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What costs are divided into fixed and variable. Fixed and variable costs

The costs of the enterprise can be considered in the analysis from different points of view. Their classification is based on various characteristics. From the standpoint of the impact of product turnover on costs, they can be dependent or independent of the increase in sales. variable costs, an example of the definition of which requires careful consideration, allow the head of the company to manage them by increasing or decreasing sales finished products. That is why they are so important to understand. proper organization activities of any enterprise.

general characteristics

Variables (Variable Cost, VC) are those costs of the organization that change with an increase or decrease in the growth of sales of manufactured products.

For example, when a company goes out of business, variable costs should be zero. To operate effectively, a business will need to evaluate its cost performance on a regular basis. After all, they affect the size of the cost of finished products and turnover.

Such items.

The book value of raw materials, energy resources, materials that are directly involved in the production of finished products.
The cost of manufactured products.
The salary of employees, depending on the implementation of the plan.
Percentage of the activities of sales managers.
Taxes: VAT, STS, UST.

Understanding Variable Costs

In order to correctly understand such a concept as variable costs, an example of their definition should be considered in more detail. So, production is in the process of fulfilling its production programs spends a certain amount of materials from which the final product will be made.

These costs can be classified as variable direct costs. But some of them should be shared. A factor such as electricity can also be attributed to fixed costs. If the cost of lighting the territory is taken into account, then they should be attributed to this category. Electricity, directly involved in the process of manufacturing products, refers to variable costs in the short term.

There are also costs that depend on turnover but are not directly proportional to the production process. Such a trend may be caused by insufficient workload (or excess) of production, a discrepancy between its design capacity.

Therefore, in order to measure the effectiveness of an enterprise in the field of managing its costs, one should consider variable costs as obeying a linear schedule on a segment of normal production capacity.

Classification

There are several types of variable cost classifications. With a change in costs from implementation, a distinction is made between:

proportional costs, which increase in exactly the same way as the volume of production;
progressive costs that increase at a faster rate than implementation;
degressive costs, which increase at a slower rate as the rate of production increases.

According to statistics, the company's variable costs can be:

general (Total Variable Cost, TVC), which are calculated for the entire product range;
averages (AVC, Average Variable Cost), calculated per unit of goods.

According to the method of accounting in the cost of finished products, variables are distinguished (they are simply attributed to the cost) and indirect (it is difficult to measure their contribution to the cost).

With regard to the technological output of products, they can be industrial (fuel, raw materials, energy, etc.) and non-productive (transportation, interest to an intermediary, etc.).

General variable costs

The output function is similar to variable costs. She is continuous. When all costs are brought together for analysis, the total variable costs for all products of one enterprise are obtained.

When common variables are combined and their total sum in the enterprise is obtained. This calculation is carried out in order to reveal the dependence of variable costs on the volume of production. Further, the formula is used to find variable marginal costs:

MS = ∆VC/∆Q where:

MC - marginal variable costs;
ΔVC - increase in variable costs;
ΔQ - increase in output.

Average cost calculation

Average variable cost (AVC) is the amount of resources a company spends per unit of output. Within a certain range, production growth has no effect on them. But when the design capacity is reached, they begin to increase. This behavior of the factor is explained by the heterogeneity of costs and their increase with large scale production.

The presented indicator is calculated as follows:

AVC=VC/Q where:

VC - the number of variable costs;
Q - the number of products released.

In terms of measurement parameters, average variable costs in the short run are similar to changes in average total costs. The greater the output of finished products, the more total costs begin to correspond to the growth of variable costs.

Variable cost calculation

Based on the above, the variable cost (VC) formula can be defined as:

VC = Cost of materials + Raw materials + Fuel + Electricity + Bonus salary + Percentage of sales to agents.
VC= Gross profit - fixed costs.

The sum of variable and fixed costs is equal to the total cost of the organization.

The calculation of which was presented above, participate in the formation of their general indicator:

Total Costs = Variable Costs + Fixed Costs.

Definition example

To better understand the principle of calculating variable costs, consider an example from the calculations. For example, a company characterizes its output as follows:

The cost of materials and raw materials.
Energy costs for production.
Wages of workers producing products.

It is claimed that variable costs grow in direct proportion to the increase in sales of finished products. This fact is taken into account to determine the break-even point.

For example, it was calculated that it amounted to 30 thousand units of production. If you build a graph, then the level of break-even production will be equal to zero. If the volume is reduced, the company's activities will move into the plane of unprofitability. And similarly, with an increase in production volumes, the organization will be able to receive a positive net profit result.

How to reduce variable costs

The strategy of using the "scale effect", which manifests itself with an increase in production volumes, can increase the efficiency of the enterprise.

The reasons for its appearance are the following.

