and total cost is greatest, or at the level at which marginal revenue equals marginal cost. If the firm's losses are less than its fixed costs, then the firm should continue to operate (in the short run), if the losses are greater than its fixed costs, then the firm should stop production.

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10.11 Types of costs

When we considered the periods of production of a firm, we talked about the fact that in the short run the firm may not change all the factors of production used, while in the long run all factors are variable.

It is these differences in the ability to change the volume of resources with a change in the volume of production that led economists to break down all types of costs into two categories:

1. fixed costs;
2. variable costs.

fixed costs(FC, fixed cost) - these are those costs that cannot be changed in the short run, and therefore they remain the same with small changes in the volume of production of goods or services. Fixed costs include, for example, rent for premises, costs associated with the maintenance of equipment, repayment of previously received loans, as well as various administrative and other overhead costs. For example, it is impossible to build a new oil refinery within a month. So if next month oil company plans to produce 5% more gasoline, this is possible only at the existing production facilities and with the existing equipment. In this case, a 5% increase in output will not lead to an increase in the cost of equipment maintenance and maintenance. industrial premises. These costs will remain constant. Only the amount paid will change. wages, as well as the cost of materials and electricity (variable costs).

The fixed cost schedule is a horizontal straight line.

Average fixed costs (AFC, average fixed cost) are fixed costs per unit of output.

variable costs(VC, variable cost) are those costs that can be changed in the short term, and therefore they grow (decrease) with any increase (decrease) in production volumes. This category includes costs for materials, energy, components, wages.

Variable costs show such dynamics from the volume of production: up to a certain point they increase at a killing pace, then they begin to increase at an increasing pace.

The variable cost schedule looks like this:

Average variable cost (AVC, average variable cost) is variable costs per unit of output.

The standard Average Variable Cost Chart looks like a parabola.

The sum of fixed costs and variable costs is total costs(TC, total cost)

TC=VC+FC

Average total cost (AC, average cost) is the total cost per unit of output.

Also, average total costs are equal to the sum of average fixed and average variables.

AC = AFC + AVC

AC graph looks like a parabola

A special place in economic analysis occupy marginal cost. Marginal cost is important because economic decisions usually involve marginal analysis of available alternatives.

Marginal cost (MC) is the incremental cost of producing an additional unit of output.

Since fixed costs do not affect the increment in total costs, marginal cost is also an increment in variable costs when an additional unit of output is produced.

As we have already said, formulas with a derivative in economic tasks are used when smooth functions are given, from which it is possible to calculate derivatives. When we are given separate points (discrete case), then we should use formulas with ratios of increments.

The marginal cost graph is also a parabola.

Let's plot the marginal cost graph together with the graphs of average variables and average total costs:

In the above graph, you can see that AC always exceeds AVC because AC = AVC + AFC, but the distance between them gets smaller as Q increases (because AFC is a monotonically decreasing function).

You can also see on the chart that the MC chart crosses the AVC and AC charts at their lows. To substantiate why this is so, it suffices to recall the relationship between average and marginal values ​​already familiar to us (from the “Products” section): when the marginal value is below the average, then the average value decreases with an increase in volume. When the limit value is higher than the average value, the average value increases as the volume increases. Thus, when the limit value crosses the mean value from the bottom up, the mean value reaches a minimum.

Now let's try to correlate the graphs of the general, average, and limit values:

These graphs show the following patterns.

Let's talk about fixed costs enterprises: what is the economic meaning of this indicator how to use and analyze it.

Fixed costs. Definition

fixed costs(EnglishFixedcost,FC,TFC ortotalfixedcost) is a class of enterprise costs that are not related (do not depend) on the volume of production and sales. At each moment of time they are constant, regardless of the nature of the activity. Fixed costs combined with variables, which are the opposite of fixed costs, constitute the total costs of the enterprise.

Formula for calculating fixed costs/costs

The table below lists possible fixed costs. In order to better understand fixed costs, we compare them with each other.

fixed costs= Cost of wages + Rent of premises + Depreciation + Property taxes + Advertising;

Variable costs = Costs for raw materials + Materials + Electricity + Fuel + Bonus part of salary;

General costs= Fixed costs + Variable costs.

It should be noted that fixed costs are not always fixed, because an enterprise, with the development of its capacities, can increase production areas, the number of personnel, etc. As a result, fixed costs will also change, which is why management accounting theorists call them ( semi-fixed costs). Similarly, for variable costs - conditionally variable costs.

