Characteristics of the function of the cost management system. General cost management system
In the economic literature and in practice, along with the term "costs", such as "expenses", "costs" are also used. Moreover, many authors interpret them as synonyms and do not distinguish between these three concepts. Meanwhile, there are differences.
Costs are the actual or estimated costs of the financial resources of the enterprise. Costs in the literal sense of the word are a set of movement of financial resources and refer either to assets if they are able to generate income in the future, or to liabilities if this does not happen and the retained earnings of the enterprise for the reporting period decrease.
Expenses are the financial costs of earning income over a given period. The concept of expenses is already the concept of costs: it implies only specific payments in a certain period. Expenses are caused by costs attributable to the cost of production, and payments from the profit of the enterprise. For example, travel expenses, hospitality expenses are included in the costs within the limits approved by the Ministry of Finance of the Russian Federation, in excess of the norms - paid from profit.
Costs characterize in monetary terms the volume of resources used for certain purposes, and are transformed into the cost of production.
To distinguish between the expenses of a given period and the costs arising from them, we note the following:
the costs of the current year are also the costs of the enterprise for this year;
expenses incurred before the current year become expenses for that year and appear as assets at the beginning of the year;
Current year's costs may be future years' costs and will be recognized as assets at the end of the current year.
The idea of enterprise costs is based on three important provisions.
Costs are determined by the use of resources, reflecting how much and what resources are spent in the production and sale of products.
The volume of resources used can be presented in natural and monetary units, however, in economic calculations, they resort to the monetary expression of costs.
The definition of costs is always correlated with specific goals, objectives, i.e. the amount of resources used in monetary terms is calculated for a specific function or production unit of the enterprise.
The Government of the Russian Federation Decree No. 552 of August 5, 1992 determined the composition of the costs of production and sales of products included in the cost price when forming the financial results of an enterprise.
The subject of management in the discipline under study is the costs of the enterprise in all their diversity.
Cost Features
1) Dynamism. Costs are in constant motion, change. Thus, in market conditions of management, prices for purchased raw materials and materials, components, tariffs for energy carriers and services are constantly changing. Products are being updated, the consumption rates of material and labor costs are being revised, which is reflected in the cost of production and the level of costs. Therefore, the consideration of costs in statics is very conditional and does not reflect their level in real life.
2) Variety of costs requiring the use of a wide range of techniques and methods in managing them. The variety of costs is revealed in their classification, which allows, firstly, to identify the degree of influence of individual costs on the economic results of the enterprise, secondly, to assess the possibility of influencing the level of certain types of costs, and, finally, to attribute to the product only those costs that necessary for its production and sale. An equally important and difficult task is the correct allocation of costs to production units and individual activities of the enterprise.
Third cost feature is difficulties in measuring them, accounting and evaluation. There are no absolutely exact methods of measurement and accounting and costs.
The fourth feature is the complexity and inconsistency of the impact of costs on the economic result. For example, it is possible to increase the profit of an enterprise by reducing the current costs of production, which, however, is ensured by an increase in capital costs for R&D, equipment and technology. High profits from the production of products are often significantly reduced due to high costs for their disposal, etc.
Cost management in the enterprise is designed to solve the following main tasks:
Identification of the role of cost management as a factor in improving economic performance;
determination of costs for the main management functions;
calculation of costs for the production units of the enterprise;
calculation of the necessary costs per unit of production;
preparation of an information base that allows estimating the costs of choosing and making business decisions;
identification of technical methods and means of measuring and controlling costs;
search for reserves to reduce costs at all stages of the production process and in all production departments of the enterprise;
choice of cost rationing methods;
selection of a cost management system that meets the conditions of the enterprise.
The tasks of cost management should be addressed in a complex. Only this approach bears fruit, contributing to a sharp increase in the economic efficiency of the enterprise.
Cost management functions.
Cost management in an enterprise involves the performance of all the functions inherent in the management of any object, i.e. development and implementation of decisions, as well as control over their implementation. Cost management functions are implemented through the elements of the management cycle: forecasting and planning, organization, coordination and regulation, activation and stimulation of implementation, accounting and analysis.
The performance of control functions in full on all elements constitutes the cycle of influence of the control subsystem (subject of control) on the controlled subsystem (object of control).
Subjects of management the costs are the managers and specialists of the enterprise and production units (production, workshops, departments, etc.). Individual functions and cost management elements are performed by employees of the enterprise directly or with their active participation. For example, the dispatcher influences the coordination and regulation of the production process, and consequently, production costs; the accountant performs cost accounting, etc.
Control objects are the costs of development, production, sale, operation and disposal of products.
The general scheme of interaction of cost management functions in the enterprise is shown in fig.
Cost management is not an end in itself, but it is absolutely necessary for an enterprise to achieve a certain economic result, to increase work efficiency.
Cost management functions are primary in relation to production, i.e. to achieve a certain production, economic, technical or other result, you first need to make costs. Therefore, the goal of cost management is to achieve the intended results of the enterprise. in the most economical way.