Using the achievements of science and technology, conducting research, which increases the manufacturability of production.
Reducing the cost of salaries of managers.
Narrow specialization of production, which allows you to perform each stage of production tasks with higher quality. This reduces the marriage rate.
Implementation of technologically similar production lines, which will provide additional capacity utilization.

At the same time, variable costs are observed below sales growth. This will increase the efficiency of the company.

Having become acquainted with such a concept as variable costs, an example of the calculation of which was given in this article, financial analysts and managers can develop a number of ways to reduce overall production costs and reduce product costs. This will make it possible to effectively manage the pace of turnover of the company's products.

Fixed costs (TFC), variable costs (TVC) and their schedules. Determination of total costs

In the short run, some resources remain unchanged, while others change to increase or decrease total output.

According to this economic costs short-term costs are divided into fixed and variable costs. In the long run, this division loses its meaning, since all costs can change (i.e., they are variable).

Fixed Costs (FC) are costs that do not depend in the short run on how much the firm produces. They represent the costs of its fixed factors of production.

Fixed costs include:

- payment of interest on bank loans;
- depreciation deductions;
- payment of interest on bonds;
- salaries of management personnel;
- rent;
- insurance payments;

Variable Costs(VC) These are costs that depend on the firm's output. They represent the costs of the firm's variable factors of production.

Variable costs include:

- wage;
- fare;
- electricity costs;
- the cost of raw materials and materials.

From the graph we see that the wavy line depicting variable costs rises with an increase in production volume.

This means that as production increases, variable costs increase:

initially they rise in proportion to the change in output (until point A is reached)

then variable cost savings are achieved at mass production, and their growth rate decreases (before reaching point B)

the third period, reflecting the change in variable costs (moving to the right from point B), is characterized by an increase in variable costs due to a violation optimal sizes enterprises. This is possible with an increase in transportation costs due to the increased volumes of imported raw materials, the volumes of finished products that need to be sent to the warehouse.

General (gross) costs (TC) are all costs of this moment the time it takes to produce a particular product. TC = FC + VC

Formation of the curve of average long-term costs, its schedule

The scale effect is a phenomenon of the long run, when all resources are variable. This phenomenon should not be confused with the known law of diminishing returns. The latter is a phenomenon of an extremely short period, when fixed and variable resources interact.

At constant prices for resources, economies of scale determine the dynamics of costs in the long run. After all, it is he who shows whether the increase in production capacity leads to a decrease or increase in returns.

It is convenient to analyze the efficiency of resource use in a given period using the long-term average cost function LATC. What is this feature? Suppose that the Moscow government decides to expand the city-owned AZLK plant. With the existing production capacity, cost minimization is achieved with a production volume of 100,000 vehicles per year. This state of affairs is shown by the short-run average cost curve ATC1 corresponding to a given scale of production (Fig. 6.15). Let the introduction of new models, which are planned to be released jointly with Renault, increase the demand for cars. The local design institute proposed two plant expansion projects corresponding to two possible scales of production. The ATC2 and ATC3 curves are the short run average cost curves for these large scale production. When deciding on an option to expand production, the management of the plant, in addition to taking into account the financial possibilities of investment, will take into account two main factors, the amount of demand and the value of the costs with which the required production volume can be produced. It is necessary to choose the scale of production that will ensure the satisfaction of demand at the lowest cost per unit of output.

ILong run average cost curve for a specific project

Here, the points of intersection of neighboring curves of short-term average costs (points A and B in Fig. 6.15) are of fundamental importance. Comparison of the volumes of production corresponding to these points and the magnitude of demand determines the need to increase the scale of production. In our example, if the amount of demand does not exceed 120 thousand cars per year, it is advisable to carry out production on a scale described by the ATC1 curve, i.e., at existing capacities. In this case, the achievable unit costs are minimal. If demand rises to 280,000 vehicles per year, then a plant with a production scale described by the ATC2 curve would be the most suitable. So, it is expedient to carry out the first investment project. If demand exceeds 280,000 vehicles per year, a second investment project will have to be implemented, i.e., to expand the scale of production to the size described by the ATC3 curve.

In the long term, there will be enough time to implement any possible investment project. Therefore, in our example, the long-run average cost curve will consist of successive segments of short-run average cost curves up to the points of their intersection with the next such curve (thick wavy line in Fig. 6.15).

Thus, each point of the long-run cost curve LATC determines the minimum achievable cost per unit of output at a given volume of production, taking into account the possibility of changing the scale of production.

In the limiting case, when a plant of the appropriate scale is built for any amount of demand, i.e., there are infinitely many curves of short-term average costs, the curve of long-term average costs from a wave-like one changes into a smooth line that envelops all curves of short-term average costs. Each point of the LATC curve is a point of contact with a certain ATCn curve (Fig. 6.16).

