Material costs how to calculate formula. Material costs calculation formula according to the balance sheet. Examples of problem solving

An enterprise with large production volumes must carefully monitor its material costs, for which special indicators are used in accounting. The efficiency of using material resources can be determined through several general indicators, including:

• Material efficiency,
• Material consumption,
• Material cost coefficients,
• Profit for every ruble of material costs,
• The share of material consumption in the cost of products.

Formula for material productivity by balance

The formula for material productivity on the balance sheet involves finding the ratio of the cost of manufactured products (volume) to the amount of material costs incurred for its production.

The general formula for material efficiency is as follows:

Mo = SP / MZ

Here Mo is an indicator of material productivity,

SP – manufactured products, revenue (in kind or value terms),

MZ – material costs for production.

The formula for material productivity on the balance sheet assumes information from the financial statements. In this case, the value of material costs is taken from the appendix to the balance sheet (form No. 5, first line), and the value of revenue from the profit and loss statement (form No. 2).

Practical use of material recovery

The material efficiency indicator is considered dimensionless; the higher the coefficient calculated by the formula, the less material is required to produce the same amount of products.

The formula for material productivity on the balance sheet has one peculiarity - the cost of products is measured not in sales prices, but in the prices of materials spent on its production. Otherwise, the material productivity indicator will not be as informative, since it will depend on changes in the rate of profit and product prices.

The balance sheet material productivity formula is most often used when comparing an indicator with previous periods or when comparing with the material productivity value of similar companies.

The capital productivity indicator is increased through the introduction of advanced technologies (equipment) and increased control over the careful use of materials.

Material efficiency value

If the enterprise can competently optimize the material productivity indicator, it becomes possible to obtain greater profits for the reporting period. The formula for material productivity by balance allows you to analyze and characterize the resources that the company has.

Material productivity has an inverse indicator called material intensity. These indicators can be considered general values ​​of the efficiency of resource use that are used in accounting for the production of an enterprise's products.

In the case of an increase in material productivity, they speak of positive dynamics, as costs are minimized and more competitive products are produced.

Examples of problem solving

EXAMPLE 1

Exercise	The company has the following performance indicators for 2 periods: Cost of gross output In the reporting year – 254,000 thousand rubles, The planned value is 272,000 thousand rubles, Amount of material costs For the reporting year – 139,000 thousand rubles, The planned value is 135,000 thousand rubles.
Solution	The balance formula for material productivity to solve this problem looks like this: Mo = SP / MZ Mo (reporting period) = 254,000 / 139,000 = 1.83 rubles (that is, for every ruble of material costs the company made a profit of 1.83 rubles) Mo (plan) = 272000 / 135000 = 2.015 rub. for every ruble of production the enterprise plans to receive Conclusion. We see that the company's management plans to increase material productivity from 1.83 rubles to 2.15 rubles.
Answer	Mo (report) = 1.83 rubles, Mo (plan) = 2.15 rubles.

How to find material costs on the balance sheet?

The balance of accounts 20 “Main production”, 23 “Auxiliary production”, 29 “Service production and facilities” as of the reporting date indicates the balance of work in progress (WIP). The balance of work in progress, own semi-finished products (account 21 “Semi-finished products of own production”) and unwritten off losses from defects (account 28 “Defects in production”) are reflected in the balance sheet asset on line 1210 “Inventories” (clause 20 PBU 4/99, Order of the Ministry of Finance dated July 2, 2010 No. 66n).

Let us remind you that accounts 25 “General production expenses” and 26 “General operating expenses” do not have a balance at the end of the month.

At the same time, it is difficult to say what the balance sheet calculation formula is for material costs. Indeed, in the data in the “Inventories” line, along with material costs, labor costs in WIP and other expenses can be reflected, depending on. In addition, the line “Inventories” reflects the materials themselves in the form of their warehouse balance, which has not yet been used up, accordingly, they are not yet material costs, as well as finished products, the material costs for which have already taken the form of a finished product of labor and not are WIP, etc.

Material Cost Analysis

Material costs, as one of the main expense items of any production, are usually under the close attention of employees of the economic planning department, departments involved in cost forecasting and performance analysis. After all, it is not enough to calculate material costs; it is important to analyze the obtained values ​​in their relationship with other indicators.

