The essence of production costs, their composition and structure

The essence and composition of production costs.

the firm must use a production process that, at the same level of output, would allow the use of the least amount of input factors of production, i.e. would be the most effective. Therefore, the company must use a production process in which the same volume of finished goods is provided with the lowest cost of input factors of production.

The costs of acquiring input factors of production or economic resources are called production costs. This means that the most cost-effective method of production of any product is one that minimizes production costs.

To evaluate a company's activities, the category of opportunity costs is of decisive importance. “The cost of using a resource, measured in terms of the benefits “lost” by not using that resource in the best alternative way, is called opportunity cost (opportunity cost).”

To calculate a firm's opportunity costs, it is necessary for each input factor of production to estimate in monetary terms the benefit that the firm missed by using the resource in this way rather than in the best alternative way.

Maximizing profits and minimizing the costs of organizing production determine the behavior of the manager and are the main active motive for the economic activity of a company or individual entrepreneur.

Production costs form the lower price limit. To ensure a rational pricing policy, it is necessary to compare the cost structure with planned production volumes and calculate short-term average costs (per unit of production). As output increases, unit costs initially decrease until a certain volume of production is achieved. However, if you increase production further, then additional costs arise due to overloading of equipment, additional repairs, disruptions in production rhythm, downtime, etc., and therefore, in order to avoid losses from increasing production costs, there is a production cost management system operating at enterprises as in foreign and domestic practice in a market economy system.

Production cost structure.

The main indicator characterizing the degree of economic efficiency of a company’s activities is the “cost-output” ratio.

The production of products, like any product, requires the expenditure of economic resources, which have certain prices.

The quantity of resources consumed and their market value constitute production costs (costs).

Resources used in production are limited. An enterprise, determining its ability to produce goods, tries to choose the most effective combination of resources that provides the least amount of cash costs.

The costs of manufactured goods are called economic costs of production.

There are external and internal production costs.

External costs are payments for resources to suppliers who do not belong to the owners of the company.

Internal costs are the costs of own, unpaid resources.

These include: depreciation for the restoration of fixed assets, remuneration of company owners, etc.

“Total production costs are the sum of all external and internal costs necessary to attract and retain resources within the limits that ensure the economically sound functioning of the company.”

Production costs have a complex structure, which determines the nature and conditions of use in the production process.

There are fixed and variable production costs.

Fixed costs are those costs that do not change depending on the volume of production. These include the costs of acquiring, maintaining and maintaining land, buildings and structures, and equipment. Variables are costs, the value of which depends on production volumes. The value of variable costs varies with the volume of production, increasing or decreasing with this volume.

Variable costs include the costs of purchasing raw materials, labor, transport, heat and energy resources, etc.

Total costs are the sum of fixed and variable costs.

For the analysis and management of the state of the company, average and unit costs, as well as marginal production costs, are also of great importance.

Average and unit costs are the costs of producing a unit of finished product. There are average total, average fixed and average variable costs.

Marginal costs are the additional costs associated with producing one more (additional) unit of output.

COURSE WORK

In the discipline "Economics of an organization (enterprise)"

Topic: “Production and sales costs”

Introduction

1 Economic essence of costs (costs) of production and sales of products

1.1 Types of costs (expenses)

1.2 Composition of enterprise costs

1.3 Cost of goods sold and production costs

2. Cost structure using the example of the enterprise ZAO Kulikovskoye

2.1 Main indicators of the enterprise’s production activities

2.2 Production cost structure

2.3 Importance and ways to reduce production costs

Conclusion

List of used literature

Application

Introduction

The production process at an enterprise is a continuous interaction of three main factors: labor resources and means of production, which in turn are divided into means of labor and objects of labor. The totality of the costs of living and embodied labor represents production costs, which are a necessary condition for the implementation of economic activity.
The concept of “costs” is one of the most general economic categories that can be used for different methods of production in any conditions of economic activity.

The economic essence of the concept of “costs” can be viewed in different ways, depending on the specific goals and objectives of the study.
Thus, “cost” is often defined as a measure in monetary terms of the amount of resources used to achieve a certain goal. The concept of “costs” is also used to solve a wider range of problems, primarily to justify management decisions. For tax purposes, “costs” are the amount by which the amount of income subject to taxation, etc. is reduced.
Sometimes the terms “expenses” and “costs” are used to define various aspects of the economic essence of “costs”.
In enterprise economics, these concepts are considered identical, and costs are understood as the monetary expression of the use of production factors, as a result of which the production and sale of products is carried out.

The purpose of the course work is: to consider the theoretical foundations of the concept of “costs”, expenses”, “cost”, to reveal the composition and structure of the cost of production using the example of the enterprise JSC “Kulikovskoe”, to outline the main directions for reducing the costs of the enterprise.

1. The economic essence of costs (costs) of production and sales of products

1.1. Types of costs(costs)

Costs are the monetary expression of the costs of production factors necessary for an enterprise to carry out its production activities.

In countries with developed market relations, there are two approaches to estimating costs: accounting and economic.

Accounting costs represent the cost of resources expended, measured in actual acquisition prices. These are costs presented in the form of payments for purchased resources (raw materials, materials, depreciation, labor, etc.).

However, to make decisions about whether to continue operating their business, owners must consider the economic costs.

Economic cost is the amount (cost) of other products that must be given up or sacrificed in order to obtain a certain amount of a given product.

The domestic economy is characterized by an accounting approach to cost estimation. If we take this into account, the terms “costs” and “expenses” can be considered synonymous.

For accounting purposes, costs are classified according to various criteria.

Based on their economic role in the production process, costs can be divided into basic and overhead.

The main ones include costs associated directly with the technological process, as well as with the maintenance and operation of labor tools.

