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Fixed costs in production. What refers to fixed costs: conditionality of costs and their relationship. How to Find Variable Costs Per Unit

Production costs are actually payments for purchased factors. Their research must provide certain volumes of production in order to fully cover the costs and ensure an acceptable profit. Income is a dynamic motivation organizational activities, costs are an important component for economic analysis. Organizations approach profit and cost differently. Income must provide maximum production possibilities for a given cost value. The greatest production efficiency will be at the lowest cost. They will include the costs of producing the goods. For example, the purchase of raw materials, electricity, payment of working hours, depreciation, organization of production. Part of the proceeds will be used to pay off production costs incurred, while the other will remain profit. This allows us to assert that costs are less than the price of the product by the profit margin.

The above statements lead to the conclusion: production costs are the costs of obtaining goods, and one-time costs arise only during the initial organization of production.

An enterprise faces many ways to generate profit and transfer it into cash. For each method, the leading factors will be costs - the real expenses that the organization incurs during production activities in order to obtain a positive income. If management ignores expenses, then financial and economic activities become unpredictable. The profit at such an enterprise begins to decrease, and over time becomes negative, which means a loss.

In practice, this happens due to the inability to describe production costs in detail. Even an experienced economist will not always understand the structure of costs, existing relationships and the main factors of production.

Analyzing costs should begin with classification. It will provide a comprehensive understanding of the main characteristics and properties of costs. Costs are a complex phenomenon and cannot be represented using a single classification. Generally speaking, each enterprise can be considered a trading, manufacturing or service enterprise. The information presented applies to all enterprises, but to a greater extent to manufacturing ones, since they have a more complex cost structure.

Main differences in general classification there will be a place where costs appear, their relationship to areas of activity. The above classification is used to systematize expenses in profit reports, for comparative analysis required types of costs.

Primary types of expenses:

  • Production
  1. production invoices;
  2. direct materials;
  3. direct labor.
  • Non-productive
  1. operating expenses;
  2. administrative expenses.

Direct costs are always variable. But in general production, commercial and general economic costs, fixed costs coexist with variable costs. A simple example: payment for mobile phone. The constant component will be the subscription fee, and the variable component is determined by the amount of time agreed upon and the availability of long-distance calls. When accounting for costs, it is necessary to clearly understand the classification of costs and correctly separate them.

According to the classification used, costs are divided into non-production and production. Manufacturing costs include: direct labor, direct materials, and overhead. Spending on direct materials consists of the costs that the enterprise had when purchasing raw materials and components, in other words, what is directly related to production and passed into finished products.

Direct labor costs mean payment production staff and the effort involved in producing the product. Payments for shop foremen, managers and equipment adjusters are production overhead costs. It is worth considering the accepted convention when defining it in modern manufacturing, where “real direct” labor is rapidly declining in highly automated production. In some enterprises, production is fully automated, which does not require direct labor. But the designation “main production workers” is retained; payment is considered the cost of direct labor of the enterprise.

Manufacturing overhead costs include the remaining costs of maintaining production. In practice, the structure is complex, the volumes are scattered over a wide range. Typical manufacturing overhead costs include indirect materials, electricity, indirect labor, equipment maintenance, thermal energy, renovation of premises, part of tax payments that are included in gross costs and other things inherently related to the production of products in the company.

Non-production costs are divided into sales and administrative costs. The costs of selling a product consist of expenses that were aimed at preserving the product, promoting it on the market, and delivering it. Administrative costs are the totality of all expenses for managing a company - maintaining the management apparatus: planning and financial department, accounting.

Financial analysis implies a gradation of costs: variable and fixed. The division is justified by the contradictory reaction to changes in production volume. Western theory and practice of management accounting takes into account a number of distinctions:

  • cost division method;
  • conditional classification of costs;
  • influence of production volume on cost behavior.

Systematization is important for planning and analyzing production. Fixed costs remain relatively constant in magnitude. When production increases, they turn out to be an important component in reducing costs; when volume increases, their share in a unit of finished goods decreases.

Variable costs

Variable costs will be costs, one hundred percent of which is directly proportional to production volume. Variable costs are directly proportional to production volumes. Growth occurs when output increases and vice versa. However, in units of production, variable costs will remain constant. They are usually classified by percentage changes depending on production volume:

  • progressive;
  • degressive;
  • proportional.

Variable management should be based on economy. It is achieved through organizational and technical measures that reduce the share of costs per unit of goods:

  • productivity growth;
  • reducing the number of workers;
  • reduction in material inventories, finished products during a difficult economic period.