An example of calculating fixed costs in an enterprise inexcel

We will show clearly the differences between fixed and variable costs. To do this, in Excel, fill in the columns with "production volume", "fixed costs", "variable costs" and "total costs".

Below is a graph comparing these costs with each other. As we can see, with an increase in production, the constants do not change with time, but the variables increase.

Fixed costs do not change only in the short run. In the long run, any costs become variable, often due to the impact of external economic factors.

Two Methods for Calculating Costs in an Enterprise

In the production of products, all costs can be divided into two groups according to two methods:

• fixed and variable costs;
• indirect and direct costs.

It should be remembered that the costs of the enterprise are the same, only their analysis can be carried out according to various methods. In practice, fixed costs are strongly intersected with such a concept as indirect costs or overhead costs. As a rule, the first method of cost analysis is used in management accounting, and the second in accounting.

Fixed costs and the break-even point of the enterprise

Variable costs are part of the break-even point model. As we determined earlier, fixed costs do not depend on the volume of production / sales, and with an increase in output, the enterprise will reach a state where the profit from the sold products will cover variable and fixed costs. This state is called the break-even point or critical point, when the company becomes self-sufficient. This point is calculated in order to predict and analyze the following indicators:

• at what critical volume of production and sales the enterprise will be competitive and profitable;
• how much sales need to be made in order to create a zone financial security enterprises;

Marginal profit (income) at the break-even point coincides with the fixed costs of the enterprise. Domestic economists often use the term instead of marginal profit gross income. The more contribution margin covers fixed costs, the higher the profitability of the enterprise. You can study the break-even point in more detail in the article ““.

Fixed costs in the balance sheet of the enterprise

Since the concepts of fixed and variable costs of the enterprise refer to management accounting, then there are no lines in the balance sheet with such names. In accounting (and tax accounting), the concepts of indirect and direct costs are used.

In the general case, fixed costs include balance lines:

• Cost of goods sold - 2120;
• Commercial expenses - 2210;
• Management (general) - 2220.

The figure below shows the balance sheet of OJSC “Surgutneftekhim”, as we can see, fixed costs change every year. The fixed cost model is a purely economic model, and it can be used in the short run, when revenue and output change linearly and regularly.

Let's take another example - OJSC ALROSA and look at the dynamics of changes in conditionally fixed costs. The figure below shows how costs have changed from 2001 to 2010. It can be seen that the costs were not constant over 10 years. The most stable costs throughout the period were selling expenses. The rest of the costs have changed in one way or another.

Summary

Fixed costs are costs that do not change with the volume of production of the enterprise. This type cost is used in management accounting to calculate the total costs and determine the break-even level of the enterprise. Since the company operates in a constantly changing external environment, then fixed costs in the long run also change and therefore in practice they are often called conditionally fixed costs.

marginal cost() is the cost of producing an additional unit of output.

MC = ∆TC / ∆Q

Marginal cost reflects the change in cost that an increase or decrease in production by one unit would entail.

Comparison of average and marginal production costs is important information for the management of the firm, determining the optimal size of production. At point B, the supply price coincides with average and marginal cost. This point represents the equilibrium of the firm.

When moving from point B to the right, an increase in production leads to a decrease in profit, because additional costs increase for each unit of goods. Going beyond point B leads to the instability of the company's finances and in the end its behavior will be determined by the flight from market structures.

marginal revenue

In modern market economy the calculation of production efficiency involves comparing marginal revenue and marginal cost.

There are two ways to determine the best production volumes. Both are based on a comparison of marginal revenue and marginal cost.

1st method: accounting and analytical

How to determine the marginal cost of producing a third good? To answer this question, we take column 4 with the designation of gross costs. With the transition from the second product to the production of the third, the costs increased (355-340=15). This is the marginal cost associated with the production of the third good.

The most profitable volume of production is at the 6th position, after it the marginal cost already exceeds the marginal revenue, which is clearly unfavorable for the firm.

2nd way: graphic

Based on a comparison of marginal cost and marginal revenue.

The benchmarks for the firm are as follows:

• If marginal revenue is higher than marginal cost, production can be expanded.
• If marginal revenue is less than marginal cost, production is unprofitable and must be curtailed.

The equilibrium point of the firm and maximum profit is reached in the case of equality of marginal revenue and marginal cost.

