Download cost of production and cost of goods

Plan of the lecture
1. Concept and types of enterprise
costs
2. Product costs
3. Grouping costs of economic elements
1. Concept and types of enterprise costs
Costs, expenses, costs are the most
important economic categories. Their
level largely determines the profit
margins
and
profitability,
the
effectiveness of its business. Reduction
and cost optimization are among the
main directions of improving the
economic performance of each company.
The essence of the production costs
and production costs are not identical to
each other in a theoretical and practical
plans, both at the level of social
production,
as
well
as
in
macroeconomics in the domestic and
foreign practice. From the standpoint of
social costs of production include the full
costs of labor and materials, and equal to
the
cost
of
the
product.
The concept of enterprise costs
varies significantly depending on their
economic purpose. A clear separation of
the costs of their role in reproduction is a
defining moment in the theory and
practice. According to him, at all levels by
grouping costs, the cost of production is
formed, determined by funding sources.
Reproduced on the basis of the
costs the company are classified into
three types:
•
the cost of producing and selling
products that make up its cost. These
are the current costs to be defrayed
from the proceeds from the sale of
products by means of turnover of
working
capital;
•
The cost of the expansion and renovation
of production. Typically, this large one-time
investment of a capital nature under the new or
upgraded products. They extend the applicable
factors of production, increase the authorized
capital. Costs consist of investments in fixed
assets, working capital standard rate, the cost of
the formation of additional manpower for the
new production. These costs are specific sources
of funding: a sinking fund, profit, issue of
securities,
loans
and
so
on.
•
The cost of production and sale of
products (works, services) are the costs
of the company, expressed in monetary
terms and related to the use in the
production of raw materials, spare parts,
fuel, energy, labor, fixed assets,
intangible assets and other non-capital
costs of the nature. They are included in
the cost of production rate.
The most general notion of the
production costs of firms in foreign
textbooks is defined as the cost of inputs
or economic resources. All costs are
accepted as an alternative (or imputed),
which means that the value of any
resource, selected for production, is
equal to its value at the best possible use
case. This is one of the most important
principles
of
market
economy.
The cost of production and sale of
products (works, services) are classified
by a number of grounds:
the role in the production process
are classified into main and overhead.
The main costs directly form to create
products that make up its physical basis:
raw materials, intermediate products,
wages, etc. Overhead costs associated
with servicing the production process:
equipment maintenance, workshop and
offsite
personnel,
etc.;
•
by way of inclusion in the cost of
production costs are divided into direct
and indirect. Direct costs are directly
attributable to the unit cost of each type
of product: raw materials, energy,
technology, wages, machinists, etc.
Indirect costs are allocated to individual
product groups in proportion to the
selected
database;
•
Depending on the cost of changes in
output, they are divided into fixed and variable.
The value of the fixed costs remain the same
when you change the volume of production
(rent, depreciation, maintenance of buildings,
etc.). Variable costs, on the contrary, increase
or decrease under the influence of the
dynamics of output. This group of costs is
widely used in the theory of foreign
microeconomics;
•
•
the methods of accounting and cost
groups are divided into simple (raw
materials, wages, depreciation, energy,
etc.) and complex, that is, gathered in
groups or on a functional role in the
production process (low value items) or
at the place of costs (departmental
expenses,
offsite
costs,
etc.);
•
the terms used in the production of
different everyday, or current, and nonrecurring costs, non-recurring costs
incurred by the less than once a month.
Cost of products (works, services) is the
valuation used in the production of goods
(works, services) of natural resources, raw
materials, fuel, energy, fixed assets, labor and
other costs of its production and sale.
Composition and structure of costs
included in cost of production.
Costs that make up the cost, the economic
content are grouped into the following
elements: material costs, labor costs, fringe
benefit expenses, amortization of fixed assets
and other costs.
Material costs in all sectors of the
economy (excluding mining) occupy the
major share of production costs. They
include: raw materials, basic materials,
purchased semi-finished products, fuel,
energy and other raw materials.
Social contributions are a form of
redistribution of national income to fund
social needs
1. Payments to the social insurance fund
2. Contributions to the pension fund
3. Insurance premiums to the state
employment fund
4. Mandatory health insurance fund
3. Grouping costs of economic elements
Grouping costs of economic elements is
reflected in the estimates of costs of
production and sale of products (works,
services). There are going to cost to
community economic content to their natural
destination.
.
Estimated Cost includes the following elements
1) Raw materials, basic materials, purchased semifinished products, components;
2) Support and other materials
3) Fuel from the outside;
4) The energy from the outside;
5) The basic salary and additional;
6) Social contributions;
7) The depreciation of fixed assets;
8) Other cash expenses.
120
Cost ($/unit)
100
80
60
40
20
0
0
12
Output (units/yr)
Cost Curves for a Firm
TC
Total cost
is the vertical
sum of FC
and VC.
VC
Variable cost
increases with
production and
the rate varies with
increasing &
decreasing returns.
Fixed cost does not
vary with output
50
FC
1.
2.
3.
4.
Costs
Production costs
Types of costs
Expenses of the
enterprise
5. Cash expenditures
6. The cost of sales
7. Fixed costs
8. Variable costs
9. Costs of production
10.Classification of costs
11. Direct costs
12. Product costs
13. The composition and
structure of
costs
14. Material expenditures
15. The cost of wages
16. Other costs
17. Expenses grouping
18. Estimated charges
19. Marginal costs