Variable costs are used in the analysis of break-even production, choice of economic policy, and planning of economic activities.

Fixed costs will be costs, 100% of which are not determined by production. Fixed costs per unit of output will decrease as production volume increases and, conversely, increase as production volume decreases.

Fixed expenses are associated with the existence of the organization and are paid even in the absence of production - rent, payment for management activities, depreciation of buildings. Fixed costs, in other words, are called overhead, indirect.

A high level of fixed costs is determined by labor characteristics, which depend on mechanization and automation, capital intensity of products. Fixed costs are less susceptible to sudden changes. In the presence of objective limitations, there is a great potential for reducing fixed costs: the sale of unnecessary assets. Reducing administrative and management costs, reducing utility payments by saving energy, renting or leasing equipment.

Mixed costs

In addition to variable and fixed costs, there are other costs that do not lend themselves to the above classification. They will be constant and variable, called “mixed”. The following methods for classifying mixed costs into variable and fixed parts are accepted in economics:

  • method of experimental assessments;
  • engineering or analytical method;
  • graphical method: the dependence of volume on the cost of goods is established (supplemented with analytical calculation);
  • economic and mathematical methods: least squares method; correlation method, low-high point method.

Each industry has its own dependence of each type of cost on production volume. It may turn out that some expenses are considered variable in one industry, and constant in another.

It is impossible to use a single classification of dividing costs into variable or constant for all industries. The range of fixed costs cannot be uniform for different industries. It must take into account the specifics of production, the enterprise and the procedure for assigning costs to cost. The classification is created individually for each area, technology or production organization.

The standards allow differentiation of costs based on changes in production volume.

Fixed and variable costs are the basis of a common economic method. It was first proposed by Walter Rautenstrauch in 1930. This was a planning option, which in the future was called the break-even schedule.

It is actively used by modern economists in various modifications. The main advantage of the method is that it allows you to quickly and accurately predict the main performance indicators of the company when market conditions change.

When constructing, the following conventions are used:

  • the price of raw materials is assumed to be constant for the planning period under consideration;
  • fixed costs remain unchanged over a certain sales range;
  • variable costs remain constant per unit as sales volume changes;
  • uniformity of sales is accepted.

The horizontal axis indicates production volumes as a percentage of capacity used or per unit of goods produced. The verticals indicate income and production expenses. All costs on the graph are usually divided into variable (PV) and constant (FP). Additionally, gross costs (VI) and sales revenue (VR) are applied.

The intersection of revenue and gross costs forms the break-even point (K). At this point, the company will not make a profit, but will not incur losses either. The volume at the break-even point is called critical. If the actual value is less than the critical value, then the organization is operating at a disadvantage. If production volumes are greater than the critical value, then profit is generated.

You can determine the break-even point using calculations. Revenue is the total value of costs and profit (P):

VR = P+PI+POI,

IN break-even point P = 0, accordingly the expression takes a simplified form:

BP = PI + POI

Revenue will be the product of the cost of production and the volume of goods sold. Variable costs are rewritten through the output volume and SPI. Taking into account the above, the formula will look like:

C*Vkr = POI + Vkr*SPI

  • Where SPI- variable costs per unit of production;
  • C- unit cost of goods;
  • Vkr- critical volume.

Vkr = POI/(C-SPI)

Break-even analysis allows you to determine not only the critical volume, but also the volume to obtain the planned income. The method allows you to compare several technologies and choose the most optimal one.

Cost and cost reduction factors

Analysis of the actual cost of production, determination of reserves, economic effect of reduction is based on calculations based on economic factors. The latter make it possible to cover most processes: labor, its objects, means. They characterize the main areas of work to reduce the cost of goods: productivity growth, efficient use equipment, introduction of new technologies, modernization of production, reduction in the cost of workpieces, reduction of management staff, reduction of defects, non-production losses, expenses.

Cost savings are determined by the following factors:

  • Growth of technical level. This occurs with the introduction of more advanced technologies, automation and mechanization of production, better use of raw materials and new materials, revision of technological characteristics and product design.
  • Modernization of work organization and productivity. Cost reduction occurs when there is a change production organization, methods and forms of labor, which is facilitated by specialization. Improve management while minimizing costs. They are reviewing the use of fixed assets, improving logistics and minimizing transportation costs.
  • Reduction of semi-fixed costs by changing the structure and volume of production. This reduces depreciation, changes the range and quality of goods. The volume of output does not directly affect semi-fixed costs. With an increase in volumes, the share of semi-fixed costs per unit of goods will decrease, and accordingly the cost will decrease.
  • Need better use natural resources. It is worth considering the composition and quality of the source material, changes in mining methods and location of deposits. This is an important factor that shows the influence natural conditions for variable expenses. The analysis should be based on industry methodologies of the extractive industry.
  • Industry factors, etc. This group includes the development of new workshops, production and production units, as well as preparation for them. Reserves for cost reduction are periodically reviewed when liquidating old ones and introducing new ones, which will improve economic factors.