One of the main coefficients calculated using the material costs indicator is material intensity.

Material intensity is calculated as the ratio of material costs to the total cost of production. It shows what is the share of material costs in the total cost of finished products.

Another approach to calculating material intensity is to determine the share of material costs in output. In this case, material intensity is the ratio of material costs to the volume of output in physical or monetary terms. An increase in the material intensity ratio indicates an increase in material costs per unit of production and a decrease in its profitability. Therefore, managing material consumption in an enterprise is the key to reducing costs and increasing production profitability.

P MZ = P / MZ

To calculate profit per ruble of material costs, the following notation is used in the formula:

• P MZ - profit per 1 ruble of material costs;
• P - profit from the sale of products;
• MZ - material costs attributable to products sold.

This indicator essentially represents the profitability of material costs. It shows how much profit (in rubles) 1 ruble of material costs incurred brings.

The ratio of actual material costs to planned ones is the material cost ratio. In this case, planned material costs are recalculated to actual output.

Let us give the formula for the coefficient of material costs:

K MZ = MZ F / MZ P,

where K MZ is the coefficient of material costs;

MZ F - actual material costs;

MZ P - planned material costs calculated for actual output.

The ultimate goal of any enterprise can be considered profit, which is the positive difference between the income received and the expenses incurred.

Profit is an absolute financial indicator, by calculating which an entrepreneur can conclude that for a certain period his income covered his expenses. However, this indicator does not make it possible to assess the effectiveness of activities. In this case, the overall profitability formula comes to the rescue.

Simply put, profitability shows how much profit is in each ruble spent by an enterprise.

Total Profitability Formula

The formula for total profitability in its simplest form is as follows:

P = P / x * 100%,

Here P is the profitability indicator;

P - amount of profit;

x is the indicator for which profitability needs to be calculated.

The profitability indicator is expressed as a percentage, so the result from the quotient is multiplied by 100%.

Types of profitability

Calculating different types of profitability has many aspects.

How to calculate profitability: how to determine whether a business is profitable?

There are several types of profitability, let's consider the main ones:

• Return on assets, which is designed to show the amount of profit that is returned by each ruble invested in the company's property. To calculate this type of profitability, profit must be correlated with assets.

Total profitability formula for calculating assets:

Rakt = P/SA * 100%

Here Rakt is an indicator of return on assets;

P - the amount of profit (the profit for calculation can be either net or profit from sales, which depends on the calculation goals);

SA is the average value of the enterprise's assets for the billing period.

When calculating, for example, return on equity, you can find out how effectively investments are working. The general profitability formula for the total determination of profitability for all capital looks like this:

Rcap = P/C * 100%,

Here Rcap is an indicator of return on capital;

P - net profit (this type of profitability is calculated exclusively in accordance with net profit);

K is the average amount of capital in the billing period.

The return on debt capital is calculated privately:

Rzk = P / (DO + KO) * 100%,

Here Rzk is an indicator of return on debt capital,

P - the amount of net profit;

DO - the amount of long-term liabilities;

KO - the amount of short-term liabilities.

This indicator reflects the profitability of each ruble of borrowing.

The formula for overall return on sales is calculated by taking profit divided by sales volume. This formula shows how much profit is in each ruble of revenue.

The return on sales formula is as follows:

Rprod = P / OP * 100%,

Here Rprod is return on sales;

P - amount of profit;

OP - sales volume (revenue).

To calculate return on sales, any profit can be used, depending on what information users need (gross, operating, net, etc.).

• Product profitability, which is the most important indicator of profitability, showing cost efficiency and the share of profit in each ruble spent on production. The formula for calculating product profitability is the ratio of profit to product cost.

Examples of problem solving

The essence of material productivity

An enterprise with large production volumes must carefully monitor its material costs, for which special indicators are used in accounting. The efficiency of using material resources can be determined through several general indicators, including:

• Material efficiency,
• Material consumption,
• Material cost coefficients,
• Profit for every ruble of material costs,
• The share of material consumption in the cost of products.

Formula for material productivity by balance

The formula for material productivity on the balance sheet involves finding the ratio of the cost of manufactured products (volume) to the amount of material costs incurred for its production.