Overheads – costs for maintenance and management of the production process, sales of finished products.

According to the method of attributing costs to the production of a specific product, direct and indirect costs are distinguished.

Direct costs are costs associated with the production of only this type of product and attributable directly to the cost of this type of product.

Indirect costs in the presence of several types of products cannot be attributed directly to any of them and must be distributed indirectly.

In relation to the volume of production, costs are divided into variable and fixed.

Variable costs are costs, the total value of which for a given period of time is directly dependent on the volume of production and sales.

Fixed costs are understood as those costs, the amount of which in a given period of time does not directly depend on the volume and structure of production and sales.

Variables usually include costs of raw materials, fuel, energy, transport services, part of labor resources, i.e. those costs whose level changes with changes in production volume.

Fixed costs include deductions for depreciation, rent, salaries of management personnel and other costs that occur even if the enterprise does not produce products.

As for average fixed costs (per unit of output), they decrease as production volume increases and increase as production volume decreases.

The sum of fixed and variable costs constitutes the gross costs of the enterprise. With an increase in the volume of production and sales of products, gross costs per unit of production are reduced due to a decrease in fixed costs.

1.2. Composition of enterprise costs

The formation of enterprise costs is carried out at five levels (Fig. 1):

1. at the level of costs of the enterprise as a whole;

2. at the level of costs associated with ordinary activities;

3. at the cost level of operating activities;

4. at the level of cost of goods and products sold;

5. at the level of production cost of production.

At the first level, from the totality of the enterprise’s costs, costs that are directly and directly related to the normal activities of the enterprise and costs associated with extraordinary events are distinguished. The magnitude and share of the latter indicate the degree of influence of unplanned and uncontrollable events on the activities of the enterprise in the reporting period. This distinction makes it possible to immediately distinguish from the composition of the enterprise’s costs expenses that cannot be taken into account when assessing the effectiveness of business activities.

At the second level, the costs of ordinary activities primarily include costs associated with operating and financial activities. In general, it is difficult to identify any criteria for the rationality of the cost ratio at this level. However, a significant share of the costs of financial activities may indicate a wide variety of activities of the enterprise, the combination of which within one legal entity is not always appropriate and may require its division.

The amount of “other costs” (this group primarily includes costs associated with the maintenance of the social sphere) also indicates the presence in the enterprise of cost objects not related to the main activity, and, as a consequence, the main source of cost recovery.
At the third to fifth levels, the cost structure of operating activities is studied by economic elements and costing items.
Operating costs include all enterprise expenses associated with the production or sale of products (goods, works, services). The difference between the costs of core and operating activities is that the former do not include current costs of investing or financing activities.
The main indicator reflecting the cost structure of an enterprise's operating activities is the ratio of material, energy costs and wage costs. Costs for these elements determine the total amount of consumption of all main types of resources necessary to maintain normal economic activities of the enterprise.

Products in which material costs predominate (for raw materials and supplies) are called material-intensive, fuel and energy products are called energy-intensive, and labor costs are called labor-intensive.

In the process of analyzing the costs of operating activities by economic elements, the share of each element in the total amount of costs for the planned volume of operating activities is determined. Then, by comparing the share of actual costs for the relevant elements with planned indicators or indicators for previous periods, deviations and the reasons that caused them are identified.

When studying the structure and dynamics of costs by item, one should not confuse “cost items” with “costing items.”

In the first case, we are talking about grouping the costs of operating activities according to various accounting objects (production of products or services; management of the enterprise as a whole, commercial and sales activities for the sale of manufactured products or services); trade (resale) of goods). In this case, the objects of accounting are the various stages of operating activities, and costs are grouped according to the homogeneity of their purpose (by analogy: economic elements - the homogeneous essence of the costs themselves; cost items - their homogeneous purpose).
In the second case, costs, which will be only part of the costs of operating activities, are grouped under one accounting object - by product or service. At the same time, earlier (before the adoption of NP(S)BU) in accounting and reporting, there was an automatic combination of expenses that were economically heterogeneous in purpose:

For the production of specific products;

For the sale of products;

To manage an enterprise.

Thus, operating costs, in turn, include:

Cost of products or services sold;

Costs associated with operating activities;

Cost of goods sold

Operating costs include:

Administrative costs,

Sales costs;

Other operating costs.

When analyzing costs associated with operating activities, an assessment is made of the total value and structure of costs of this group, their share in the costs of operating activities and the costs of the enterprise as a whole, and qualitative conclusions are drawn about the significance and feasibility of costs for this item. In addition, actual data is compared with planned indicators, deviations are identified and their causes are clarified. Of particular importance for determining the feasibility of expenses for this item is a comparison of the rate of change in expenses with the rate of change in the volume of operating activities (for example, the rate of growth in sales costs with the rate of growth in product sales volumes). The optimal situation for an enterprise is when these indicators change proportionally.

1.3. Cost of goods sold and production cost

The concept of “enterprise costs” is closely related to the concept of “cost”. Cost plays a leading role in the general system of indicators characterizing the efficiency of the economic activities of an enterprise and its structural divisions.

Cost is a general indicator of the use of all types of enterprise resources. Cost also provides for the replacement of these resources, which is necessary to continue the production process. The level and dynamics of cost allow us to assess the feasibility and rationality of using the resources that are at the disposal of the enterprise. The cost of production reflects the technical level and organization of production, and the efficiency of management in general.
The economic essence of cost is that, firstly, it reflects the costs of material and monetary resources in the form of wages necessary for the production of goods. Secondly, the cost ensures reimbursement of expended resources in the process of circulation of production assets, since the cost itself participates in this circulation and is its integral part.
According to NP (C) BU No. 16, for goods and services participating in the economic turnover of an enterprise, three types of cost can be distinguished:

1. cost of goods;

2. cost of products sold;

3. production cost.

