Instruction
Define common costs(TCi) for each value of Q according to the formula: TCi = Qi *VC +PC. In this case, you need to understand that before calculating the marginal cost, you must variable (VC) and fixed (PC) costs.
Define change total costs as a result of an increase or decrease in production, i.e. determine the change in TS - ∆ TS. To do this, use the formula: ∆ TC = TC2-TC1, where:
TC1 = VC*Q1 + PC;
TC2 = VC*Q2 + PC;
Q1 - the volume of production before the change,
Q2 - production volumes after the change,
VC - variable costs per unit of production,
PC - fixed costs of the period required for a given volume of production,
TC1 - total costs before the change in production volume,
TC2 is the total cost after the change in output.
Divide the increment in total cost (∆ TC) by the increment in output (∆ Q) and you get the marginal cost of producing an additional unit of output.
Build a graph of changes in marginal costs for different productions - this will give a visual picture of the mathematical one, which will clearly demonstrate the process of changing production costs. Pay attention to the MS form on your ! The curve of marginal costs MC is clear that, with all other constant factors, with an increase in production, marginal costs increase. It follows from this that it is impossible to increase the volume of production indefinitely without changing anything in the production itself. This leads to an unreasonable increase and decrease in the expected.
Increase production through the use of intensive methods to improve efficiency: through the modernization of production, replacement of equipment, changes in technology, staff training. Constantly improve your productivity.
Recognized as permanent costs, the value and quantity of which does not change over a minimum period of time and regardless of the volume of products sold. Such costs include the salaries of management personnel, the payment of rent, the maintenance of production facilities, payments to creditors, transport costs.
You will need
Instruction
Calculate permanent costs enterprises for a given period of time. Let the trade is engaged in the sale of goods. Then her permanent costs will be equal
FC = U + A + K + T, where
U - salary of management personnel (112 rubles),
A - payments for the rental of premises (50 thousand rubles),
K - payments on accounts payable, for example, for the purchase of the first batch of goods (158 thousand rubles),
T - transport associated with the delivery of goods (190 thousand rubles).
Then FC = 112 + 50 + 158 + 190 = 510 thousand rubles. This must be paid by the trade organization to the relevant authorities or suppliers. Even if the trade organization was not able to sell the goods in the considered period of time, it must pay 510 thousand rubles.
Divide the amount received by the quantity of goods sold. For example, a trade organization was able to sell 55 thousand pieces of goods in the specified period. Then her average permanent costs can be done as follows:
FC \u003d 510 / 55 \u003d 9.3 rubles per unit of goods sold. Permanent costs do not depend. With zero realization permanent costs continue to be equated with mandatory and payments. The larger the volume of products sold, the lower the fixed cost. Accordingly, with a decrease in the volume of goods sold permanent costs per unit of production will increase, which can naturally lead to an increase in prices for these products. This is explained by the fact that large quantity sold goods distributes among themselves a common constant value. That is why permanent costs products to cover mandatory expenses are included first.
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Variables are recognized costs, which directly depend on the volume of calculated production. Variables costs will depend on the cost of raw materials, materials, and on the cost electrical energy, and on the amount of wages paid.
You will need
Instruction
Add it all up costs enterprises that are directly dependent on the volume of products produced. For example, the trading variables that sell consumer goods include:
Pp - the volume of products purchased from suppliers. Expressed in rubles. Let a trade organization purchase goods from suppliers in the amount of 158 thousand rubles.
Uh, electric. Let the trade organization pay 3,500 rubles for.
Z - the salary of sellers, which depends on the amount of goods sold by them. Let the average payroll in a trade organization be 160 thousand rubles. Thus, the variables costs trade organization will be equal to:
VC \u003d Pp + Ee + Z \u003d 158 + 3.5 + 160 \u003d 321.5 thousand rubles.