The equilibrium of a firm under perfect competition, when it chooses the optimal output, implies the following equality:

P = MS + MR

where: P is the price of the good, MC is the marginal cost, MR is the marginal revenue.

Average cost

In order to more clearly define the possible volumes of production at which it protects itself from excessive growth, the dynamics of average costs is examined.

If the gross costs are attributed to the quantity of output, we get average cost(curve ).

This type of average cost curve is determined by the following circumstances: Average costs are:

Average fixed costs are fixed costs per unit of output.

Average variable costs are the variable costs per unit of output.

Unlike average fixed costs, average variable costs can either decrease or increase as output increases, which is explained by the dependence of total variable costs on output. Average variable costs!!AVC?? reach their minimum at a volume that provides the maximum value of the average product.

Let's prove this position:

Average variable cost (by definition), but

and the output volume.

Thus,

If , then , , which was to be proved.

Average total costs (total) costs - show the total cost per unit of output.

The company's costs in the long run

In the long run all resources of the firm are variable. The firm can hire new equipment, rent new workshops, change the composition management personnel, use new technology production.

The lack of permanent resources in the long run leads to the fact that there is no difference between fixed and variable costs. The analysis of the long-term activity of the company is carried out through consideration of the dynamics long run average cost (LATC). And the main goal of the company in the field of costs can be considered the organization of production of the "required scale", providing a given volume of production with lowest average cost.

Long run average cost

To construct long-run average costs, suppose that a firm can organize production of three sizes: small, medium and large, each of which has its own short-run average cost curve (respectively SATC1, SATC2, SATC3), as shown in Fig. 1.

Rice. 1. Long run average cost curve

The choice of one project or another will depend on estimated market demand on the company's products and on what capacities are needed to provide it.

If the forecasted demand corresponds to Q1, then the firm will prefer the creation of small production, since its average costs in this case will be much lower than in more large enterprises. As seen in fig. 1,

ATC1(Q1)2(Q1),

and correspondingly

ATC1(Q1)3(Q1).

If demand is expected to be Q2, then project 2 (medium enterprise) will be the most preferable, providing lower costs, or

ATC2(Q2)1(Q2),

ATC2(Q2)3(Q3).

Similarly, when assessing demand in Q3, the firm will choose a large enterprise.

Combining the segments of the three short-run cost curves that provide the optimal production size for each output, shows us the firm's long-run average cost curve. On fig. 1 is represented by a solid line.

Long run average cost curve shows the minimum cost per unit of output produced at each possible volume of production.

If the number of possible sizes ( Q1, Q2,...Qn) approaches infinity (n → ∞), then the long-run average cost curve becomes flatter, as shown in Fig. 2.

Rice. 2. Curve of long-run average costs with an unlimited number of possible sizes of the enterprise

In this case, all points on the LATC curve are the least average cost at a given output, provided the firm has enough time to change all the required inputs.

Minimum efficient enterprise size

Analysis of long-term average costs reveals optimal size enterprises (Q*), i.e. the amount of production that ensures the minimum cost per unit of output in a given sphere of production. If the LATC curve has a horizontal section, as is the case in Fig. 2, enterprises of several sizes can be considered equally efficient.

The smallest firm size that allows a firm to minimize its long-run average cost is called the minimum efficient size of the enterprise.

Depending on the specifics of production and technological features, the minimum effective size can vary within very different limits. Thus, it is estimated that in the production of footwear this indicator is 0.2% of the total output of the industry, in the production of cigarettes - 6.6%, and in the production of cars - 11%.

If the minimum efficient size of one enterprise provides almost 100% of the market needs for a given product, then the firm that owns such an enterprise turns out to be natural monopoly(more details in the topic "Pure monopoly").

Comparison of short and long run average cost curves

Average costs in both the long and short run are the firm's costs per unit of output and are calculated using the same formula:

ATC=TC/Q.

However, there are also fundamental differences:

if in the short run average total costs break down into average fixed and average variable costs

SATC=AVC+AFC,

then in the long run this division does not take place, since all costs are variable;

in the short term U-shaped curves ATC And AVC determined law of diminishing returns variable resource; in the long run, when all resources are variable, the shape of the curves LATC is determined;

for a rationally operating firm choosing the optimal size of the enterprise, long-run average costs are always less than or equal (in other words, no more) than short-run average costs,

SATC≤ LATC (Q*)

Where Q*- optimal production size.

Graphically, this means that the long-run cost curve bends around the short-run cost curves from below.