There are a large number of ways in which a company makes a profit, and the fact of cost is important. Costs are the real costs incurred by the company in its operation. If a company is unable to pay attention to the category of costs, then the situation may become unpredictable and profit margins may decrease.

Fixed production costs must be analyzed when constructing their classification, with which you can determine the idea of their properties and main characteristics. The main classification of production costs includes fixed, variable, general costs.

Fixed costs of production

Fixed costs of production are an element of the break-even point model. They are costs regardless of the volume of output and are opposed to variable costs. The sum of fixed and variable costs represent the total costs of the enterprise. Fixed costs can be made up of several elements:

room rental,
deductions for depreciation,
management and administrative staff costs,
the cost of machines, machinery and equipment,
security of premises for production,
payment of interest on loans to banks.

Fixed costs are represented by the costs of enterprises, which are unchanged in short periods and do not depend on changes in production volumes. This type of cost must be paid even if the enterprise does not produce anything.

Average fixed costs

Average fixed costs can be obtained by calculating the ratio of fixed costs and output. Thus, average fixed costs represent the fixed cost of producing products. In sum, fixed costs do not depend on production volumes. For this reason, average fixed costs will tend to decrease as the number of products produced increases. This is due to the fact that with an increase in production volumes, the amount of fixed costs is distributed over a larger number of products.

Features of fixed costs

Fixed costs in the short run do not change with changes in output. Fixed costs are sometimes referred to as sunk costs or overheads. Fixed costs include the costs of maintaining buildings, space, and purchasing equipment. The fixed cost category is used in several formulas.

Thus, when determining total costs (TC), a combination of fixed and variable costs is needed. The total costs are calculated by the formula:

This type of cost increases with the increase in production volumes. There is also a formula for determining the total fixed costs, which are calculated by dividing the fixed costs by a certain volume of manufactured products. The formula looks like this:

Average fixed costs are used to calculate average total costs. Average total costs are found through the sum of average fixed and variable costs according to the formula:

Fixed costs in the short run

In the production of products spent live and past labor. In this case, each enterprise seeks to obtain the greatest profit from its operation. In this case, each enterprise can go in two ways - to sell products more expensively or to reduce their production costs.

In accordance with the time it takes to change the amount of resources used in production processes, it is customary to distinguish between long-term and short-term periods of the enterprise. The short-term interval is the time interval during which the size of the enterprise, its output and costs change. At this time, the change in the volume of products occurs through a change in the volume of variable costs. In short-term periods, an enterprise can quickly change only variable factors, including raw materials, labor, fuel, and auxiliary materials. The short run divides costs into fixed and variable. During such periods, fixed costs are mainly provided, determined by fixed costs.

The fixed costs of production get their name in accordance with their invariable nature and independence in relation to the volume of production.

variable costs These are costs, the value of which depends on the volume of output. Variable costs are opposed to fixed costs, which add up to total costs. The main sign by which it is possible to determine whether costs are variable is their disappearance during a stop in production.

Note that variable costs are the most important indicator enterprises in management accounting, and are used to create plans to find ways to reduce their weight in total costs.

What is variable cost

Variable costs have a major distinguishing feature- they vary depending on the actual production volumes.

Variable costs include costs that are constant per unit of output, but their total amount is proportional to the volume of output.

Variable costs include:

raw material costs;

Consumables;

energy resources involved in the main production;

main salary production staff(together with charges);

the cost of transport services.

These variable costs are directly charged to the product.

In value terms, variable costs change when the price of goods or services changes.

How to find variable costs per unit of output

In order to calculate the variable costs per piece (or other unit of measure) of the company's products, you should divide the total amount of variable costs incurred by the total amount of finished products, expressed in physical terms.

Classification of variable costs

In practice, variable costs can be classified according to the following principles:

According to the nature of the dependence on the volume of output:

proportional. That is, variable costs increase in direct proportion to the increase in output. For example, the volume of production increased by 30% and the amount of costs also increased by 30%;

degressive. As production increases, the company's variable costs decrease. So, for example, the volume of production increased by 30%, while the size of variable costs increased by only 15%;

progressive. That is, variable costs increase relatively more with output. For example, the volume of production increased by 30%, and the amount of costs by 50%.

Statistically:

are common. That is, variable costs include the totality of all variable costs of the enterprise across the entire product range;

average - average variable costs per unit of production or group of goods.

According to the method of attribution to the cost of production:

variable direct costs - costs that can be attributed to the cost of production;

variable indirect costs - costs that depend on the volume of production and it is difficult to assess their contribution to the cost of production.

In relation to the production process:

production;

non-production.

Direct and indirect variable costs

Variable costs are either direct or indirect.