Divide the resulting amount of variable costs by the volume of products sold. This indicator can be found by a trading organization. The volume of goods sold in the above example will be expressed in quantitative terms, that is, by the piece. Suppose a trade organization was able to sell 10,500 pieces of goods. Then the variables costs taking into account the quantity of goods sold are equal to:
VC \u003d 321.5 / 10.5 \u003d 30 rubles per unit of goods sold. Thus, variable costs are made not only by adding the costs of the organization for the purchase and goods, but also by dividing the amount received by the unit of goods. Variables costs with an increase in the quantity of goods sold, they decrease, which may indicate efficiency. Depending on the type of activity of the company, the variables costs and their types can change - be added to those indicated above in the example (costs for raw materials, water, one-time transportation of products and other expenses of the organization).
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Costs production - these are the costs that are associated with the circulation of goods produced and production. In statistical and financial statements, costs are reflected as prime cost. The costs include: labor costs, interest on loans, material costs, costs associated with the promotion of goods on the market and its sale.
Instruction
Costs There are variables, constants and . Fixed costs are those costs that in the short run do not depend on how much the company produces. This is the cost of fixed factors of production of the enterprise. Total costs are all that the manufacturer spends for the purposes of production. Variable costs are those costs that always depend on the firm's output. This is the cost of variable factors in the production of the firm.
Fixed costs The opportunity cost of the portion of financial capital that has been invested in the equipment of the enterprise. The value of this cost is equal to the sum, for which the owners of the company could this equipment and invest the proceeds in the most attractive investment case (for example, to an account or to the stock exchange). These include all costs for raw materials, fuel, transport services, etc. The largest part of the variable costs, as a rule, falls on the costs of materials and labor. Since, as output grows, the costs of variable factors increase, so do variable costs, respectively, with the growth of output.
Average costs are divided into average variables, average fixed and average total. To find the average, you need to divide the fixed costs by the volume of output. Accordingly, in order to calculate the average variable costs, it is necessary to divide the variable costs by the volume of output. To find the average total costs, you need to divide the total costs (the sum of variables and fixed ) by the volume of output.
Average cost is used to decide whether a given product should be produced at all. If the price, which is the average revenue per unit of output, is less than the average variable cost, then the company will reduce its losses if it suspends operations in the short run. If the price is below average total cost, then the firm is making a negative profit and needs to consider final closing. However, if the average cost is below market price, the enterprise can operate quite profitably within the limits of the volume of production being carried out.
Certain costs, which are independent of changes in output. They can only depend on time. At the same time, the variables and permanent costs in the sum determine the size of the total costs.
You can also fixed costs if you derive this indicator from a formula that defines: Revenue \u003d Fixed costs - Variable (general) costs. That is, based on this formula, we get: Fixed costs = Revenue + Variable (general) costs.
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Costs play a big role in business development, because they directly affect profits. In modern economics There are two types: fixed and variable costs. Their optimization allows to increase the efficiency of the enterprise.
To begin with, it is necessary to define the short-term and long-term periods. This will allow you to better understand the essence of the issue. In the short run, factors of production can be fixed or variable. In the long run, they will only be variables. Let's say the building is . In the short term, it will not change in any way: the company will use it to, for example, place machine tools. However, in the long run, the firm may buy out a more suitable building.
Fixed costs are costs that do not change in the short run even if production increases or decreases. Let's say it's the same building. No matter how many goods are produced, the rent will always be the same. You can work at least a whole day, the monthly payment will still remain unchanged.
To optimize fixed costs, complex analysis. Depending on the specific unit, the solutions may differ significantly. If we are talking about the rent for the building, then you can try to reduce the price of accommodation, occupy only part of the building so as not to pay for everything, etc.
It is not difficult to guess that the variables are called costs, which can vary depending on the decrease or increase in production in any period. For example, for the manufacture of one chair, you need to spend half the tree. Accordingly, to make 100 chairs, you need to spend 50 trees.
Variable costs are much easier to optimize than fixed costs. Most often, it is simply necessary to reduce the cost of production. To do this, for example, you can use cheaper materials, upgrade technology or optimize the location of jobs. Let's say instead of oak, which costs 10 rubles, use poplar for 5 rubles. Now, for the production of 100 chairs, it is necessary to spend not 50 rubles, but 25.
There are also a number of secondary indicators. Total costs are a combination of variable and fixed costs. For example, for one day of renting a building, an entrepreneur pays 100 rubles and manufactures 200 chairs, the cost of which is 5 rubles. The total costs will be equal to 100+(200*5)=1100 rubles per day.