Scale effect of production

• Main article:

Variable costs are the company's expenses spent on the production or sale of goods and services, the amount of which varies depending on the volume of production. This indicator is used to calculate the possibility of reducing the costs of the enterprise.

The main purpose of calculating variable costs

Any economic indicator serves a single purpose - to increase the profitability of the enterprise. Variable costs are no exception. They allow you to analyze the company's activities and develop a strategy to increase profitability. Accordingly, this indicator is absent in the balance sheet, since it is needed not for accounting, but for management accounting.

Important! A clear distinction should be made between fixed and variable costs. The first are those whose amount does not change for a long time. For example, office rent, tuition fees, retraining of employees of the enterprise and other fixed costs.

The main types of variable costs

First of all, variable costs are divided into two main subgroups:

1. Direct- these are expenses that are directly related to the cost of goods (services). For example, the cost of materials, wages, etc.
2. Indirect- these are expenses related to the cost of a group of goods (services). For example, general factory, general warehouse and other types of general costs that affect the cost of all goods or their individual groups.

Some businessmen believe that variable costs are proportional to the volume of production. However, this is not always the case. According to the volume of production, variable costs are divided into three types:

1. Progressive. This is a type of cost at which costs increase faster growth volume of sales or production of goods.
2. Regressive. With this type of cost, the costs lag behind the pace of production or sales.
3. Proportional. This is precisely the case when the increase in costs is directly proportional to the increase in production volumes.

Consider an example of changing variable costs by volume of production:

You can also distinguish the type of costs by interconnection with the production process:

1. Production costs are costs that are directly related to the goods produced. For example, raw materials, consumables, energy, wages, etc.
2. Non-production costs are costs that are not directly related to the production of products. For example, transportation, storage, commission payments to dealers and other types of indirect costs.

Accordingly, variable costs include:

• Piecework bonus payments to employees (bonuses, commissions, percentages of sales, etc.);
• travel and other related payments;
• costs of storage, transportation and warehousing of goods;
• outsourcing and other types of services used to service production;
• taxes for the manufacture and / or sale of goods and services;
• payment for fuel, energy, water and other utility bills;
• the cost of purchasing raw materials and Supplies for the production of products.

Detailed instructions for calculating variable costs

To calculate costs, you need to determine the material costs for the production of products. This is done on the basis of the following documents:

• reports on the write-off of raw materials, consumables and other materials for the production of goods;
• acts of work performed on the main and auxiliary production processes;
• reports of outsourcing companies involved in the production of products;
• returns for waste materials.

Important! The amount of material costs includes data only on the first three items from this list. The last point (on the return of waste) is deducted from the amount of costs.

Then you need to determine the amount of costs for paying the variable part of salaries to employees of the enterprise. This includes premiums, interest, commissions, allowances, payments to the Social Insurance Fund and other types of additional payments.

Based on the data on actual consumption and prices set in the region of production, the amount of costs for utility costs and fuel is determined.

After that, the sum of the costs for packaging, storage and delivery of products is calculated. This can be done on the basis of internal documents of the company or reports of third parties responsible for these stages of work.

After all this, the amount of tax costs is determined on the basis of declarations or accounting reports of the company.

Important! Please note that reducing variable costs for taxes, fees and other mandatory payments It is possible only when appropriate changes are made to federal or regional legislative acts. However, in the calculation they must be taken into account without fail.

Formula for calculating variable costs

The easiest way to calculate variable costs is to simply add up all the costs and then divide by the volume of goods produced during the analyzed period of time. The calculation formula is:

PI \u003d (VI¹ + VI² + VI∞) ÷ OP, Where:

• PI - variable costs;
• VI - type of costs (fuel, taxes, premiums, etc.);
• OP is the volume of production.

Variable Cost Example

In 2017, Romashka LLC spent on the production and sale of products:

• 350 thousand rubles for the purchase of materials;
• 150 thousand rubles for packaging and storage of goods;
• 450 thousand rubles to pay taxes;
• 750 thousand rubles for piecework bonus payments to employees.

Accordingly, the total amount of variable costs amounted to 1.7 million rubles. (350 thousand rubles + 150 thousand rubles + 450 thousand rubles + 750 thousand rubles). The volume of production amounted to 500 thousand units of goods. Accordingly, the variable costs per unit of production amounted to:

RUB 1.7 million ÷ 500 thousand units = 3 rubles 40 kop.