The cost of goods is determined in accordance with NP(C)BU 9 “Inventories”.

The production cost of products (works, services) that were sold during the reporting period includes only direct costs. Thus, the production cost of products includes only those general production costs that can be distributed among all types of products (works, services).

Cost of goods sold includes:

- production cost;

- excess costs;

- unallocated general production costs.

The cost of production represents the current costs of enterprises expressed in monetary terms for the production and sale of products (works, services).

The cost of production is a qualitative indicator, since it characterizes the level of use of all resources at the disposal of the enterprise.

The cost of production of a particular enterprise is determined by the conditions in which it operates. This cost is called individual cost.

If, based on the individual cost of enterprises, the weighted average value of costs for the industry is determined, such a cost will be called the industry average. The average industry cost is closer to socially necessary labor costs.

The main document that guides the formation of the cost of production at an enterprise is the Regulation on the composition of costs for the production and sale of products (works, services) and on the procedure for generating financial results taken into account when taxing profits.

For the purpose of analysis, accounting and planning of the entire variety of costs included in the cost of production, two complementary classifications are used: element-by-element and calculation.

When grouping costs by elements, the costs of the enterprise as a whole are determined, without taking into account its internal structure and without identifying types of products. A document that presents costs by element is a production cost estimate. Cost estimates are drawn up to calculate the total needs of the enterprise in material and monetary resources. The cost amount for each item is determined based on supplier invoices, payroll records, and depreciation.

Cost elements are the costs of all services and workshops that are homogeneous in nature for production and economic needs.

The costs that form the cost of products (works, services) are grouped in accordance with their economic content into the following elements:

Material costs (minus the cost of returnable waste);

Labor costs;

Contributions for social needs;

Depreciation of fixed assets;

Other expenses.

Material costs reflect the cost of raw materials purchased from outside; cost of purchased materials; the cost of purchased components and semi-finished products; the cost of production work and services paid to third parties; cost of natural raw materials; the cost of fuel of all types purchased from outside, used for technological purposes, production of all types of energy, heating of buildings, transport work; the cost of purchased energy of all types, spent on technological, energy, propulsion and other needs.

The cost of material resources included in the cost of production excludes the cost of sold waste.

Industrial waste refers to the remains of raw materials, materials, semi-finished products, coolants and other types of material resources generated during the production process, which have lost completely or partially the consumer qualities of the original resource. They are sold at a reduced or full price of the material resource, depending on their use.

Labor costs reflect the costs of remunerating the main production personnel of the enterprise, including bonuses to workers and employees for production results, incentives and compensation payments.

Until recently, contributions for social needs reflected mandatory deductions from the costs of paying employees, included in the cost of products (works, services). These deductions were made in accordance with the norms established by law to the state social insurance, Pension Fund, state employment and health insurance funds.

From January 1 2001 All contributions to social extra-budgetary funds were replaced by a single social tax.

Depreciation of fixed assets reflects the amount of depreciation charges for the complete restoration of fixed assets.

Other costs are taxes, fees, deductions to extra-budgetary funds, loan payments within the limits of rates, costs of business trips, training and retraining of personnel, rent, depreciation of intangible assets, repair fund, payments for compulsory property insurance, etc. d.

Grouping costs by economic elements does not allow accounting for individual divisions and types of products; this requires accounting by costing items.

Costing is the calculation of the cost of a unit of products or services according to expense items. Unlike elements of cost estimates, costing items combine costs taking into account their specific purpose and place of formation.

There is a standard nomenclature of costs for costing items, but ministries and departments can make changes to it depending on industry characteristics.

Typical nomenclature includes the following articles:

1. Raw materials and materials.

2. Returnable waste (subtracted).

3. Purchased products, semi-finished products and production services of third-party enterprises and organizations.

4. Fuel and energy for technological purposes.

5. Wages of production workers.

6. Contributions for social needs.

7. Expenses for preparation and development of production.

8. General production expenses

9. General expenses.

10. Losses from marriage.

11. Other production costs.

12. Selling expenses.

The total of the first 9 items forms the workshop cost, the total of 11 items forms the production cost, and the total of all 12 items forms the total cost.

Shop cost represents the costs of the production unit of an enterprise for the production of products.

Production costs, in addition to workshop costs, include general enterprise costs.

The total cost includes the costs of both production and sales of products.

Manufacturing overhead is the cost of maintaining and managing production. They include the costs of maintaining and operating equipment and shop expenses.

General business expenses are expenses associated with managing the enterprise as a whole: administrative and managerial, general business expenses, taxes, mandatory payments, etc.

Commercial expenses include costs for containers and packaging, transportation costs, advertising costs, and other sales costs.

Cost items included in the calculation are divided into simple and complex. Simple ones consist of one economic element (wages). Complex items include several cost elements and can be broken down into simple components (general production costs, general business expenses...).

Cost accounting is necessary to determine the financial results of an enterprise.

2. Cost structure using the example of JSC Kulikovskoe

2.1 Main indicators of the enterprise’s production activities

Closed joint-stock company "Kulikovsky" is an agricultural enterprise; it was formed in 1993 through the reorganization of the state farm "Kulikovsky" by the decision of its founders, who contributed their land and property shares as payment for the shares.

JSC "Kulikovskoye" is located 8 km away. From the regional center of Kalachinsk and at a distance of 80 km from the regional city of Omsk.

The main activities are production, sales and processing of agricultural products. The economy develops two main sectors:

production of commercial grain in crop production;

production of milk and meat in livestock farming.