The general formula for material efficiency is as follows:

Mo = SP / MZ

Here Mo is an indicator of material productivity,

SP – manufactured products, revenue (in kind or value terms),

MZ – material costs for production.

The formula for material productivity on the balance sheet assumes information from the financial statements. In this case, the value of material costs is taken from the appendix to the balance sheet (form No. 5, first line), and the value of revenue from the profit and loss statement (form No. 2).

Practical use of material recovery

The material efficiency indicator is considered dimensionless; the higher the coefficient calculated by the formula, the less material is required to produce the same amount of products.

The formula for material productivity on the balance sheet has one peculiarity - the cost of products is measured not in sales prices, but in the prices of materials spent on its production. Otherwise, the material productivity indicator will not be as informative, since it will depend on changes in the rate of profit and product prices.

The balance sheet material productivity formula is most often used when comparing an indicator with previous periods or when comparing with the material productivity value of similar companies.

The capital productivity indicator is increased through the introduction of advanced technologies (equipment) and increased control over the careful use of materials.

Material efficiency value

If the enterprise can competently optimize the material productivity indicator, it becomes possible to obtain greater profits for the reporting period.

Step-by-step instructions for calculating enterprise profitability

The formula for material productivity by balance allows you to analyze and characterize the resources that the company has.

Material productivity has an inverse indicator called material intensity. These indicators can be considered general values ​​of the efficiency of resource use that are used in accounting for the production of an enterprise's products.

In the case of an increase in material productivity, they speak of positive dynamics, as costs are minimized and more competitive products are produced.

Examples of problem solving

The profitability ratio is the ratio of the net profit (after payment of all taxes and interest) of an enterprise to the total amount of sales, i.e., to revenue. It reflects the efficiency of the organization, its financial results and shows how much of the proceeds from sales is profit. The indicator value must be above zero, which means that the company is profitable. Otherwise, it is unprofitable. For the calculation, data from the income statement are used.

The goal of any commercial organization is to make a profit. The further development of the enterprise and its financial stability depend on its size. Company management, when analyzing operating results, uses different ratios, including profitability indicators, which give an idea of ​​how much profit is received on the amount of invested funds, equity capital, total assets or revenue.

Determination of the coefficient

The profitability ratio (return on sales - ROS) shows what percentage of profit is contained in the total revenue of the enterprise. This relative indicator is used by management, investors and creditors to analyze the company's business activity and its performance.

Why is the profitability ratio calculated?

The ROS value allows you to evaluate:

• level of business activity;
• share of profit in revenue volume;
• risks of increasing product costs;
• overall efficiency of the enterprise.

The indicator is calculated for both internal and external use. With its help, the company’s management decides on the need to reduce costs, commercial, administrative or other expenses. Investors and lenders evaluate the degree of profitability and the margin of financial strength.

Important! For company management, investors and creditors, what is important is not the sales volume itself, but how much net cash is received from these sales.

Normative value

ROS should be above 0. If this is not the case, then the management of the enterprise is ineffective and it incurs losses. The standard values ​​of this indicator depend on the industry of production:

• agriculture - 9%;
• retail trade - 2.2%;
• real estate transactions - 5.7%.
• oil and gas production - 4.1%;
• food production - 1.5%;
• construction of buildings - 1.1%.

Reference! There are no strict ROS standards. These are only average values ​​for industries for the year, collected by Rosstat based on the results of an analysis of the activities of Russian companies.

You can view the full list of average values ​​by downloading the Excel file.

In general, an enterprise is considered:

• low-profit if ROS is in the range of 1-5%;
• averagely profitable with ROS from 5% to 20%;
• highly profitable if the indicator is 20-30%;
• super profitable if the value exceeds 30%.

The efficiency of economic activity can be judged by analyzing the indicator over time. Its increase indicates high sales efficiency and reduced production costs.

Calculation procedure

The indicator is calculated using the formula:

where PE is net profit, i.e. the profit remaining after paying interest and taxes;

B - revenue from sales of products.

Important!

What is profitability in simple words?

This formula is used exclusively for Russian financial statements. In Western practice, ROS is calculated not by net profit, but by earnings before taxes (EBIT).

