Cost classification.
Great value for proper organization cost accounting has a science-based classification of costs. Production costs are grouped according to their place of origin, responsibility centers, cost carriers and types of expenses.
At the place of origin, the costs are grouped by production, workshops, sections and other structural divisions of the enterprise. This grouping of costs is necessary for:
- performance monitoring structural divisions and the enterprise as a whole;
- distribution of overhead costs between certain types products when calculating the cost of products (works, services).
By responsibility centers (segments of the enterprise), costs are distributed to accumulate data on costs and control deviations from the estimate. Cost center - an organizational unit or area of activity where it is advisable to accumulate information about the costs of acquiring assets and expenses.
Cost carriers are the types of products (works, services) of the enterprise intended for sale. This grouping is necessary to determine the unit cost of production (works, services).
By type, costs are grouped by economically homogeneous elements and by calculation items in accordance with the Regulations on the composition of costs for the production and sale of products (works, services) included in the cost of products (works, services).
In order to management accounting costs are divided into categories depending on what management task needs to be solved.
Classification of costs depending on the objectives of management accounting
| Tasks | Cost classification |
| Calculation of the cost of manufactured products, valuation of inventories and profits | Incoming and expired Direct and indirect Basic and overhead Included in the cost (production) and costs of the reporting period (periodic) Single element and complex Current and one-time |
| Management decision making and planning | Constants and variables Accepted and not taken into account in assessments Irretrievable and returnable Imputed (lost profits) Marginal and incremental Planned and unplanned |
| Control and regulation | Regulated and non-regulated |
Fixed and variable costs.
They are used in the analysis of break-even and related indicators, as well as in the optimization of products.
In relation to the volume of production or sales (level of business activity), costs are divided into "fixed" and "variables".
variable costs change in proportion to the volume of production or sales, and those calculated per unit of output are a constant value. An example of cost variables for commercial enterprise is the cost of purchased goods, commissions and other costs associated with sales, which change in proportion to changes in sales volume.
Dynamics of total (a) and specific (b) variable costs.
Sper - total variable costs, rub. Uper - specific variable costs, rub.
fixed costs in total do not change with a change in the level of business activity, but calculated per unit decrease with an increase in production or sales. Examples of fixed costs are the cost of renting premises, salaries of administrative staff, professional services. The total amount of these costs is relatively independent of the volume of sales.
Dividing costs into variable and fixed, you need to use the concept " area of relevance", in which a special relationship is maintained between the planned relationship of revenue and costs. So fixed costs are constant with respect to a specific period, for example, one year, but over time due to the impact external factors may increase or decrease (change in the property tax rate, etc.).
Dynamics of total (a) and specific (b) fixed costs.
Spost - total fixed costs, rub. Upost - fixed costs per unit of output (specific), rub.
Some types of costs cannot be strictly defined in relation to the volume of production as variables or variables. Therefore, in management accounting, an additional group of conditionally variable or conditionally fixed costs is distinguished. These costs have both fixed and variable components. For example, the cost of maintaining a warehouse:
- The fixed component is the lease of warehouse space and utilities
- Variable component - warehouse processing services (operations for the movement of commodity items)
When classifying costs, variable and fixed components are separated into independent cost items, so conditionally variable or conditionally fixed costs are not allocated to a separate group.
Costs accepted and not taken into account in the assessment.
The process of making a managerial decision involves comparing several alternative options with each other in order to choose the best one. The indicators compared in this case can be divided into two groups: the first remain unchanged for all alternative options, the second vary depending on the decision made. It is advisable to compare only the indicators of the second group. These costs, which distinguish one alternative from another, are called relevant. Only they are taken into account when making decisions.
Example. A company that sells products foreign market, basic materials were purchased for the future in the amount of 500 rubles. Subsequently, in connection with the change in technology, it turned out that for own production these materials are unsuitable. The products made from them will be uncompetitive in the foreign market. However, the Russian partner is ready to buy products made from these materials from this enterprise for 800 rubles. At the same time, the additional costs of the enterprise for the manufacture of products will amount to 600 rubles. Is it reasonable to accept such an order?