The main financial and economic indicators of the activities of CJSC Kulikovskoye for 2006-2007 are shown in Table 1.

Table 1. Main technical and economic indicators of the activities of JSC Kulikovskoe

From the data in Table 1, it is clear that in 2007, CJSC Kulikovskoye reduced sales of its products compared to 2006 (69.1%). Costs (cost price) decreased in 2007 (76.1%), product profitability in 2007 decreased to 2.6%, compared to the level of 2006 (50.9%).

Based on the company’s indicators, there is a decrease in sales revenue, but due to excess costs, net profit decreased by 1,470 thousand rubles. and the level of product profitability is very low - 2.6%.

2.2. Production cost structure

Based on the grouping of costs by economic elements, the structure of product costs can be characterized.

Let's consider the structure of production costs for

a specific example: the enterprise CJSC Kulikovskoye.

Let's determine the level and structure of production costs compared to the previous year (Table 2)

Table 2. Production costs by element

Analysis of production costs is carried out by comparing the share of actual costs by element with planned data or with data for the previous (reporting) period. From the above data it is clear that actual production costs are less than the costs of the previous year: 19221-25118 = -5897 thousand rubles ., or -23.5%. Such a reduction in costs could be caused by various reasons - a decrease in production costs, a decrease in the volume of manufactured products, a change in its assortment, etc.

For the reporting year, of the total costs, 19,221 thousand rubles. the production cost of marketable products (works and services) accounts for 18,858 thousand rubles. Thus, the share of the cost of products (works, services) in all costs was 98.1% (18858: 19221×100%).

From the table 2 also shows that the main share (37.9%) of production costs is the cost of raw materials and supplies, as well as labor costs (32.8%). Consequently, this production is material-intensive and the most important direction for reducing production costs will be the search for reserves to reduce these costs. As you know, the source of saving materials is their rational use.

During the period under review, the share of labor costs increased from 28.4 to 32.8%. This suggests that the rate of decline in production costs outpaced the expected decline in wage costs. The share of contributions for social needs also increased – from 11.2 to 13.1%. However, in this case, the correctness of social contributions should be verified by comparison. To do this, the amount of contributions for social needs must be divided by the amount of labor costs for both periods, respectively. In our case, 39.8% (2510: 6310×100) was allocated for social needs in the reporting year, and 39.5% (2813:7124×100) in the previous year. The deviation is insignificant, but it is still necessary to clarify why it occurred.

An increase in the share of depreciation in both costs and product costs indicates a decrease in capital productivity. A decrease in the share of energy costs indicates a decrease in the energy intensity of products, but fuel consumption has increased, which indicates an imbalance in fuel and energy prices.

The increase in the share of other costs is caused by a change in their structure: the share of interest on bank loans, rent, and taxes included in the cost has increased.

When analyzing production costs, the costs of materialized labor should be separated from the costs of living labor (Table 3).

The costs of materialized labor represent raw materials, supplies, fuel, energy, depreciation of fixed assets and two-thirds of other expenses.

Table 3. Production cost structure

From the table 3 shows that the share of materialized labor costs in the reporting year decreased compared to the previous year by 57.7-50.7 = 7.0% with an increase in living labor costs. This change is characterized by a decrease in material costs for production and an increase in costs, primarily for labor costs. Thus, data analysis shows that in the analyzed company there has been a deterioration in the structure of production costs, which is caused by an increase in the share of living labor costs and a decrease in material costs.

Grouping costs by economic elements is the basis for calculating net output (NP): NP = Q-MZ. Thus, net production in the previous year amounted to 10,627 thousand rubles, in the reporting year – 9,482 thousand rubles.

When considering production costs by element, it is necessary to keep in mind that indicators for the previous period are taken without recalculation to the volume and range of products actually produced in the reporting period at current prices. Therefore, it is not possible to calculate savings or cost overruns in the reporting period compared to the previous one. However, such a comparison makes it possible to establish the magnitude of the deviation of actual costs in general for the production of products from the planned ones or from those that took place in the previous period for economically homogeneous elements, to identify changes in their structure and to outline the main directions for a more in-depth analysis.

Currently, enterprises are independently developing tasks to reduce the cost of certain types of products and reduce production costs.

Having data on the cost per unit of product for the previous period (Z 0), according to planned calculations (Z pl) and for the reporting period (Z 1), it is possible to give a general description of the degree of implementation of the planned target for reducing cost and its dynamics, as well as determine the absolute amount savings or overruns as a result of changes in costs.

Let's look at these calculations using an example. Let us assume that the production of 1 centner of flour should cost, according to planned calculations, 120 thousand rubles, in fact it costs 129 thousand rubles, in the previous period - 125 thousand rubles; Actually 250 quintals of flour were produced, 300 quintals were planned. We determine individual cost indices.

Planned task index:

those. a reduction of 4% is planned.

Plan task completion index:

those. above-plan growth of 7.5%.

Dynamics index:

those. actual growth of 3.2%.

The listed indices are interrelated:

(in our example 1.032=1.075x0.96).

Thus, with the planned target of reducing the cost of one hundredweight of flour by 4%, it actually increased by 3.2%. As a result, an overexpenditure was obtained based on the entire quantity of manufactured products - flour in the amount of 1,000 thousand rubles.

The total amount of overexpenditure (savings) from changes in product costs is determined by the formula

(in our example (129-125)×250=1,000 thousand rubles).

Subtracting the planned savings from the actual savings, we obtain above-plan savings (overspending):

Consideration of the cost of products, works and services by cost elements allows us to find out the trends in this indicator, the implementation of the plan according to its level, determine the influence of factors on its growth and, on this basis, assess the enterprise’s work in using opportunities and establish reserves for reducing the cost of production.