In addition, there are many averages. For example, average fixed costs (how much you need to pay for one unit of production).
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.
Variable Cost (VC) are the 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.
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 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 managing its costs, one should consider variable costs as obeying a linear schedule over a segment of normal production capacity.
There are several types of variable cost classifications. With a change in costs from implementation, a distinction is made between:
According to statistics, the company's variable costs can be:
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.).
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:
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:
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 match the growth of variable costs.
Based on the above, the variable cost (VC) formula can be defined as:
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.
To better understand the principle of calculating variable costs, consider an example from the calculations. For example, a company characterizes its output as follows:
It is argued that variable costs grow in direct proportion with 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.
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 as follows.
At the same time, variable costs are observed below sales growth. This will increase the efficiency of the company.
By familiarizing themselves with the concept of variable costs, the calculation example of which was given in this article, financial analysts and managers can develop a number of ways to reduce the total cost of production and reduce the cost of production. This will make it possible to effectively manage the pace of turnover of the company's products.
In this article, you will learn about costs, cost formulas, and also understand the meaning of their division into different types.
Costs are those monetary resources that must be spent to carry out economic activity. Analyzing the costs (cost formulas are given below), we can conclude that the enterprise manages its resources effectively.
Such production costs are divided into several types, depending on how they are affected by a change
Fixed costs are those costs that are not affected by the volume of output produced. That is, their value will be the same as when the enterprise is operating in an enhanced mode, fully using production capacity, or, conversely, during production downtime.
For example, such costs can be administrative or some separate items from the amount (office rent, expenses for the maintenance of engineering and technical personnel not related to the production process), wage employees, deductions to insurance funds, license costs, software and others.
It is worth noting that in fact such costs cannot be called absolutely constant. Still, the volume of production can affect them, although not directly, but indirectly. For example, an increase in output may require an increase free space in warehouses, additional maintenance of mechanisms that wear out faster.
Often in the literature, economists often use the term "conditionally fixed costs of production."
Unlike fixed costs, they are directly proportional to the volume of products produced.
IN this species can include raw materials, materials, other resources that are involved in the process and many other types of costs. For example, with an increase in production wooden boxes per 100 units, it is necessary to purchase the corresponding amount of material from which they will be produced.
Moreover, the same costs can apply to different types, and, accordingly, these will be different costs. The cost formulas by which such costs can be calculated absolutely confirm this fact.
Take, for example, electricity. Light lamps, air conditioners, fans, computers - all this equipment that is installed in the office is powered by electricity. Mechanical equipment, machine tools and other equipment that is involved in the production of goods and products also consume electricity.
At the same time, in the financial analysis, electricity is clearly separated and refers to different types of costs. Because in order to perform the correct forecasting of future costs, as well as accounting, a clear separation of processes depending on the intensity of production is necessary.
The sum of the variables is called "total costs". The calculation formula is as follows:
Io = Ip + Iper,
Io - total costs;
Ip - fixed costs;
Iper - variable costs.
This indicator is used to determine general level costs. Its analysis in dynamics allows you to see the processes of optimization, restructuring, reduction or increase in production and management processes at the enterprise.
By dividing the sum of all costs per unit of output, you can find the average cost. The calculation formula is as follows:
Is \u003d Io / Op,
Is - average costs;
Op - the volume of manufactured products.
This indicator is also called "the total cost of one unit of output." Using this indicator in economic analysis, you can understand how efficiently the company uses its resources to produce products. In contrast to the general costs, the average costs, the calculation formula of which is given above, show the effectiveness of financing per 1 unit of output.
To analyze the feasibility of changing the quantity of products produced, an indicator is used that reflects the production costs per additional unit. It's called marginal cost. The calculation formula is as follows:
Ypres \u003d (Io2 - Io1) / (Op2 - Op1),
Ypres - marginal cost.
This calculation will be very useful if the management personnel of the enterprise has decided to increase production volumes, expand and make other changes in production processes.
So, after you have learned about costs, cost formulas, it becomes clear why economic analysis clearly separates the costs of the main production, administrative and management, as well as general production costs.