Forecasting and planning costs It is divided into long-term (at the stage of long-term planning) and current (at the stage of short-term planning).
The task of long-term planning is to prepare information about the expected costs in the development of new sales markets, the organization of the development and release of new products, and the increase in the capacity of the enterprise. This may be the cost of marketing research and R & D, capital investments.
Current plans specify the implementation of long-term goals of the enterprise.
If the accuracy of long-term cost planning is low and is influenced by the inflationary process, the behavior of competitors, state policy in the field of economic management of an enterprise, and sometimes force majeure, then short-term cost planning, reflecting the needs of the near future, is more accurate, since it is justified by annual, quarterly calculations .
Organization - an essential element of effective cost management. It establishes how the enterprise manages costs, i.e. who does it, in what terms, using what information and documents, in what ways. The places of origin of costs, the centers of responsibility for their observance are determined. A hierarchical system of linear and functional relations of managers and specialists involved in cost management is being developed, which should be compatible with the organizational and production structure of the enterprise.
Cost coordination and control involves comparing actual costs with planned ones, identifying deviations and taking prompt measures to eliminate them. If it turns out that the conditions for the implementation of the plan have changed, then the costs planned for its implementation are adjusted. Timely coordination and regulation of costs allows the enterprise to avoid a serious disruption in the implementation of the planned economic performance.
Activation and stimulation imply the search for such ways of influencing the participants in production that would encourage them to comply with the costs established by the plan and find ways to reduce them. Such a course of action can be motivated by both material and moral factors. Incentives for compliance and cost savings should not be replaced by penalties for overspending. In this case, employees will make the main effort to challenge the level of planned costs, to overestimate it. Then achieving the main goal of the enterprise - obtaining the maximum possible profit by reducing costs - will become a difficult task.
Accounting as an element of cost management is necessary for the preparation of information in order to make the right business decisions. For example, when assessing the value of inventories, the costs incurred are established by production accounting, and information about the actual results of the enterprise and all its production costs is supplied by the book. accounting. Production accounting is included in the management accounting system, which allows you to control costs and decide on their appropriateness.
Cost analysis, which is an element of the control function, helps to evaluate the efficiency of the use of all enterprise resources, identify reserves for reducing production costs, collect information for preparing plans and making rational management decisions in the field of costs.
Control (monitoring) functions in the cost management system provides feedback, comparisons of planned and actual costs. The effectiveness of control is determined by corrective management actions aimed at bringing actual costs in line with planned ones or at refining plans if these latter cannot be met due to an objective change in production conditions.
So, cost management is a dynamic process that includes management actions, the purpose of which is to achieve a high economic result of the enterprise.
Cost management principles.
The basic principles of cost management have been developed by practice and boil down to the following:
a systematic approach to cost management;
unity of methods practiced at different levels of cost management;
cost management at all stages of the product life cycle - from creation to disposal;
organic combination of cost reduction with high product quality;
avoiding unnecessary costs;
widespread introduction of effective cost reduction methods;
improvement of information support on the level of costs;
increasing the interest of the production departments of the enterprise in reducing costs.
The systems approach finds its expression in the fact that the effectiveness of cost management is evaluated by the effectiveness of the weakest link in the system. Whatever it is: a low level of cost rationing, mediocre motivation and incentives for staff to reduce, insufficient in volume and unsatisfactory analysis in quality, a cost system that does not meet the needs of management - it will inevitably affect the functioning of the system. It is the weak link that determines the reliability (efficiency) of the entire production system, which is the enterprise. Lack of attention to one function of cost management can nullify the entire work.
The methodological unity of cost management at different levels implies uniform requirements for information support, planning, accounting, and cost analysis at the enterprise.
Compliance with all the principles of cost management creates the basis for the economic competitiveness of the enterprise, gaining a leading position in the market.
The set of elements and links between them, which have a certain integrity, is called the control system. The interaction of subjects, objects, functions, tools and methods of management should ensure the preservation, functioning and development of this system, increasing the efficiency of the costs incurred by the enterprise.
The goal of the cost management system is achieved as a result of the implementation of the management process, which involves the functioning of the adopted organizational structure, which reflects the progress of the management functions and characterizes its dynamics. This process has its own (specific) content, due to its essence; their stages and internal stages of implementation, involving a certain sequence of actions in space and time. The qualitative originality of the cost management process is revealed in the implementation of a systematic approach.
This approach allows you to comprehensively explore the management object, build a cost management system, highlight the main tasks of the management process and determine the sequence of their implementation. The basis of this approach is the principles of unity, development, global goal, functionality, decentralization, hierarchy, uncertainty and organization.
The effectiveness of cost management will increase with a combination of systematic and situational approaches, since with a lack of information, management is carried out on the basis of determining the most important situational factors.
In the process of its functioning, the cost management system is divided into three subsystems:
- ? control subsystem or subject of control;
- ? controlled subsystem or control object;
- ? communication subsystem.
