Types of expenses of the enterprise. Variables, fixed and gross costs
As you know, no production can notexist without the cost of acquiring production assets. They are called costs. You can calculate them in various ways. The analysis of costs today is carried out in relation to the volume of production and the method of estimating costs.
Considering the process of sale and purchase from the position of the seller, the main purpose of obtaining income from the transaction will be reimbursement of costs associated with the manufacture of products.
In this regard, allocate alternative, accounting and economic costs.
Imputed (economic) expenditure is an economic expense, which, in the entrepreneur's opinion, he incurred in the course of the production process. They include, in particular:
- the resources acquired by the company;
- internal assets not included in the market turnover;
- normal profit, which the entrepreneur considers as compensation for risk in business.
Thus, it is the economic expenses that the entrepreneur undertakes, first of all, to compensate by means of a price. If, for some reason, this does not work for him, he leaves the market.
To obtain the necessary information for an enterprisecertain means are needed. Payments, cash costs associated with the acquisition of resources, are called accounting costs. They are always less than economic. Mainly, this is due to the fact that in accounting costs only real expenses for purchasing production assets from third-party suppliers are taken into account. These costs are legally formalized, exist in real form, which is the basis for accounting.
The increase in production volumes invariably entailsfor itself an increase in costs. Since the development of production can not occur indefinitely, costs are considered one of the main parameters in determining the optimal size of the enterprise.
There are costs that the organizationregardless of the volume of production activity. Such costs are called permanent. This category of expenses includes rent for premises, expenses for depreciation of equipment, loans, taxes, labor compensation for employees of the firm.
There are costs, the size of which depends onproduction volume. Such expenses are called variables. This category includes costs for advertising, transportation services, raw materials, labor compensation for third-party employees, and others. Expansion of production provokes an increase, and reduction is a reduction of variable costs.
Separation of costs for variables and permanentis considered conditional. This classification is used for a short period of time, in which a number of production factors is unchanged.
Variables and fixed costs in sum form gross costs. This is the total cash costs of the company to produce a certain amount of goods.
The interdependence and relationship between fixed and variable costs is expressed mathematically as follows:
TC-VC = FC;
FC + VC = TC;
TC-FC = VC.
In this case, FC - constant and VC - variable costs, and TC - gross costs.
When calculating and building expenditure schedulesit should be taken into account that FCs are equated to a certain constant. In this regard, gross costs will vary in accordance with the behavior of VC. In other words, the total costs of an enterprise in the short run are determined by the law of decreasing marginal productivity.
Average total costs are grosscosts that per unit of goods. These costs are compared with the price of the products, and as a result, an idea is formed about the profitability of the organization. At the same time, average gross costs are reduced against the background of decreasing variables and constant average costs.