The values ​​of the indicators are taken for the same period, usually a year. Several coefficients are calculated, ideally over 5 years, to assess the dynamics.

Formula for accounting forms

To calculate the ROS indicator, data from the income statement is used.

where page 2400 of the f. report. R. - the value of line 2400 of the financial results report;

page 2110 of the report on f. R. - the value of line 2110 of the financial results statement.

ROS belongs to the group of profitability ratios:

• EBIT return on sales - the ratio of profit before tax to sales volume;
• return on assets (ROA) - PE divided by the assets of the enterprise;
• product profitability - the ratio of EBIT to cost of goods sold;
• return on equity (ROE) - characterizes the ratio of private equity to the amount of equity capital.

Calculation example

As an example, let’s calculate the profitability ratio of PJSC LUKOIL for the last three years using Russian and Western financial analysis systems.

Data source: official website of PJSC LUKOIL

As the calculation showed, the value of the coefficient over the past years is significantly higher than all standard values. PJSC LUKOIL is a highly profitable enterprise. In 2015, the profitability ratio exceeded 100%, which indicates that the company has significant income from other activities not related to the sale of products. In this case, the drop in the coefficient in 2016 does not play a significant role, since its value is extremely high, and the increase next year indicates that the difficulties encountered were temporary.

Rice. 1. Dynamics of ROS of PJSC LUKOIL.

You can download a table with calculations of the profitability ratio (ROS) in a convenient format - an Excel file.

Questions and answers on the topic

The cost-benefit ratio is one of the main indicators for assessing the efficiency of a company, its use of resources, and the quality of management. Based on it, you can determine what share of profit each ruble of labor, capital, and financial resources expended brings. The data for calculation is taken from the financial results report - F. No. 2. ROCS needs to be analyzed over the years over time, as well as in comparison with similar enterprises in the industry. The normal value of the indicator is РЗ>0.

In its activities, any enterprise often has to deal with the emergence of new competitors, changes in the cost of resources, and adjustments in the product life cycle. In these conditions, it is important to objectively assess your advantages and determine ways to optimally use material, labor and financial resources.

Cost return(Return on Cost of Sales - ROCS, РЗ) is a relative financial indicator that allows you to determine the efficiency of using the company's resources in its activities, the ratio of balance sheet profit to the total cost of goods, works, and services sold.

Reference! Book profit is a category of financial analysis that is not indicated in the company's financial statements. In practice, it is equated to profit (loss) before taxes, presented in the statement of financial results (F. No. 2).

The significance of the ROCS ratio is the ability to estimate the costs arising in connection with the needs of the production process. It can be calculated not only for the entire enterprise as a whole, but also for individual production units and types of products.

Reference! In practice, RP provides owners and managers with more significant information than indicators of profitability of working capital and equity. It accurately indicates how much profit the company will receive from each ruble spent on production.

ROCS is a criterion on the basis of which you can evaluate not only the effectiveness of cost management, but also the policy of forming the cost and profit of the company.

Reference! Managers often evaluate competitors' RP to determine their weaknesses and formulate their own high-quality policy for the optimal use of resources.

Formula for calculating cost profitability

All information for determining the profitability of costs can be taken from the financial statements of the organization - the report on financial results (F. No. 2):

• Balance sheet profit (item 2300).
• Cost of products sold (Article 2120).

Important point! When assessing RP, it is worth using the full cost of production - the sum of costs for the production and sale of products, works, and services.

In general, the formula for assessing cost profitability can be presented as the ratio:

ROCS = BP / PSA *100%, where

• BP - balance sheet profit;
• PSA - cost of products sold.

For ease of use in practice, it makes sense to express the formula through financial reporting items:

ROCS = st. 2300/st.

Important point! In some cases, instead of book profit, gross or operating profit is used in the formula. However, in this case, the result will be less accurate: operating, commercial, administrative and other costs will not be taken into account.

Standard indicator value

There is no exact limit value for the cost profitability indicator: it depends on the industry of the enterprise. There are several rules for assessing it:

• the value of the coefficient must always be positive (РЗ>0) - otherwise we can say with confidence that the company is suffering losses;
• it cannot be considered for a single period of activity of one enterprise - a relative indicator requires comparison with previous periods, basic values ​​or other enterprises in the same industry.