2.3. Ways to reduce production costs

The decisive condition for reducing costs is continuous technical progress. The introduction of new technology, comprehensive mechanization and automation of production processes, improvement of technology, and the introduction of advanced types of materials can significantly reduce the cost of production.

A serious reserve for reducing production costs is the expansion of specialization and cooperation. In specialized enterprises with mass production, the cost of production is significantly lower than in enterprises producing the same products in small quantities. The development of specialization requires the establishment of the most rational cooperative ties between enterprises.

Reducing production costs is achieved, first of all, by increasing labor productivity. With an increase in labor productivity, labor costs per unit of production are reduced, and consequently, the share of wages in the cost structure decreases.

The success of the struggle to reduce costs ensures, first of all, an increase in the productivity of workers, which, under certain conditions, ensures savings on wages or an increase in output, reducing the share of semi-fixed costs in the cost of a unit of production.

The most important importance in the struggle to reduce production costs is compliance with the strictest savings regime in all areas of the enterprise’s production and economic activities. The consistent implementation of the economy regime at enterprises is manifested primarily in reducing the cost of material resources per unit of production, reducing production maintenance and management costs, and eliminating losses from defects and other unproductive expenses.

Material costs, as is known, in most industries occupy a large share in the structure of product costs, so even a slight saving of raw materials, materials, fuel and energy in the production of each unit of production for the entire enterprise has a major effect.

The enterprise has the opportunity to influence the amount of material resource costs, starting with their procurement. Raw materials and materials are included in the cost price at their purchase price, taking into account transportation costs, so the correct choice of material suppliers affects the cost of production. It is important to ensure the supply of materials from suppliers who are located a short distance from the enterprise, as well as to transport goods using the cheapest mode of transport. When concluding contracts for the supply of material resources, it is necessary to order materials that, in size and quality, exactly correspond to the planned specification for materials, strive to use cheaper materials, without at the same time reducing the quality of the product.

The main condition for reducing the cost of raw materials and supplies per unit of production is improving product designs and improving production technology, the use of advanced types of materials, and the introduction of technically sound standards for the consumption of material assets.

Reducing production maintenance and management costs also reduces production costs. The size of these costs per unit of production depends not only on the volume of output, but also on their absolute amount. The lower the amount of workshop and general plant expenses for the enterprise as a whole, the lower, other things being equal, the lower the cost of each product.

The reserves for reducing shop and general plant costs lie, first of all, in simplifying and reducing the cost of the management apparatus and saving on management costs. The composition of shop and general plant expenses also largely includes the wages of auxiliary and auxiliary workers. Carrying out measures to mechanize auxiliary and auxiliary work leads to a reduction in the number of workers employed in these works, and, consequently, to savings in workshop and general plant expenses.

The reduction of workshop and general plant costs is also facilitated by the economical use of auxiliary materials used in the operation of equipment and for other economic needs.

Significant reserves for reducing costs are contained in reducing losses from defects and other unproductive expenses. Studying the causes of defects and identifying its culprit makes it possible to implement measures to eliminate losses from defects, reduce and use production waste in the most rational way.

In the context of the transition to a market economy, the role and importance of reducing production costs at an enterprise increases sharply.

From an economic and social point of view, the importance of reducing production costs for an enterprise is as follows:

- in increasing the profit remaining at the disposal of the enterprise, and, consequently, in the emergence of opportunities not only in simple, but also in expanded production;

– in the emergence of opportunities for material incentives for workers and solving many social problems of the enterprise staff;

– improving the financial condition of the enterprise and reducing the risk of bankruptcy;

– the possibility of reducing the selling price of its products, which can significantly increase the competitiveness of products and increase sales volume;

In reducing the cost of production in joint-stock companies, which is a good prerequisite for paying dividends and increasing their rates.

Conclusion

1. Costs, expenses, cost are the most important economic categories. Their level mainly determines the amount of profit and profitability and underlies the system of production efficiency indicators.

2. Costs for production and sales of products are current non-capital costs financed from proceeds from sales of products through the turnover of working capital. The production costs of foreign firms consist of accounting and economic costs, which include standard profit.

3. The cost of production includes: material costs, labor costs, social contributions, depreciation and other expenses.

4. Grouping costs by budget elements reflects the generality of their economic content and determines the total volume of various types of resources consumed by the enterprise according to their natural purpose.

5. Classification of costs by costing items unites them according to areas of use and place of origin. It allows you to determine the cost per unit of production, distribute costs across product groups, and identify reserves for their reduction.

6. There are planned, normative, estimated and actual calculations. When calculating the cost of a unit of production, direct costs are included based on established norms, prices and tariffs, and indirect costs are distributed in accordance with the selected base.

7. Enterprises develop two options for product costs: for accounting purposes and for tax purposes.

8. A company’s costs are classified into fixed, variable, gross, average and marginal. The marginal cost curve intersects the lines of average variable cost and average total cost at their lowest points. At the point where the average cost curve reaches a minimum, the firm optimizes output in terms of minimizing costs.

