Conditionally fixed costs include costs, the value of which does not change relatively with a change in the volume of production (for example, it can be depreciation of fixed assets with a linear method of its calculation, wages management personnel, security costs).
Fixed costs are usually classified into useful and useless ("idle"):
Zpost. = Zuseful + Zuseless
Waste costs arise if the factor of production is not used to its full capacity. The occurrence of such costs may be due to the indivisibility production factor(for example, means of labor or labor force).
Such a division is especially relevant when analyzing the use of expensive equipment, since if it is not fully used, depreciation is still charged and interest is paid on the invested capital, which, in this case only partially useful.
If we designate the optimal use of equipment capacity (output in physical units) Mopt., And its planned level of use - Mplan., Then useful and idle costs can be calculated as follows:
Useful = Mplan. x Zpost. / Mopt.
Useful = Zpost. x% power usage,
Where % of power usage = Mplan. / Mopt.
Useless = (Mopt. - Mplan) x Zpost. / Mopt.
Useless expenses are in this case direct losses of the enterprise.
special practical value this classification has in cases where a certain divisibility of the factors that determine the constancy of costs is given. If, for example, the equipment consists of four identical units, then with a reduction in production by more than 25%, one of the units can be sold or leased, which will eliminate unnecessary costs.
Majority size fixed costs is not absolutely fixed. That is, we are dealing with semi-fixed costs, which are constant for a specific volume of production, but at some critical moment increase by a certain amount. Such costs are classified as fixed or variable, depending on the frequency of step increments and the magnitude of increments at each point.
In practice, the "pure" classification of costs into fixed and variable, which we have considered, is distorted due to the impact on the size of costs of a combination of factors (and not just the volume of production), therefore, one of the widely used tolerances in classifying costs is linearity.
The linear approximation method allows you to turn costs with non-linear dependencies into linear ones. This method uses the concept of relevant levels. Relevant level - the level of expected business activity within which many non-linear costs can be estimated as linear.
It is necessary to take into account the fact that costs of the same type can behave differently. There are costs that are variable in one situation and fixed in another. This classification cannot be determined once and for all even for a particular enterprise, but must be revised (specified) taking into account the changing conditions of activity; a strict, legally fixed classification in this case is impossible.
An example of solving the problem of cost classification is the transition to the use of the above classification of costs per product and per period. In this case, only partly there is the main sign of the classification of costs for fixed - variable, and some confusion of signs that takes place here is justified by the convenience of practical application.
Semi-fixed costs - part of the production costs, the value of which on the pre-tyi within certain limits does not depend on the volume of production (work performed, services rendered). Therefore, with an increase in production volumes the value of U.-p.r. (per unit of products, works, services) decreases accordingly, and with a reduction in production, it increases.
In builds, production to U.-p.r. up to 50% of overhead costs can be attributed to: administrative and household. expenses, depreciation of temporary buildings and structures, taken into account as part of overhead costs, expenses for the maintenance of fire and watch guards, for the improvement of buildings, sites, cultural events, maintenance of buildings, laboratories, testing of materials and structures, rationalization and regulation of labor, labor protection and technology security and some others. U.-p.r. can be considered about 1% of the cost of materials, mainly procurement and storage costs, approximately 15% of the cost of operating machines and mechanisms.
In economic calculations efficiency, the savings of U.-p.r. are taken into account if the increase in the volume of construction and installation works was the result of a reduction in the duration of their implementation. If the reduction in the duration of the construction of the facility is achieved due to the development and application of a more economical design solution that reduces the volume and estimated cost of work compared to the replaced one, then the savings of U.-p.r. at builds, the organization is not formed and therefore is not subject to accounting.
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Depending on how the value changes certain types expenses when changing the volume of production (sales) of products (works, services), all types of expenses can be divided into conditionally variable and conditionally constant.
Conditionally variable (proportional) (note) costs change in proportion to the change in the volume of production (sales), and their level remains practically unchanged in the unit cost of production (works, services).
Variable expenses include:
The cost of the main materials used in production;
The consumption of energy carriers (electricity, fuel, etc.) for the production of products (for the operation of machine tools, machines, other production equipment);
Wages of basic workers with piecework wages and taxes calculated from the fund wages such workers;
Most customs payments ( customs duty, excises, VAT);
Fare;
Taxes, fees and deductions calculated from revenue (gross income).
As a rule, conditionally variable costs are the so-called direct costs.
The value of semi-fixed (disproportionate) costs practically does not depend on the dynamics of the volume of production (sales), and therefore, with a change in the volume of production (sales), the level of semi-fixed costs in the cost of a unit of production (work, services) changes: with an increase in the volume of production (implementation) amount ( specific gravity) of these costs decreases, and with a decrease in the volume of production - increases.