Expired costs for the purchase of materials in the amount of 500 rubles. have already taken place. They do not affect the choice of solution, are not relevant. Let's compare the alternatives by relevant indicators (table).
Choosing alternative 2, the enterprise will reduce its loss from the purchase of materials it does not need by 200 rubles, reducing it from 500 to 300 rubles.
Approaches to cost reduction analysis.
Cost Structure Analysis
Building a cost management system.
- Cost classification.
- Methodology for allocating costs by departments, types of activities and types of products:
- bases and principles of cost allocation;
- formats of primary reporting forms on costs;
- methodology for filling out primary reporting forms;
- methodology for processing primary reporting forms, which allows distributing costs between types of products, objects of accounting and types of activities;
- management cost reporting formats.
- Choice of costing method.
- Consider cost reduction opportunities.
- Conduct cost-benefit analysis.
Costing method for variable costs ("direct-costing").
Its essence lies in a fundamentally new approach to the inclusion of costs in the cost. Costs are divided into fixed and variable. Only variable costs are included in the cost price. To determine it, the amount of variable costs is divided by the number of products produced and services provided. Fixed costs are generally not included in the cost calculation, but as expenses of a given period, they are written off from the profit received during the period in which they were made. In other words, before calculating the operating profit, an indicator of the marginal profit of the company is formed, and only then, by reducing the marginal profit of the company by the amount of fixed costs, is formed financial results.
There are many opinions about the legitimacy of such an incomplete inclusion of costs in the cost. International Standards accounting prohibit the use of this approach to compile financial reporting companies in financial accounting. The main argument against this is the thesis that fixed costs are also involved in the process of creating products. But on the other hand, it turns out that fixed costs are involved in different ways in creating the cost of different volumes of the same product, and it is almost impossible to calculate the actual participation of fixed costs in creating costs, so their cost is simply written off from the profit received by the company.
Below is a brief summary of the "direct-costing" and "absorption-costing" costing methods.
| "Direct-costing" | "absorption-costing" |
| Based on specific production costs. Fixed costs are included in the entire amount of the financial result and are not posted by type of product. | It is based on the distribution of all costs included in the cost price by type of product (calculation of the total cost of production). |
| Assumes the breakdown of costs into fixed and variable. | Assumes a breakdown of costs into direct and indirect. |
| It is used for more flexible pricing, as a result of which the competitiveness of products increases. Provides the ability to determine the profit generated by the sale of each additional unit of production, and, accordingly, the ability to plan prices and discounts for a certain volume of sales. | Most commonly used in Russian enterprises. Mainly used for external reporting. |
| Inventories of finished goods are valued at direct costs only. | Inventory in stock is valued at full cost, including fixed manufacturing cost components. |
Marginal profit is the excess of sales revenue over all variable costs associated with a given sales volume.
Therefore, the contribution margin method is based on the following formula:
Marginal profit \u003d Revenue from sales of products - Variable costs for the same volume of production
If we subtract fixed costs from marginal profit, we get the operating profit:
Operating Profit = Marginal Profit - Fixed Costs
Example. The difference in the impact of methods of accounting for full and variable costs on the cost of goods sold. Let the direct material cost per product be $59,136, direct labor cost $76,384, variable overhead cost $44,352, and fixed overhead cost $36,960. During the year, 24,640 units of products were produced. There was no work in progress either at the beginning or at the end of the reporting period. Unit selling price is $24.50, variable business expenses per unit - $4.80. Fixed selling expenses for the period are $48,210 and fixed administrative expenses are $82,430.