List of used literature

1. Enterprise economics: Course of lectures. Volkov O.I., Sklyarenko V.K. (2006, 280 pp.)

2. Economics of an enterprise (firm). (Textbook) Ed. Volkova O.I., Devyatkina O.V. (2007, 3rd ed., 601 p.)

3. Enterprise economics. (Textbook) Ed. Gorfinkel V.Ya., Shvandar V.A. (2007, 4th ed., 670 pp.)

4. Enterprise economics. (Tutorial) Ed. Ilyina A.I., Volkova V.P. (2003, 677 pp.)

5. Enterprise Economics (textbook) Safronov N.A., Moscow. Publishing house LAWYER, (2002, 425 pp.)

6. Enterprise economics. (Textbook) Sklyarenko V.K., Prudnikov V.M. (2006, 528 pp.)

7. Enterprise economics. (Textbook) Titov V.I. (2008, 416 pp.)

8. Economics of enterprise (lecture notes), Frolova T.A., Taganrog. Publishing House TRTU, 2005

9. Enterprise Economics (Tutorial) Hungureeva I.P., Shabykova N.E., Ungaeva I.Yu. (2004 - 240 pp.)

10. Economics of the company. (Tutorial) Chechevitsyna L.N., Chuev I.N. (2006, 400 pp.)

• production;
• non-production (advertising, product certification);
• non-productive (losses: defects, complaints, fines).

• material costs;
• wages;
• contributions for social needs;
• depreciation;
• other expenses.

• raw materials and materials;
• purchased components, semi-finished products and production services;

• fuel and energy for technological needs;
• wages of production workers;
• taxes and contributions to the budget from the wages of production workers;
• social insurance contributions;
• expenses for preparation and development of production;
• shop expenses;
• general production expenses;
• general running costs;
• non-production (business expenses).

• for the maintenance of management staff, logistics, transport services for their activities, business travel costs;
• maintenance and servicing of technical means of enterprise management (computer equipment, communications, alarms, lighting, heating, etc.);
• payment for consulting, information, audit services, payment for bank services;
• training and retraining of personnel, recruitment of labor;
• maintenance of environmental funds, treatment facilities, destruction of environmentally hazardous waste, etc.;
• depreciation, repair of fixed assets for general production purposes, etc.

• basic;
• invoices.

• straight;
• indirect.

• complex.

• current;
• one-time

• production;
• commercial.

• productive;
• unproductive.

• to conditionally permanent;
• conditional variables.

• absolute fixed costs. They remain unchanged within certain limits and with the expansion of production capacity. For example, depreciation charges or rent for industrial premises;

• jumpy fixed costs (relatively fixed costs). If it is necessary to expand production, there is a need, for example, to purchase new equipment. With each new acquisition, fixed costs increase exponentially. As long as the newly purchased machines are not yet used to their full capacity, the jump costs incur non-use costs and capacity utilization costs.

• costs directly related to the production of products. These are costs determined by the technology and organization of production, including costs of monitoring production processes and the quality of products;
• costs associated with the use of natural raw materials. For example, costs for land reclamation, payments for water taken by enterprises from water management systems within established limits, emissions of pollutants into the surrounding area.

• costs for preparation and development of production include costs for the development of new workshops, production facilities, units, as well as for checking their readiness for production;
• production process maintenance costs. For example, the costs of ensuring (material and technical supply) of production with raw materials, materials, etc., the costs of carrying out technical inspections, maintaining equipment, carrying out its current, medium and major repairs, etc.;
• costs of ensuring normal working conditions. For example, the costs of installing showers, laundries, providing special clothing, etc.;
• costs associated with the maintenance and operation of environmental funds;
• costs associated with production and enterprise management;
• costs associated with training and retraining of personnel and recruitment of labor;
• taxes, deductions and payments legally included in the cost price;
• costs associated with product sales. For example, the costs of packaging, storage, transportation of finished products to the departure station (unless otherwise provided for in the supply agreement with the consumer).

• the share of an individual element or item in the total cost;
• the relationship between fixed and variable, direct and indirect costs, etc.

• labor-intensive (labor costs account for the largest share);
• material-intensive (the largest share is occupied by material costs);
• energy- and fuel-intensive (the largest share is occupied by energy and fuel costs);
• capital-intensive (depreciation accounts for the largest share);
• mixed (the largest share in costs is occupied by material costs and labor costs).

Costs are costs expressed in monetary terms, caused by the expenditure of various types of economic resources (material, labor, land, financial) in the process of production and circulation of goods. They include the costs of living and materialized (past) labor embodied in the means of production. Costs are divided into production costs and distribution costs.

Production costs represent the costs of consumed resources in the production cycle of the circulation of funds.

Distribution costs are costs associated with the acquisition of production resources, the sale of finished products and their promotion in the sphere of circulation.

The main part of the total costs are production costs, which include labor costs with deductions for social needs, material costs, depreciation charges, etc. Production costs are divided into public and individual (private).

Social costs production represents the costs incurred to produce products from the perspective of the entire national economy, i.e. costs to society. They characterize the cost of a product and show how much the product costs to society.

Individual (private) costs reflect the costs of a particular enterprise for the production of products. They determine the cost of production.

Production costs are divided into constant (fixed) and variable.

Fixed costs - costs, the value of which does not depend on the volume of products produced. They exist from year to year at the same level until the enterprise changes its assets (cash property) and the number of employees. These include depreciation of fixed assets, certain types of taxes levied on the enterprise; insurance of fixed assets; costs of repairing fixed assets; interest rates for loans; advertising costs; overhead costs, etc.

Variable costs depend on production volume. These include wages, costs of feed, fertilizers, production materials (diesel fuel, lubricants, etc.), energy, auxiliary materials, insurance against adverse weather conditions (hail, drought), costs of selling products. The distribution of costs into fixed and variable ones is of great importance when analyzing the activities of an enterprise, as well as for simplifying the calculations of standard costs and more flexible adjustment of them in connection with changes in specified parameters.

There are economic and accounting costs of production.

Economic costs - this is the cost of other benefits (goods, services) that could be obtained with the most profitable possible alternative use of production resources. Economic costs include accounting and opportunity costs.