Manufacturing variable direct costs are costs that can be based on data primary accounting attributed directly to the cost of specific products.

Production variable indirect costs are costs that are directly dependent or almost directly dependent on the change in the volume of activity, however, due to the technological features of production, they cannot or are not economically feasible to be directly attributed to manufactured products.

The concept of direct and indirect costs is disclosed in paragraph 1 of article 318 tax code RF. Thus, according to tax legislation, direct expenses, in particular, include:

expenses for the purchase of raw materials, materials, components, semi-finished products;

wages of production personnel;

depreciation on fixed assets.

Note that enterprises can include in direct costs and other types of costs directly related to the production of products.

At the same time, direct expenses are taken into account when determining the tax base for income tax as products, works, services are sold, and written off to the tax cost as they are implemented.

Note that the concept of direct and indirect costs is conditional.

For example, if the main business is transport services, then drivers and depreciation of cars will be direct costs, while for other types of business, the maintenance of vehicles and the remuneration of drivers will be indirect costs.

If the cost object is a warehouse, then the storekeeper's wages will be included in direct costs, and if the cost object is the cost of manufactured and sold products, then these costs (storekeeper's wages) will be indirect costs due to the impossibility of unambiguously and in the only way to attribute it to the object costs - cost.

Examples of Direct Variable Costs and Indirect Variable Costs

Examples of direct variable costs are costs:

for the wages of workers involved in manufacturing process, including accruals on their salaries;

basic materials, raw materials and components;

electricity and fuel used in the operation of production mechanisms.

Examples of indirect variable costs:

raw materials used in complex production;

expenses for research and development, transportation, travel expenses, etc.

conclusions

Due to the fact that variable costs change in direct proportion to the production volume, and the same costs per unit of finished product usually remain unchanged, when analyzing this type of cost, the value per unit of production is initially taken into account. In connection with this property, variable costs are the basis for solving many production problems related to planning.

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Variable Costs: Accountant Details

Operational leverage in the main and paid activities of the BU
They are useful. Management of fixed and variable costs, as well as their associated operational ... in the structure of the cost of fixed and variable costs. The effect of operating leverage arises... variable and conditionally constant. Conditionally variable costs change in proportion to the change in the volume of provided ... constant. Conditionally fixed costs Conditionally variable costs Maintaining and maintaining buildings and ... the price of the service falls below the variable costs, it remains only to curtail production, ...

Example 2. In reporting period variable costs for the production of finished products, reflected .... The cost of production includes variable costs in the amount of 5 million rubles... Debit Credit Amount, rub. Reflected variable costs 20 10, 69, 70, ... Part of general factory costs added to the variable costs that form the cost 20 25 1 ... Debit Credit Amount, rub. Variable costs are reflected 20 10, 69, 70, ... Part of general factory costs is added to the variable costs that form the cost price 20 25 1 ...

Financing the state task: examples of calculations
Does it make sense to divide costs into variable and fixed costs?
It is the difference between revenue and variable costs, shows the level of reimbursement of fixed ... costs; PermZ - variable costs for the entire volume of production (sales); permS - variable costs per unit...increased. Accumulation and distribution of variable costs When choosing a simple direct costing ... semi-finished products own production accounted for as variable costs. Moreover, complex raw materials, with ... The total cost on the basis of the distribution of variable costs (for output) will be ...
Dynamic (temporary) profitability threshold model
For the first time he mentioned the concepts of "fixed costs", "variable costs", "progressive costs", "degressive costs". ... The intensity of variable costs or variable costs per working day (day) is equal to the product of the value of variable costs per unit ... total variable costs - the value of variable costs per unit of time, calculated as the product of variable costs by ... respectively, total costs, fixed costs, variable costs and sales. The above integration technology...
Director's questions to which the chief accountant should know the answers
Equality: revenue = fixed costs + variable costs + operating profit. We are looking for... products = fixed cost / (price - variable cost/unit) = fixed cost: marginal... fixed cost + target profit) : (price - variable cost/unit) = (fixed cost + target profit ... equation: price = ((fixed costs + variable costs + target profit) / target sales ... , in which only variable costs are taken into account. Marginal profit - revenue ...

Examples of Variable Costs

Dependence of cost type on cost object

The concept of direct and indirect costs is conditional.

Properties of Direct Costs

Direct costs increase in direct proportion to the volume of products produced and are described by a linear function equation in which b=0. If the costs are direct, then in the absence of production they should be equal to zero, the function should start at the point 0 . In financial models, it is allowed to use the coefficient b to reflect minimum wage labor of employees due to downtime due to the fault of the enterprise, etc.
Linear dependence exists only for a certain range of values. For example, if, with an increase in production volumes, a night shift is introduced, then payment in night shift is higher than the day shift.