| Variable Cost Accounting | Full Cost Accounting | |
| unit cost | ||
| Direct material costs ($59,136:24,640 units) | $2,40 | $2.40 |
| Direct labor costs ($76,384:24,640 units) | 3.10 | 3.10 |
| Variable overhead costs ($44,352:24,640 units) | 1.80 | 1.80 |
| Fixed overhead costs ($36,960:24,640 units) | - | 1.50 |
| Total unit cost | $7,30 | $8.80 |
| Finished goods balance at the end of the year (2,640 x $7.30) (2,640 x $8.80) | 19,272 | 23,232 |
| Cost of goods sold (22,000 x $7.30) (22,000 x $8.80) | 160,600 | 193,600 |
| 36,960 | - | |
| Total costs shown in the income statement | $197,560 | $193,600 |
| Total costs to be accounted for | $216,832 | $ 216,832 |
Profit and loss statement (Margin approach).
Revenues from sales $539,000
Variable part of the cost of goods sold
- Variable part of the cost of goods for sale $179,872
Minus Final residues of finished products $19,272
Variable part of the cost of goods sold $160,600
Plus Variable selling expenses (22,000 x $4.80) $105,600 $266,200
Marginal profit $272,80 0
minus fixed costs
- Fixed overhead costs $36,960
Fixed selling expenses $48,210
permanent administrators. expenses $82,430 $167,600
Operating profit (before tax) $105,200
Example. Unit price - 10 thousand rubles, variable costs per unit - 6 thousand rubles, fixed overhead costs amounted to 300 thousand rubles. for the period, fixed general business costs amounted to 100 thousand rubles. for the period.
| Period 1 | Period 2 | Period 3 | Period 4 | Period 5 | Period 6 | |
| Sales volume (pcs) | 150 | 120 | 180 | 150 | 140 | 160 |
| Production volume (pcs.) | 150 | 150 | 150 | 150 | 170 | 140 |
Full cost costing method.
| (thousand roubles.) | (thousand roubles.) | (thousand roubles.) | (thousand roubles.) | (thousand roubles.) | (thousand roubles.) | |
| Period 1 | Period 2 | Period 3 | Period 4 | Period 5 | Period 6 | |
| Prod. expenses | ||||||
| Cost of goods sold | ||||||
| Volume of sales | ||||||
| Gross profit | ||||||
| General business. expenses | ||||||
| Operating profit |
Cost calculation method "direct costing".
| (thousand roubles.) | (thousand roubles.) | (thousand roubles.) | (thousand roubles.) | (thousand roubles.) | (thousand roubles.) | |
| Period 1 | Period 2 | Period 3 | Period 4 | Period 5 | Period 6 | |
| Stocks of finished goods in stock at the beginning of the period | ||||||
| Prod. AC expenses | ||||||
| Inventory of finished goods in stock at the end of the period | ||||||
| Cost of goods sold at variable costs | ||||||
| Fixed overhead costs | ||||||
| Total productions. expenses | ||||||
| Volume of sales | ||||||
| Gross profit | ||||||
| General business. expenses | ||||||
| Operating profit |
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Fixed Costs: Accountant Details
- Operational leverage in the main and paid activities of the BU
Limit (threshold) does not cause an increase in fixed costs. Operating leverage (operating leverage) shows ... changes in the volume of services provided. Conditionally fixed costs - costs, the value of which at ... consider an example. Example 1 Fixed Costs educational institution are 16 million ... the threshold at which an increase in fixed costs is required. With a favorable macroeconomic environment ... activity) increases, under conditions of constant fixed costs, the BU receives savings (profit); ...
- Financing the state task: examples of calculations
which it was created. Variable and fixed costs If you break the formula for financial support ... per unit of service; Z post - fixed costs. This formula is based on the assumption... salaries of key personnel). The value of semi-fixed costs with a change in the volume of services remains ... quantity. Therefore, the coverage by the founder of a part of the fixed costs of the BU can be qualified as non-market ... property. How reasonable is this allocation of fixed costs? From the standpoint of the state - it is fair ...