Alternative (imputed) costs - lost profits from alternative use of production resources. For example, in agriculture, where resources are limited, the expansion of one industry will limit the development of other industries that use the same resources, i.e. there is lost profit from the reduction of other industries. Lost profits act as opportunity costs and are additional alternative costs that are not reflected in accounting (financial) accounting, but can be calculated in the management accounting system when determining the economic efficiency of production.

Accounting costs represent production costs, i.e. the cost of consumed (spent) production resources. These costs are obvious.

The individual costs of an enterprise represent the cost of production.

Cost - current costs, calculated in monetary terms and caused by the use of land, labor, material and financial resources for the production and sale of products.

Cost is an economic category that shows how much it costs each enterprise to produce and sell its products. A certain amount of means of production and living labor of workers are spent on the production of products. Spent means of production represent past labor embodied in means of production, which act as enterprise costs for seeds, fuel, fertilizers, electricity, fixed assets (depreciation), etc. Living labor is accounted for by actual payment.

Cost is one of the most important economic indicators of the activities of agricultural enterprises, since it reveals the qualitative aspects of their work, the degree of rational use of means of production and labor resources. Increasing the economic efficiency of production is ultimately determined by increasing the production of high-quality products while reducing their cost. Consequently, the level of cost serves as a criterion for the location and specialization of agricultural production. In addition, cost calculation makes it possible to determine the profitability of production.

The purpose of accounting for the cost of products (works, services) is a timely, complete and reliable reflection of the actual costs of its production, as well as control over the use of material, labor, land and other production resources.

In agriculture, the cost of gross output and unit of production is calculated.

Cost of gross output represents the sum of all production costs of the enterprise. Production costs consist of costs associated with the use of natural, material, labor and financial resources in the production process.

Unit cost is determined by dividing production costs by the volume of gross output in physical terms.

In addition to the cost of production, the cost of a unit of work is also determined (1 conventional floor hectare, 1 tkm, 1 horse-day, etc.), as well as the cost of cultivating 1 hectare of crops, raising 1 head of livestock.

Depending on the volume of included costs, the cost price is divided into production and full (commercial). Production cost includes costs associated with the production of products. Commercial (full) cost - These are the costs of production and sales of products.

Depending on the data source, actual, planned and preliminary (provisional) costs are distinguished.

Actual cost calculated at the end of the year based on the results of economic activities based on accounting data. It allows you to evaluate the performance of individual production departments. By determining the actual cost of production, you can outline specific ways to reduce it, compare the current year's indicators with the previous period or with the planned cost.

Planned cost calculated on the basis of standard indicators taking into account the actual cost for the previous year. Calculations of production costs are carried out based on technically sound standards for the consumption of material resources (seeds, fertilizers, pesticides, pesticides, fuel, energy, etc.), production and maintenance standards and other standards, taking into account recommendations for the rational use of land, as well as the expected economic effect . Calculations are made on the basis of technological maps for cultivating agricultural crops and raising various types of livestock and poultry. When calculating the planned cost, measures are planned to reduce material, labor and monetary costs, general business expenses, as well as the fullest use of agricultural production reserves.

Preliminary (provisional) cost determined before the end of the business year (usually October 1) based on actual costs incurred for 9 months (three quarters) and expected indicators for the fourth quarter using standards.

Introduction 2

1 Costs of production and sales of products 3

1.1 Concept and composition of production and sales costs 3

1.2 Classification of production costs 7

1.3 Cost estimate and methodology for its preparation 8

1.4 Cost calculation. Calculation methods 9

1.5 The value of cost and ways to optimize it 11

2 Drawing up cost estimates 13

2.1 Drawing up cost estimates for installation of the facility 13

Conclusion 17

3 List of used literature 18

INTRODUCTION

Prices for products are set as a result of the interaction of supply and demand. As is already known from the course of economic theory, supply and demand are determined by various factors. The most important factor determining the ability and desire of firms to supply a product to the market is production costs. The production of any product requires costs, which, due to their relative rarity, have certain prices. The quantity of any product that a firm seeks to offer on the market depends on prices (costs) and the efficiency of use of resources necessary for its production, on the one hand, and on the price at which the product will be produced on the market, on the other. The author chose this topic for the course work because he believes that in the context of Russia’s transition to a market economy, the question of enterprise costs and their minimization becomes more relevant than it was under the administrative-command system. The market economy encourages each enterprise to make the most efficient use of its opportunities to make a profit. In modern conditions, enterprises have begun to have real financial independence, independently distribute revenue from the sale of products, and dispose of profits at their own discretion, but before making a profit, the enterprise must analyze all types of costs to reduce them. Only in this case can we really talk about making a profit. The relevance determined the purpose of the research of this course work - to explore the essence of production costs, their structure and their minimization.

COSTS OF PRODUCTION AND SALES OF PRODUCTS

Concept of the composition of production and sales costs

Enterprise costs are an economic indicator of the enterprise’s performance, reflecting the financial expenses of the enterprise for the production of goods and services. This definition contains three important provisions:

Costs are determined by the quantitative and qualitative use of resources, i.e. reflect how many and what resources were used;

The amount of resources used is presented in monetary terms;

Determining costs is always correlated with specific goals and objectives (production, functioning of a department or other type of activity).

The costs of production and sales of products are the valuation of the natural resources used in the production process of products, raw materials, materials, fuel, energy, fixed assets, labor resources, this is the full volume of costs of living and social labor, they are equal to the cost of the product.

The following indicators of the opportunity costs of an enterprise for the production of various volumes of goods for sale on the market are distinguished.

Gross, or total, costs represent the costs of the gross (total) output of goods intended for sale on the market. During the analysis process, they are comparable to gross income or proceeds from the sale of goods. They are usually designated as TS.

Average costs are the costs per unit of goods intended for sale on the market. Usually denoted as AC.