Reduced fixed costs:

  • reduction of administrative and commercial expenses;
  • reduction in commercial services;
  • increased load;
  • sale of unused intangible and current assets.

Reduced variable costs:

  • reducing the number of main and auxiliary workers by increasing labor productivity;
  • use of time-based payment;
  • preference for resource-saving technologies;
  • use of more economical materials.

The listed methods lead to the following conclusion: cost reduction should mainly occur by minimizing preparatory processes, mastering a new range and technologies.

Changing the range of products becomes an important factor determining the level of production costs. With excellent profitability, a shift in the assortment should be associated with improving the structure and increasing production efficiency. This can either increase or decrease production costs.

Classifying costs into variable and fixed has a number of advantages, which many enterprises actively use. In parallel with it, accounting and grouping of costs by cost is used.


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Costs are usually divided into fixed and variable costs. Fixed costs are those costs that do not depend on the volume of production and sales, they are unchanged, and do not constitute the direct cost of products, goods, services. Variable costs are costs that constitute the direct cost of production, and their size directly depends on the volume of production and sales of products, goods or services. Fixed and variable costs, examples of them are very diverse, they depend on the types and areas of activity. Today we will try to present fixed and variable costs in more detail through examples.

Fixed costs include the following types:

Rent. The most striking example of fixed costs that occurs in any form entrepreneurial activity are rental payments. An entrepreneur, renting an office, workshop, warehouse, is forced to pay regular rental payments, regardless of how much he earned, sold goods or provided services. Even if he has not received a single ruble of income, he will still have to pay the rental price, otherwise the contract with him will be terminated and he will lose the rented space.
salaries of administrative staff, management, accounting, wages of support staff (system administrator, secretary, repair service, cleaner, etc.). The calculation and payment of such wages also does not depend in any way on sales volumes. This also includes the salary portion of sales managers, which is accrued and paid regardless of the sales manager’s performance.

The percentage or bonus part will be classified as variable costs, since it directly depends on volumes and sales results. Examples of fixed costs include the salary portion of the wages of the main workers, which is paid regardless of the volume of production, or payments for forced downtime.
depreciation charges. Accrued depreciation amounts are also a classic example of fixed costs.
payment for services related to general management enterprises. This includes utility costs: payment for electricity, water, communication services and the Internet. Services of security organizations, banking services ( cash management services) are also examples of fixed costs. Advertising agency services.
bank interest, interest on loans, discounts on bills.
tax payments, the tax base of which is static taxation objects: land tax, enterprise property tax, unified social tax paid on wages accrued on salaries, UTII is a very good example of fixed costs, various payments and fees for permitting trade, environmental fees, transport tax.

It is not difficult to imagine examples of variable costs associated with the volume of production, sales of goods and services; these include:

Piecework wages for workers, the amount of which depends on the amount of products produced or services provided.
the cost of raw materials, materials and components used to produce products, the cost of purchased goods for subsequent resale.
the amount of interest paid to sales managers from the results of sales of goods, the amount of bonuses accrued to personnel based on the results of the enterprise’s activities.
amounts of taxes, the tax base of which is the volume of production and sales of products, goods: excise taxes, VAT, tax under the simplified tax system, unified social tax, paid on accrued premiums, interest on sales results.
the cost of services of third-party organizations, paid depending on sales volumes: services of transport companies for the transportation of products, services of intermediary organizations in the form of agency or commission fees, sales outsourcing services,
cost of electricity, fuel, in manufacturing enterprises. These costs also depend on the volume of production or provision of services, the cost of electricity used in an office or administrative building, as well as the cost of fuel for cars used in administrative purposes, refer to fixed costs.

As we have already said, knowledge and understanding of the essence of fixed and variable costs is very important for competent management of a business and its profitability. Due to the fact that fixed costs do not depend on the volume of production and sales of goods, they are a certain burden for the entrepreneur. After all, the higher the fixed costs, the higher the break-even point, and this in turn increases the risks of the entrepreneur, since in order to cover the amount of large fixed costs, the entrepreneur must have a large volume of sales of products, goods or services. However, in conditions of fierce competition, it is very difficult to guarantee the constancy of the occupied market segment. This is achieved by increasing advertising and promotion costs, which are also fixed costs. It turns out to be a vicious circle. By increasing expenses on advertising and promotion, we thereby increase fixed costs, while at the same time we stimulate sales volume. The main thing here is that the efforts of the entrepreneur in the field of advertising are effective, in otherwise, the entrepreneur will suffer a loss.