- Does it make sense to divide costs into variable and fixed costs?
Variable indirect costs and part of the fixed costs depending on the utilization rate ... the level of recovery of fixed costs and profit generation. With equality of fixed costs and the amount ... between the volume of production, variable and fixed costs. The break-even point can be ... simple direct costing fixed (conditionally fixed) costs are collected on complex accounts (... it is variable and fixed costs. There are the following options for allocating fixed costs to a specific ...
- Dynamic (temporary) profitability threshold model
... "German Metallurgy" for the first time mentioned the concepts of "fixed costs", "variable costs", "progressive costs", ... ∑ FC - total fixed costs corresponding to the release of Q units of production... The graph shows the following. Fixed costs FC change according to the change in intensity ... R), respectively, total costs, fixed costs, variable costs and sales. The above ... period of the sale of goods. FC - fixed costs per unit of time, VC - ...
- A good politician goes ahead of events, they drag bad ones with them
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- Actual strategic and tactical tasks of the management team of the enterprise
sales of products); permanent and semi-fixed costs for the production and sale of products ... products; Zpos - fixed and semi-fixed costs of the enterprise for the production of products. If ... conditionally variable, fixed and conditionally fixed costs for the production of a unit of output or ..., as well as fixed and conditionally fixed costs for the production and sale of products ...
- Director's questions to which the chief accountant should know the answers
Its definitions, we will make equality: revenue = fixed costs + variable costs + operating profit. We ... in units of production = fixed costs / (price - variable costs / unit) = fixed costs: contribution margin on ... units of production \u003d (fixed costs + target profit) : (price - variable costs / unit) \u003d (fixed costs + target profit ... price. So, the equation is true: price \u003d ((fixed costs + variable costs + target profit)/ target...
- What do you know about general factory expenses?
The type of goods, excluding conditionally fixed costs, is 2,000,000 rubles ...
- Features of pricing in a crisis
The service must cover variable and fixed costs, as well as provide an acceptable level ... unit of service; Z post - conditionally fixed costs for the entire volume of services; App... costs, at which fixed costs and profits are not covered - although ... apply this tactic, since part of the fixed costs of the AC is borne by the founder. Below ... - 144 thousand rubles. in year; fixed costs for paid groups - 1,000 ... organizations. No or low fixed costs. While business...
- Economic and social consequences of underutilizing the production and commercial capabilities of an enterprise
...), where Zpos - fixed and semi-fixed costs for the production of products at the enterprise ...
- The financial analysis. Some provisions of the methodology
Production and sales. As part of fixed costs, single out the articles "" as separate items ... costs PerZatr Marginal profit MarginPrib Fixed costs, including:
- Analysis of the financial condition of the company. Chapter II. Analysis of the financial condition on the example of a manufacturing enterprise
Additional financial resources. The fixed charge coverage ratio is derived similarly to... than the interest coverage ratio). Fixed costs include interest and long-term lease... as follows: Fixed Cost Coverage Ratio = EBIT (32) + "Rental Fees" (30 ... in 1993. Kovoplast's Fixed Cost Coverage Ratio declined in 1993 ...
- Rationalized information system for analysis and control of the main results of the enterprise
Orff products Fixed and conditionally fixed costs for the production and sale of products ...
- Building management accounting based on IFRS reporting
Direct and indirect, variable and fixed costs), the correct definition of the so-called drivers...
and contributions to funds). Semi-fixed costs include overhead and general business expenses ... examples. At the same time, variable and fixed costs in relation to the taxation of profits resemble ...
The implementation of any activity of companies is impossible without investing costs in the process of making a profit.
However, costs are different types. Some operations during the operation of the enterprise require constant investments.
But there are also costs that are not fixed costs, i.e. are related to variables. How do they affect the production and sale of finished products?