Marginal, or marginal, costs (sometimes called incremental costs) represent the increase in costs as a result of the production and sale of one additional unit of goods (products, services).

Classification of enterprise costs:

Based on the location of origin, costs are divided into production and commercial. Production costs include all types of costs directly related to the manufacture of products. They form the production cost or production costs of the enterprise. Commercial costs are understood as costs associated with the sale of finished products. This is a distribution cost that is inevitable in any enterprise. The costs of selling finished products are divided into two parts: transport and sales. Transportation of finished products is a continuation of the production process, and transportation costs include the costs of loading, unloading, railway or water tariff, etc. Marketing costs consist of the costs of packaging and sorting, storage of finished products, wages, travel expenses sales workers, advertising, etc. Production and commercial costs make up the full (commercial) cost of production.

Based on expediency, costs are divided into productive and unproductive. Productive expenses are those that are justified or appropriate under the given conditions/production. Unproductive are those expenses that arise for reasons related to shortcomings in technology and production organization, losses from defects, downtime, shortages, etc.

Based on the method of attributing individual products to the cost price, costs are divided into direct and indirect. This division of costs can exist in enterprises that produce two or more types of products, since in the production of homogeneous products all costs will be direct.

Direct costs are economically homogeneous expenses that are directly attributable to the cost of a specific type of product, directly in accordance with reasonable norms and standards. These include costs for raw materials and basic materials, transportation and procurement costs, fuel and energy for technological purposes, wages of production workers, and contributions for social needs.

Indirect costs are expenses that cannot be calculated for individual products on the basis of direct ownership, since they are associated with the manufacture of several types of products or with different stages of its processing. They are grouped into complexes and then included in the cost of specific types of products by distributing them proportionally to some conditional base. Indirect costs include costs for the maintenance and operation of machinery and equipment, preparation and development of production, general production, general economic and other production costs.

The costs of maintaining and operating machinery and equipment constitute the most important part of all indirect costs. These include depreciation of equipment and vehicles; remuneration of auxiliary workers servicing equipment; contributions for the social needs of these workers; the cost of auxiliary materials needed to maintain the equipment; the cost of fuel and energy to operate production equipment; expenses for current repairs; equipment and vehicles; intra-factory movement of goods, etc.

General production expenses include remuneration of the workshop management staff, depreciation and current repairs of buildings, structures and equipment for general workshop purposes, and labor protection costs. The reported cost includes losses from downtime, damage to material assets and other unproductive expenses.

General business expenses include wages for the management staff of the enterprise, expenses for the maintenance of fire and security guards, travel expenses, office, postal, telephone and telegraph expenses, expenses for the maintenance of plant management buildings (heating, lighting, routine repairs) and passenger transport, depreciation of fixed assets general plant use.

In relation to changes in production volume, costs are divided into variable and conditionally constant (proportional and disproportionate). The essence of this grouping is that with an increase in production volume, some costs increase, while others do not change or change slightly.

Variables are costs, the value of which is in a certain direct proportion to changes in production volume. These include the cost of raw materials; fuel and energy for technological purposes, wages for key production workers..

Conditionally fixed costs are costs, the value of which does not change depending on the growth of production volume or changes slightly. As a rule, these costs are not directly related to the manufacture of products and represent production maintenance and management costs. These include depreciation of fixed assets and the cost of their ongoing repairs, as well as all overhead costs. Note that semi-fixed costs can be constant up to known limits of change in production volume. With a significant increase or decrease in production volumes, they also change. This grouping of costs makes it possible to determine the relationship between the use of production capacity, labor and material resources and the corresponding costs and, ultimately, to establish the optimal relationship between the volume of output and costs.

Based on economic content (in relation to the technological process), costs are divided into basic and overhead. The main ones include costs directly related to the technological process of manufacturing products and inevitable under any conditions and nature of production, regardless of the level and forms of management organization. These are the costs of raw materials, materials, fuel and energy for technological purposes, wages of workers with deductions for social needs, costs of maintaining and operating machinery and equipment, etc.

Overhead costs are not directly related to the technological process of manufacturing products, but are formed under the influence of certain working conditions for the organization and management of production services. Therefore, these include: remuneration of administrative and managerial personnel; postal, telephone and office expenses; travel expenses; expenses for subscriptions to newspapers and magazines; expenses for maintaining fire guards; various taxes and fees; general production and general business expenses; expenses associated with the sale of finished products; unproductive expenses and losses.

Overhead costs are the most important reserve for reducing production costs.

Note that the grouping of costs into fixed and overhead costs does not coincide with the grouping of costs into direct and indirect, and the existing identification in the economic literature of basic costs with direct costs, and overhead costs with indirect ones, is not justified.

Based on the degree of economic homogeneity, simple and complex costs are distinguished.

Simple (homogeneous) are costs consisting of one economic element: raw materials and materials, purchased products and semi-finished products, fuel and energy for technological purposes, wages of production workers, contributions for social needs. Complex (complex) - costs consisting of several heterogeneous economic elements that have the same purpose. These include the costs of maintaining and operating machinery and equipment, general production, general business expenses, losses from defects, and other production and commercial expenses.

To the extent possible, all costs are divided into planned and unplanned.

Planned costs are the inevitable costs of an enterprise arising from the nature of its economic activities and provided for by the production cost estimate.

Unplanned are unproductive expenses that are not economically inevitable and do not arise from the normal economic activities of the enterprise. These are direct losses that are not included in the production cost estimate; shortages; losses from damage to raw materials and materials during storage; losses from defects and downtime.

In addition to the considered analytical groupings of costs, costs can also be grouped by the nature of production (main and auxiliary); by workshop; by type of product (work, service); for individual orders; by stages of production (phases, repartitions).