This is especially important for small businesses, since the margin of safety of a small business entrepreneur is low and he has limited access to many financial instruments(credits, loans, third-party investors), especially for a novice entrepreneur who is just trying to develop his business. Therefore, for small businesses, you should try to use low-cost methods of business promotion, such as guerrilla marketing, non-standard advertising. It is necessary to try to reduce the level of fixed costs, especially for initial stage development.

53. Fixed and variable costs

Fixed costs- costs that do not change depending on production volume. The source of fixed costs (overhead) is the cost of fixed resources.

The latter remain unchanged throughout the short-term period, therefore fixed costs do not depend on the volume of output. The plant may be idle because his products are not sold; mine - not working due to workers' strikes.

But both the plant and the mine continue to incur fixed costs: they must pay interest on loans, insurance premiums, property taxes, pay wages to cleaners and watchmen; make utility payments.

The lack of connection between output levels and fixed costs does not reduce the influence of the latter on the production process.

To understand this, it is enough to list the types of fixed costs.

These include many costs that determine the technological level of production. These are the costs of fixed capital in the form of depreciation, rental payments; expenses for R&D and other know-how; payments for the use of patents.

Fixed costs are some costs of “human capital”, including payments for the “backbone” of personnel: key managers, accountants or even skilled craftsmen - workers in rare specialties. Expenses for training and advanced training of employees can also be considered fixed costs.

Fixed costs do not depend on production volume.

Source variable costs are the costs of variable resources. The bulk of these costs are associated with the non-use of working capital.

They include the costs of purchasing raw materials, supplies, components and semi-finished products, and paying wages to production workers. The nature of variable costs also includes transportation costs, value added tax, and various payments, if the contract establishes their value in the form of fixed costs.

As is known, in the short term, changes in output are associated with a decrease or increase in the costs of variable resources.

Therefore, variable costs increase as production volume increases.

Moreover, the nature of this growth depends on the return on the variable resource (more specifically, on whether it is increasing, constant or decreasing).

The sum of fixed and variable costs forms the gross (total) total costs in the short term:

TC = TFC + TVC

If the enterprise does not produce products, then the gross total costs are equal to the value of fixed costs. When production volume increases, gross costs increase by the amount of variable costs depending on production volume.


(Materials are based on: E.A. Tatarnikov, N.A. Bogatyreva, O.Yu. Butova. Microeconomics. Answers to exam questions: Tutorial for universities. - M.: Publishing house "Exam", 2005. ISBN 5-472-00856-5)

In the activities of any enterprise, making the right management decisions is based on an analysis of its performance indicators. One of the objectives of such analysis is to reduce production costs, and, consequently, increase business profitability.

Fixed and variable costs and their accounting are an integral part of not only calculating product costs, but also analyzing the success of the enterprise as a whole.

Correct analysis of these items allows you to make effective management decisions that have a significant impact on profits. For analysis purposes, in computer programs at enterprises it is convenient to provide for the automatic division of costs into fixed and variable costs based on primary documents, in accordance with the principle adopted in the organization. This information is very important for determining the “break-even point” of a business, as well as assessing profitability various types products.

Variable costs

To variable costs These include costs that are constant per unit of production, but their total amount is proportional to the volume of output. These include the costs of raw materials, consumables, energy resources involved in the main production, the salary of the main production personnel (together with accruals) and the cost transport services. These costs are directly included in the cost of production. In monetary terms, variable costs change when the price of goods or services changes. Specific variable costs, for example, for raw materials in physical terms, can be reduced with an increase in production volumes due, for example, to a reduction in losses or costs for energy resources and transport.

Variable costs can be direct or indirect. If, for example, an enterprise produces bread, then the costs of flour are direct variable costs, which increase in direct proportion to the volume of bread production. Direct variable costs may decrease with the improvement of the technological process and the introduction of new technologies. However, if a plant processes oil and as a result receives 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, they are usually taken into account in proportion to the physical volumes of production. So, for example, if when processing 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 producing one ton of ethylene is 1.111 tons of oil (20 tons of ethylene + 2.22 tons of waste /20 t ethylene). This is due to the fact that when calculated proportionally, 20 tons of ethylene produce 2.22 tons of waste. But sometimes all waste is attributed to one product. Data from technological regulations are used for calculations, and actual results for the previous period are used for analysis.