To semi-fixed expenses usually include:
Depreciation of fixed assets and intangible assets;
Expenses for rent and maintenance of office, production and warehouse premises;
Leasing payments;
Expenses for the repair of fixed assets;
Expenses for heating, lighting of premises;
Wages of administrative and management personnel and personnel with time wages, as well as taxes calculated from the wage fund of such personnel;
Costs associated with the management and organization of production;
Payment for certain types of services of third parties (bank services, telephone communication);
Some fixed taxes (for example, land) included in the cost of products (works, services).
semi-fixed expenses tend to be indirect costs.
It is more profitable for an organization to have the smallest possible amount of fixed costs per unit of output (works, services), which is achieved with the maximum possible volume of production (sales) with the available number of machinery and equipment, production areas, human (labor) resources. In the event of a decrease in the volume of production (sales), the amount of conditionally variable costs(as a whole for the organization) is reduced in proportion to such a decrease, but the amount of semi-fixed costs is not. As a result, there is an increase in the share of cost in the selling price of products, which means a decrease in the share of profit (respectively, the income of the organization) in this price.
In general, all types of costs can be divided into two main categories: constants (conditional-constant) and variables (conditional-variables).
Fixed (conditionally fixed) costs - these are expenses that remain relatively constant during the budget period, regardless of changes in sales volumes (eg, management expenses, depreciation). In reality, these costs are not literally fixed. They increase as the scale increases. economic activity(for example, with the emergence of new products, new businesses, branches or representative offices in other regions) at a slower pace than the growth in sales volumes, or grow in leaps and bounds. That is why they are called conditionally permanent.
Variable (conditionally variable) costs- these are expenses that change in direct proportion in accordance with the increase or decrease in the total turnover (sales proceeds). These costs are directly related to the enterprise's operations for the purchase and delivery of products to consumers (the cost of purchased goods, raw materials, components, some processing costs, such as electricity, etc.). They are called conditional variables because the directly proportional dependence on the volume of sales actually exists only for the time being or in a certain period.
In the theory of financial management, it is also customary to single out such two categories as direct and overhead costs. Here, the separation criterion is not the procedure for accruing (rationing) these costs in conjunction with changes in sales volume, but the procedure for attributing various categories of costs to the cost of production.
Direct costs- these are the costs that are directly and fully related to the cost of this product. They are directly related to economic activity and form the cost of production (the cost of purchased raw materials, materials, components, the cost of wages processing and production services).
Overheads- these are expenses indirectly related to the production of this product, business or economic activity of the company, were a condition for its existence as an organization.
The main criterion for the distribution of expenses by main categories is their economic content, and not their place in the accepted accounting system.
In the literature on financial management there is also a more detailed classification of costs with the allocation of semi-variable and semi-fixed costs.
Semi-variable costs have the features of both fixed and variable costs, i.e., they change depending on the turnover at a higher rate than constant ones, but not in direct proportion, like variables. These costs are usually recorded as overheads (some business expenses, such as advertising costs).
It should always be remembered that there is no single, universal criterion for classifying specific production costs as direct or overhead (fixed) costs. We can limit ourselves to a simple statement of the fact that direct costs are more of an accounting category, while variables are a category of financial planning.
In budgeting, it is important to take into account (plan, normalize, control) the most important (critical) cost items for this business. However, this problem is exacerbated by the fact that for each a separate enterprise or firms even in the same industry or region, a variety of resources can act as critical resources. What resources (types of costs or expenses) should be allocated in the budget of income and expenses as separate items, for which operating budgets should be drawn up - all this depends entirely on the leaders of the company.
Direct costs- these are all costs that can be traced and attributed to the product, customer, contract
In overhead all types of fixed or semi-fixed costs are included, that is, those costs whose value does not depend in direct proportion to the volume of sales. Depending on the type of business, a specific set of expenses related to overheads is accepted, but in general, three main groups of costs are usually distinguished here:
a) management expenses is the cost of wages
employees of the management apparatus (ITR and AUP) of an enterprise or firm, their structural divisions, support staff, pre
staking, travel expenses;
b) commercial- expenses for the sale and distribution, promotion of the product on the market and its delivery to the consumer;
in) other waybills- expenses for servicing loans and borrowings, depreciation of fixed assets and intangible assets, etc.
Management expenses can be determined by the following methods.
1. The actual costs for personnel remuneration, rent, repairs, etc. for past periods are determined (based on a plan-fact analysis) and then their amount is taken as a limit for the upcoming budget period (planning from what has been achieved).
2. The share of management expenses (also based on historical analysis) can be set as a fixed percentage of sales (net net sales) in order to allow managers to quickly maneuver the resources at their disposal.
3. The share of management expenses in the volume of conditionally net production is determined (the sum of the wage fund and balance sheet profit) separate business for past periods.
Selling expenses are determined, as a rule, depending on the marketing strategy, while the following methods are usually used:
As a percentage of turnover;
Per unit of goods sold;
Based on market research (value advertising campaign);
Total expenses based on historical trends.
share corporate The management or selling expenses of an individual business can be established based on the business' share of:
total volume company sales;
The total number of employees;
the total payroll fund,
General assets companies.