Important point! ROCS for capital-intensive products (mechanical engineering, mining, metallurgy, etc.) will always be lower than for goods with a simple production cycle, trading industry, and services.

A positive indicator of economic profitability is considered normal (ER>0).

Examples of coefficient calculation

The process of calculating profitability of costs is presented in detail using the examples of two well-known Russian corporations: the capital-intensive PJSC ANK Bashneft and the online platform for selling goods Yulmart.

Conclusion! The dynamics of the RP indicator for PJSOC Bashneft is unstable: in 2016 it decreased by 8.69% due to a large-scale reorganization, which entailed an increase in the cost of products sold. In 2017, the company introduced new approaches to cost management. The corporate structure changed, resulting in a reduction in administrative and operating expenses, resulting in lower balance sheet profits.

Conclusion! Within the framework of NPASC Ulmart, cost profitability is increasing at a gradual pace: by 1-3% per year. This trend is due to the gradual reduction of administrative and commercial costs. The growth of balance sheet profit covers the increase in production costs and ensures an increase in the remuneration.

Despite the fact that in 2017 both corporations under consideration showed an increase in cost profitability, Yulmart has a higher value: its assets are mainly represented by inventories, while for ANK Bashneft ROCS are expensive fixed assets.

The detailed algorithm for calculating the ROCS indicator based on the Excel spreadsheet editor is presented in the sample.

Questions and answers on the topic

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Material costs are the lion's share of an organization's expenses. Their effective assessment and analysis allows timely making the right management decisions for the rational redistribution of assets and resources of an economic entity. We will tell you in the article what is included in material costs, how and where the indicator is reflected in the financial statements and what formulas are used to calculate it.

Let's understand the concepts

The definition of what financial expenses are is given not only in accounting, but also in tax accounting. The concepts do not differ significantly; therefore, material costs include the following types of expenses:

• acquisition of inventories, raw materials, components and components for fixed assets of production departments;
• purchase of fuel and lubricants, electricity, thermal energy, water to carry out the technological process;
• procurement of works, goods and services necessary for the production cycle;
• losses and shortages of products within the established norms of natural loss;
• other expenses.

The amount of sold and returnable waste cannot be used in calculations. Waste should be subtracted from material costs.

According to tax accounting standards, the list of costs is closed. But accounting contains only a definition, without a list of listings (clause 8 of PBU 10/99). The company must independently consolidate a comprehensive list of material costs in its accounting policies. The accounting policy will describe the same expenses as in fiscal legislation, only with certain considerations taking into account the specifics of the activity of an economic entity.

Types of financial expenses

Despite the strict limitation of the types of expenses in the Tax Code, all financial expenses are classified into direct and indirect expenses. The division is enshrined in Art. 318 Tax Code of the Russian Federation. But companies have the right to independently determine the composition of direct and indirect expenses, taking into account legal requirements.

Direct material costs are the expenses of an economic entity aimed at providing the production cycle with the necessary materials, raw materials, semi-finished products, components, as well as for the purchase of services and work necessary in production. Direct financial expenses include expenses that are directly related to the implementation of the main activity.

The rest of the company's business expenses should be classified as indirect.

Employee salaries, insurance premiums, as well as bonuses for the quality of work and other types of remuneration cannot be included in material costs. Labor costs are direct expenses of the company, but they cannot be classified as material expenses.

Accounting for material costs

There is no separate account in the Unified Chart of Accounts for the accumulation of financial expenses. To reflect information about the cost of expenses incurred in accounting, several accounts are used at once:

In addition to the main accounting accounts, some expenses can be attributed to 25 “OPR” and 26 “OHR”. These accounts cannot have a balance at the end of the reporting period, that is, they must be included in the main cost accounting accounts.

Financial expenses in the balance sheet

The financial reporting forms approved by Order of the Ministry of Finance No. 66n do not contain a separate line to reflect information about the enterprise’s material costs indicator. However, the current accounting regulations determine that material costs should be reflected in the balance sheet, line 1210 “Inventories” (the second asset section of the balance sheet). Why? The presence of balances on cost accounts indicates an unfinished production cycle. And work in progress is recognized as an asset of the enterprise, and its price is included in the inventory of the economic entity.