The concept of fixed and variable costs and their differences
The main purpose of the enterprise is the manufacture and sale of manufactured products for profit.
To produce products or provide services, you must first purchase materials, tools, machines, hire people, etc. It requires investment of various amounts Money which are called "costs" in economics.
Since monetary investments in production processes are of various types, they are classified depending on the purpose of using the costs.
In economics costs are shared by these properties:
- Explicit - this is a type of direct cash costs for making payments, commission payments trading companies, payment banking services, transport costs, etc.;
- Implicit, which include the cost of using the resources of the owners of the organization, not provided for by contractual obligations for explicit payment.
- Permanent - this is an investment in order to ensure stable costs in the production process.
- Variables are special costs that can be easily adjusted without affecting operations, depending on changes in output.
- Irrevocable - a special option for spending movable assets invested in production without return. These types of expenses occur at the beginning of the issue new products or reorientation of the enterprise. Once spent, the funds can no longer be used to invest in other business processes.
- Average costs are estimated costs that determine the amount of capital investment per unit of output. Based on this value, the unit price of the product is formed.
- Marginal - this is the maximum amount of costs that cannot be increased due to the inefficiency of further investments in production.
- Returns - the cost of delivering products to the buyer.
From this list of costs, fixed and variable types are important. Let's take a closer look at what they consist of.
Kinds
What should be attributed to fixed and variable costs? There are some principles on which they differ from each other.
In economics characterize them as follows:
- fixed costs include the costs that must be invested in the production of products within one production cycle. For each enterprise, they are individual, therefore, they are taken into account by the organization independently based on the analysis production processes. It should be noted that these costs will be typical and the same in each of the cycles during the manufacture of goods from the beginning to the sale of products.
- variable costs that can change in each production cycle and are almost never repeated.
Fixed and variable costs add up to total costs, summed up after the end of one production cycle.
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What applies to them
Main characteristic fixed costs is that they do not actually change over a period of time.
AT this case, for an enterprise that decides to increase or decrease the volume of output, such costs will remain unchanged.
Among them can be attributed such costs:
- communal payments;
- building maintenance costs;
- rent;
- employee earnings, etc.
In this scenario, it should always be understood that the constant amount of total costs invested in certain period time for the release of products in one cycle, will be only for the total number of manufactured products. When such costs are calculated piece by piece, their value will decrease in direct proportion to the growth in production volumes. For all types of industries, this pattern is an established fact. 
Variable costs depend on changes in the quantity or volume of products produced.
To them refer such expenses:
- energy costs;
- raw materials;
- piecework wages.
These cash investments are directly related to production volumes, and therefore vary depending on the planned parameters of output.
Examples
In each production cycle there are cost amounts that do not change under any circumstances. But there are also costs associated with production factors. Depending on these features economic costs for a certain, small period of time are called constants or variables.
For long-term planning, such characteristics are not relevant, because Sooner or later, all costs tend to change.
Fixed costs - ϶ᴛᴏ costs that do not depend on short term how much the firm produces. It is worth noting that they represent the costs of its constant factors of production, independent of the quantity of goods produced.
Depending on the type of production into fixed costs The following expenses are included:
Any costs that are not related to the release of products and are the same in the short period of the production cycle can be included in fixed costs. According to this definition, it can be stated that variable costs are such costs that are invested directly in output. Their value always depends on the volume of products or services produced.
Direct investment of assets depends on the planned amount of production.
Based on this characteristic, to variable costs include the following costs:
- raw material reserves;
- payment of remuneration for the work of workers engaged in the manufacture of products;
- delivery of raw materials and products;
- energy resources;
- tools and materials;
- other direct costs of producing products or providing services.
The graphical representation of variable costs displays a wavy line that smoothly rushes up. At the same time, with an increase in production volumes, it first rises in proportion to the increase in the number of manufactured products, until it reaches point "A".