The same costs for companies in the same industry can be classified as variables in one case, as variables in another. fixed costs. The only universal criterion here can be only one - whether these costs change in proportion (directly proportional) to changes in sales volumes or not.
In concept management accounting costs occupy an important place, since in the course of current activities their analysis is mandatory. Semi-fixed costs are general business costs for advertising, as well as those that do not depend on the volume of production. Every organization has this part of the costs, so its study and optimization make it possible to increase profits.
Why is it necessary to classify costs?
To analyze the costs of the enterprise was easier and more efficient, it is customary to classify them according to certain criteria. This division allows you to identify their relationship and calculate how much each individual affects the cost of production and the profitability of the business as a whole.
In order for the cost structure of an enterprise to have order, it is necessary to effectively maintain accounts and link costs to objects. For this purpose, expenses are classified according to similar characteristics. The choice of differentiation determines the object: if it changes, this may entail a change in the cost category.
Classification types:
- Subjective. Costs are grouped according to specific characteristics: direct or indirect, fixed or variable.
- Objective. In this case, the subjective classification is tied to a specific object.
At each enterprise, costs can be differentiated in different ways so that the cost structure is clear and understandable. Management accounting allows you to choose the most optimal method. It should be noted that all costs are grouped by types of costs, cost carriers and the place where they arise.
By type, costs can be divided in accordance with economically homogeneous factors and costing items.
Cost carriers are products, activities or services. This category of expenses is necessary in order to determine the unit cost of production.
Costs and their classification also depend on the place of occurrence: it can be production shops or other divisions. It is advisable to group the costs in accounting so that the information is as accessible as possible for the analysis of costs and the definition of a savings strategy.
Costs and their classification
Enterprises distinguish between the main types of costs:
- semi-fixed costs;
- conditionally variable costs.
Semi-fixed costs are those that do not depend on the time period and production volumes. These costs increase with the increase in the scale of economic activity, but at a slower pace. In some cases, their growth tends to jump.
Simply put, semi-fixed costs are those that arise when the volume of production has increased dramatically, for example, the cost of additional equipment.
Conditionally variable costs include costs associated with the purchase and sale of products. Their value depends on many factors: supplier prices, and others.
Calculated as the sum of conditionally variable and conditionally fixed costs.
Internal and external costs
Towards environment costs are classified into internal and external. He finances the internal ones on his own, and entrusts the care of external organizations to other organizations or society as a whole.
The grouping of costs by directions and articles is used to calculate the costs of manufacturing and selling goods or services. To make it more convenient to calculate losses and profits, analyze the cost and set prices, a calculation sheet is compiled. According to the items, the costs are divided depending on what role they play in the enterprise and for what needs they are used.
Indirect and direct costs
Indirect or divided depending on the method of attributing costs to cost.
Indirect costs are those costs that are not charged per unit of output, but are accumulated in the accounts. After that, they are included in the cost price by calculation. As a rule, indirect costs are taken into account at the places of their occurrence, and then distributed among the types of products. These include salary temporary workers or the cost of purchasing additional materials.
Direct costs are calculated based on primary documents for each unit of production. All costs that relate to a particular product are called direct: the purchase of raw materials and materials, the salary of the main workers, as well as any others. When calculating an object, it is necessary to understand that the greater the share of direct costs, the more accurately you can calculate the cost per unit of goods.
Technical and economic costs
According to the technical and economic purpose, the costs can be divided as follows:
- Basic.
- Overhead.
It is customary to refer to the main costs those that are directly related to the production process or the provision of services. These are the costs necessary to carry out the production and release of a specific product: the cost of purchasing materials, the cost of electricity, fuel, wages, and so on.
General production and business expenses are considered indirect. They are related to the maintenance of structural divisions of the enterprise.
Costs characterizing the activities of the enterprise
To analyze the activities of the enterprise as a whole and evaluate finished products, the cost structure of the enterprise is as follows: expenses are divided into incoming and expired. Incoming funds include acquired funds that are used to make a profit. If over time they have lost relevance or been used up, they are transferred to expired costs.
In the asset balance, input costs can be reflected as goods, finished products, inventory or work in progress.
Costs that relate to social or managerial development programs are usually called discretionary. To get the average unit cost, you need to add the unit fixed and variable costs.
Types of variable costs
Depending on the change in production volumes, non-fixed costs can be divided into types:
- Proportional. These costs change at the same rate as the scale of production.
- Progressive. Such costs increase much faster than the growth rate of the enterprise's activity. This may be due to interruptions in work or downtime.
- Degressive. To increase profits and reduce costs, the rate of these costs must exceed the rate of progressive and proportional costs.
Conditionally variable and conditionally fixed costs are important indicators in any business, so it is necessary to clearly understand the mechanism of their formation.