Calculation and evaluation formulas

Material costs have a direct impact on the cost of production, and therefore on revenue. Assessment, timely analysis of structure and dynamics, as well as systematic calculation of material costs are necessary. A tactical approach to planning and monitoring the indicator will provide the enterprise with maximum profitability, that is, it will increase its profitability.

To determine the profitability of expenses, experts calculate a special coefficient that allows you to find out what profit per ruble of material costs is expected to be received, or to estimate losses.

The formula for profit per ruble of material costs—the definition of profitability—looks like this:

Profit (loss) per ruble of material costs = profit received from the sale of a specific type of product / total costs associated with the production of this product.

If the resulting value is less than one, this indicates that the enterprise is unprofitable. If the indicator is equal to one, it means that the profit received is equal to the expenses, and the organization did not earn anything in the reporting period. If the indicator is greater than one, this means that the enterprise is profitable, that is, its activities are profitable.

Material costs include the following components:

the cost of raw materials, components, fuel, energy, spare parts, i.e. funds allocated by the enterprise for the acquisition of working production assets;

tax for the use of natural resources and tax for emissions of pollutants into the environment.

Material costs in this course work will be planned on the basis of aggregated material costs per 100 rubles of revenue:

MZ pl = MZ 100pl * V pl / 100, (14)

where MZ pl is the amount of material costs in the planned year, thousand rubles;

MZ 100pl - material costs per 100 rubles. revenue in the planned year, rub.;

In pl - revenue in the planned year, thousand rubles.

To calculate the material cost plan, you must first calculate the material costs per 100 rubles of revenue in the planned year:

MZ 100 pl. = MZ 100 current. * (100-I cost) /100, (15)

where I cost - percentage of cost reduction, %

MZ 100 tech . - material costs per 100 rubles of revenue in the current year, rub.

Let's calculate material costs for each type:

1. Materials and spare parts:

MZ 100pl = 2.23* (100-2.1) / 100 = 2.18 thousand rubles.

MZ pl = (2.18*619890.59) / 100 = 13513.61 thousand rubles.

2. Electricity:

MZ 100pl = 2.82* (100 - 4.5) / 100 = 2.69 thousand rubles.

MZ pl = (2.69*619890.59) / 100 = 16675.06 thousand rubles.

3. Fuel:

MZ 100pl = 0.75* (100-1.1) / 100 = 0.74 thousand rubles.

MZ pl = (0.74*619890.59) / 100 = 4587.19 thousand rubles.

Let's calculate the total amount of material costs in the planned year.

MZ pl =13513.61 +16675.06 +4587.19 =34775.86 thousand rubles.

We summarize the initial data and calculation results in Table 4.

Table 4 - Calculation of material costs in the planned year

The main item of MZ pl is electricity, which amounts to 16675.05 thousand. rub. And the total amount of material costs for all indicators is 34775.86 thousand. rub.

Calculation of other expenses

Contributions to the industry centralized innovation fund (IF) are calculated by multiplying the total cost of production and sales of products of the previous period by the established percentage rate (initial data):

IF = (Z current * I if) /100, (16)

Let's calculate the IF using formula 16.

IF = (407220*6) /100 = 24433.2 thousand rubles.

We will calculate the amount of the balance of other expenses based on the current share of these expenses in the total cost of production and sales of products in the amount 6%:

D.R. = (ROT pl. + OSN pl. + MZ pl. + A pl. + IF) *6% /94, (17)

where D.R. - balance of other expenses, thousand roubles.

Let's calculate the balance of other expenses:

DR = ((214559.28+34775.86+24433.2+72851.43+72950.16) *6%) 94= 26781.06 thousand rubles.

The total cost includes deductions for labor costs, social contributions, depreciation charges, material costs and the balance of other expenses. Let's determine the total amount of other expenses using the formula:

Z pr = Dr + IF, (18)

Zpr = 24433.2 +25174.2 = 51214.26 thousand rubles.

Contributions to the industry centralized innovation fund amount to 24,433.2 thousand rubles. Other expenses include other expenses, which amount to 26,781.06 thousand. rub. Based on these calculations, we determine the total amount of other expenses, which is 51214.26 thousand. rub.