Then there is cost savings in mass production, in connection with which the line no longer rushes up at a slower speed (section "A-B"). After the violation of the optimal expenditure of funds in variable costs after the point "B", the line again takes a more vertical position.
The growth of variable costs can be influenced by the irrational use of funds for transportation needs or excessive accumulation of raw materials, volumes of finished products during a decrease in consumer demand.
Calculation procedure
Let's give an example of calculating fixed and variable costs. Production is engaged in the manufacture of shoes. The annual output is 2000 pairs of boots.
The enterprise has the following types of expenses per calendar year:
- Payment for renting the premises in the amount of 25,000 rubles.
- Payment of interest 11,000 rubles. for a loan.
Production costs goods:
- for wages when issuing 1 pair of 20 rubles.
- for raw materials and materials 12 rubles.
It is necessary to determine the size of the total, fixed and variable costs, as well as how much money is spent on the manufacture of 1 pair of shoes.
As you can see from the example, only rent and interest on a loan can be added to fixed or fixed costs.
Due to the fact that fixed costs do not change their value with a change in production volumes, then they will amount to the following amount:
25000+11000=36000 rubles.
The cost of making 1 pair of shoes is a variable cost. For 1 pair of shoes total costs amount to the following:
20+12= 32 rubles.
For the year with the release of 2000 pairs variable costs in total are:
32x2000=64000 rubles.
General costs calculated as the sum of fixed and variable costs:
36000+64000=100000 rubles.
Let's define average total cost, which the company spends on tailoring one pair of boots:
100000/2000=50 rubles.
Cost analysis and planning
Each enterprise must calculate, analyze and plan the costs of production activities.
Analyzing the amount of costs, options are considered for saving funds invested in production in order to rational use. This allows the company to reduce the output and, accordingly, set more cheap price on the finished products. Such actions, in turn, allow the company to successfully compete in the market and ensure continuous growth.
Any enterprise should strive to save production costs and optimize all processes. The success of the development of the enterprise depends on this. Due to the reduction of costs, the company significantly increases, which makes it possible to successfully invest in the development of production.
Costs planned taking into account the calculations of previous periods. Depending on the volume of output, they plan to increase or decrease the variable costs of manufacturing products.
Display in the balance sheet
In the financial statements, all information about the costs of the enterprise is entered in (form No. 2).
Preliminary calculations during the preparation of indicators for entering in can be divided into direct and indirect costs. If these values are shown separately, then we can assume such reasoning that indirect costs will be indicators of fixed costs, and direct costs, respectively, are variables.
It is worth considering that there is no data on costs in the balance sheet, since it reflects only assets and liabilities, and not expenses and incomes.
For information on what fixed and variable costs are and what applies to them, see the following video material:
In the activity of any enterprise, the adoption of correct management decisions is based on the analysis of its performance indicators. One of the objectives 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 of not only the calculation of the cost of production, but also the analysis of the success of the enterprise as a whole.
The correct analysis of these articles allows you to take effective management decisions which have a significant impact on profits. For the purposes of analysis, in computer programs at enterprises, it is convenient to provide for automatic separation of costs into fixed and variable based on primary documents, in accordance with the principle adopted by the organization. This information is very important for determining the "break-even point" of the business, as well as assessing the profitability various kinds products.
variable costs
to variable costs include costs that are constant per unit of output, but their total amount is proportional to the volume of output. These include the cost of raw materials, expendable materials, energy resources involved in the main production, salary of the main production staff(together with accruals) and 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 the physical dimension, may decrease with an increase in production volumes due, for example, to a decrease in losses or costs for energy resources and transport.
Variable costs are either direct or indirect. If, for example, the enterprise produces bread, then the cost of flour is a direct variable cost, which increases in direct proportion to the volume of bread produced. Direct variable costs may decrease with the improvement of the technological process, the introduction of new technologies. However, if the plant 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 production. 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 are obtained (10 tons are losses or waste), then the cost of 1.111 tons of oil (20 tons of ethylene + 2.22 tons of waste) is attributed to the production of one ton of ethylene /20 tons of ethylene). This is due to the fact that in a proportional calculation, 20 tons of ethylene account for 2.22 tons of waste. But sometimes all the waste is attributed to one product. For calculations, data from technological regulations are used, and for analysis, actual results for the previous period.