The division into direct and indirect variable costs is arbitrary and depends on the nature of the business.

Thus, the cost of gasoline for transporting raw materials during oil refining is indirect, and for transport company direct, since they are directly proportional to the volume of transportation. Salary production personnel with accruals are classified as variable costs for piecework wages. However, with time-based wages, these costs are conditionally variable. When calculating the cost of production, planned costs per unit of production are used, and when analyzing actual costs, which may differ from planned costs, both upward and downward. Depreciation of fixed assets of production per unit of production volume 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/expenses.

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 an enterprise, according to their dependence on production volumes, can be divided into constant 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 many goods the store sells, rent is a constant amount per month.

Variable costs, on the contrary, 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 production decrease with an increase in production volume, and, on the contrary, increase with a decrease in sales rates. Variable costs always remain the same per unit of product.

Economists call such costs conditionally fixed and conditionally variable. For example, rent cannot be indefinitely independent of production volume. All the same, at some point the production area will not be enough and more premises will be required.

That is, we can say that semi-variable costs are directly related to the main activity, while semi-fixed costs are more related to the activities of the enterprise as a whole, to its functioning.

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How it will help: contains visual examples of constructing classifiers of objects, media and cost items.

Fixed costs

Conditionally fixed costs include those whose absolute value does not change significantly when the volume of output changes. That is, these costs arise even when the organization is idle. These are general business and production expenses. Such expenses will always exist as long as the enterprise carries out its economic and financial activities. They exist regardless of whether it receives income or not.

Even if an organization’s production volume does not change significantly, fixed costs can still change. Firstly, production technology is changing - it is necessary to purchase new equipment, train personnel, etc.

What is included in fixed costs (examples)

1. Salary of management personnel: chief accountant, financial director, general director etc. The salaries of these employees are most often salary. Of course, twice a month the employees receive this money regardless of how efficiently the organization operates and whether the founders make a profit ( ).

2. Company insurance premiums from the salary of management personnel. This mandatory payments from salary. By general rule contributions are 30 percent + contributions to the Social Insurance Fund for industrial and professional accidents. diseases.

3. Rent and public utilities. Rental expenses do not depend in any way on the company’s profit and revenue. You are required to transfer money to the landlord monthly. If the company does not comply with this condition of the lease agreement, the owner of the premises may terminate the agreement. Then there is a possibility that the business will need to be closed for some time.

4. Credit and leasing payments . If necessary, the company borrows money from the bank. Payments to the credit institution are required every month. That is, regardless of whether the company was profitable or at a loss.

5. Spending on security. Such expenses depend on the area of ​​protected premises, the level of security, etc. But they do not depend on the volume of production.

6. Costs of advertising and product promotion. Almost every company spends money on promoting a product. Indirectly, there is a relationship between advertising and sales volume, and, accordingly, production. But it is believed that these are independent quantities from each other.

The question often arises: is depreciation a fixed or variable cost? It is believed that they are permanent. After all, the company charges depreciation every month, regardless of whether it received income or not.

Variable costs

This is a company's expenses, which are directly dependent on production volume. For example, the cost of goods. The more a company sells, the more products it purchases.

Most often, variable costs arise when a company generates revenue. After all, the company spends part of the income received on the purchase of goods, raw materials and supplies for the manufacture of products, etc.

What refers to variable costs (examples)

  1. Costs of goods for resale. There is a direct relationship here: the greater the company’s sales volumes, the more goods it needs to purchase.
  2. Piece-rate part of the remuneration of sellers. Most often, sales managers' salaries consist of two parts - salary and percentage of sales. Interest is a variable cost because it directly depends on sales volume.
  3. Income taxes: income tax, simplified tax, etc. These payments directly depend on the profit received. If a company has no income, then it will not pay such taxes.

Why divide costs into fixed and variable?

Businesses separate fixed and variable costs to analyze performance. Based on the values ​​of these costs, the break-even point is determined. It is also called coverage point, critical production point, etc. This is a situation when a company operates “at zero” - that is, income covers all its expenses - fixed and variable.

Revenue = Fixed expenses + Total variable expenses

The higher the fixed costs, the higher the company's break-even point. This means that you need to sell more goods in order to operate at least without a loss.

Price × Volume = Fixed costs + Variable costs per unit × Volume

Volume = Fixed Costs / (Price – Variable Costs per Unit)

where volume is the break-even sales volume.

By calculating this figure, a company can figure out how much it needs to sell to start making a profit.

Companies also calculate marginal income - the difference between revenue and variable costs. Marginal income shows how much an organization covers fixed costs.