The division into direct and indirect variable costs is conditional and depends on the nature of the business.
Thus, the cost of gasoline for the transportation of raw materials during oil refining is indirect, and for transport company direct, since they are directly proportional to the volume of traffic. Wages production personnel with accruals are classified as variable costs with piecework wages. However, with time wages, these costs are conditionally variable. When calculating the cost of production, planned costs per unit of production are used, and in the analysis, actual costs, which may differ from planned costs, both upwards and downwards. Depreciation of fixed assets of production, referred to a unit of output, is also a variable cost. But this relative value is used only when calculating the cost of various types of products, since depreciation charges, in themselves, are fixed costs / costs.
There are several classifications of costs. Most often, costs are divided into fixed and variable. We will tell you what applies to each type of cost and give examples.
What is this article about:
Cost classification
All costs of the enterprise according to their dependence on production volumes can be divided into fixed and variable.
Fixed costs are company expenses that do not depend on the volume of production, sales, etc. These are costs that are necessary for the normal operation of the company. For example, rent. No matter how much the store sells goods, rent is a constant value per month.
Variable costs, on the other hand, depend on the volume of production. For example, this is the salary of salespeople, which is expressed as a percentage of sales. The more sales a company has, the more sales.
Fixed costs per unit of output decrease with an increase in production volume, and, on the contrary, increase with a decrease in the rate of sales. Variable costs remain always the same per unit of goods.
Economists call such costs conditionally fixed and conditionally variable. For example, rent cannot be infinitely independent of the volume of production. Anyway, at some point the production area will not be enough and more space will be required.
That is, we can say that conditionally variable costs are directly related to the main activity, while conditionally fixed costs are more related to the activities of the enterprise as a whole, to its functioning.
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What will help: contains illustrative examples building classifiers of objects, carriers and cost items.
fixed costs
Fixed costs include expenses absolute value which does not change significantly with a change in the volume of output. That is, these costs arise even with a simple organization. These are general business expenses. Such expenses will always exist while the enterprise carries out its economic and financial activities. They are there regardless of whether it receives income or not.
Even if the organization does not significantly change the volume of production, then fixed costs can still change. Firstly, the production technology is changing - it is required to purchase new equipment, train personnel, etc.
What is included in fixed costs (examples)
1. Salary management personnel: chief accountant, financial director, CEO etc. The salaries of these employees are most often a salary. Of course, twice a month, employees receive this money, regardless of how efficient the organization is and whether the founders make a profit ( ).
2. Company insurance premiums from the salaries of management personnel. These are mandatory payroll payments. By general rule contributions are 30 percent + contributions to the FSS from accidents at work and prof. diseases.
3. Rent and utilities. Rental costs do not depend on the profits and revenues of the company. Monthly payment is required to the landlord. If the company does not fulfill this condition of the lease, the owner of the premises may terminate the contract. Then there is a possibility that for some time it will be necessary to curtail the business.
4. Credit and lease payments . If necessary, the company borrows money from the bank. Paying with a credit institution is required every month. That is, regardless of whether the company worked in profit or at a loss.
5. Spending on security. Such expenses depend on the area of protected premises, the level of protection, etc. But they do not depend on the volume of production.
6. Costs for advertising and promotion of goods. Almost every company spends money to promote a product. Indirectly, there is a relationship between advertising and sales, and, accordingly, production. But it is believed that these are independent of each other quantities.
The question often arises, is depreciation a fixed or variable cost? It is believed to be permanent. After all, the company accrues depreciation every month, regardless of whether it received income or not.