The subjects of cost management are the managers and specialists of the enterprise, as well as the relevant management bodies. The object of control is the costs depending on the goal. They, as an object of management, are considered as a whole and by individual components (in accordance with their classification), which are of interest in the management process. The communication subsystem includes a direct communication channel through which input information is transmitted, and a feedback channel through which information about the state of the control object is received. As a result of the influence of the control subsystem, the cost management system goes into various states, from which the most preferable one is selected.
The effectiveness of such a system is determined by the interconnection of all its elements, their focus on achieving a common goal and compliance with the laws, principles and methods that are objectively in force in the field of management and reflect the most significant links between individual elements of management and elements of the external environment.
Cost management involves the performance of all functions inherent in the management of any object. Cost management functions include planning, coordination, control and motivation.
Planning includes the selection of long-term and immediate goals and the development of strategic plans to achieve them. Coordination is the determination of the best directions for the use of resources to carry out the planned plans. Control ensures the execution of decisions and feedback so that the goals of the enterprise and its strategic plans are implemented in an optimal way. Motivation is the formation of a system of motives that encourage the implementation of decisions made.
A. Fayol is considered to be the founder of the functional approach in management. He singled out five management functions: foresight, organization, managerial activity, coordination and control.
In modern literature there is no single view on the composition of management functions. However, there is now a widespread approach based on combining all of them into four main functions applicable to all enterprises. According to this approach, the management process consists of interrelated functions of planning, organization of activities, motivation and control, which are united by the connecting processes of communication and decision-making.
In turn, cost management functions are implemented using management tools: regulatory framework, classification, system of indicators, application of various methods of analysis and cost forecasting. Cost analysis, being an important element of the control function, prepares information for reasonable cost planning. Costs are analyzed both for the enterprise as a whole and for individual divisions, economic cost elements and cost items, types of activities, units of production (works, services) and other accounting items.
Cost management is a dynamic process, the purpose of which is to achieve a high economic result of the enterprise. At all stages of management, it is necessary to concentrate and correctly use cost data as a factor that plays an important role in making a decision and ultimately determining the competitiveness of an enterprise. The answer to certain problems that arise in the management process has always been the development and practical application of various cost management systems. At the heart of any cost management system is their classification according to various criteria, which is necessary to assess the degree of possible impact on certain costs or the degree of influence of certain costs on the final results of the enterprise.
Cost information can be used in three ways:
- ? to assess the level of costs in a given period and determine profits;
- ? for decision-making (in the field of price policy, growth and reduction of objects of activity, product renewal);
- ? for control and regulation.
The first of these areas involves the calculation of the cost of production and income received for a certain period, by comparing which profit is determined. When making decisions in the field of pricing policy or reducing the volume of activities, updating products, creating the most rational program for maximizing profits, the company's management needs information about expected costs and incomes, since any decision is future-oriented. The third of these areas involves the collection of information on how costs are allocated between individual cost and responsibility centers.
So, using various classifications of costs and methods of their accounting, you can obtain the information necessary for certain purposes of enterprise management, and build a variety of cost management systems. Recently, the following cost management systems have been in the focus of attention of economists:
- ? total cost management system (standard-cost, absorption-costing, total cost management system, or tcm, transaction costing method, or ABC, etc.);
- ? cost management system for a reduced range of cost items (simple and advanced direct costing);
- ? management system by responsibility centers and controlling system. A brief description of cost management systems is presented in Table. 5.1. Not a single monograph or practical guide on enterprise management, control of its activities or cost accounting ignores the issues of their functioning.
Table 5.1
Brief description of existing cost management systems
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Characteristic |
Advantages |
disadvantages |
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1. Full cost management |
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The cost of production includes all costs of the organization, and fixed costs are distributed in proportion to the selected base |
The full cost of production is visible, compliance with the traditions established in the Russian Federation and the requirements of regulatory acts on financial accounting and taxation is ensured |
The impossibility of analyzing, controlling and planning costs due to inattention to the nature of their behavior depending on the volume (fixed costs in accounting are considered as variables). Loss of individuality by costing objects due to the use of common distribution bases. The inclusion in the cost of production of costs that are not directly related to its production, as a result, the distortion of the profitability of certain types of products. Pricing assumes a planned profit from the outset, while in reality it is only necessary to eliminate the risk of loss, which does not allow the allocation of relevant costs. |
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Characteristic |
Advantages |
disadvantages |
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1.1. Actual cost management. 1.1.1. Basic option |
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Actual costs are reflected without any adjustments: Zf = (2fTf, where Zf - actual costs; ()f - actual quantity; Tsf - actual price |
Ease of use |
Lack of regulations to control the amount of resources used and their prices. Inability to analyze the causes of deviations. The complexity of the procedure for calculating actual prices when exchanging services between departments. Cost jumps due to the impossibility of creating reserves. The complexity of recalculating prices for each unit of resources used. The need to calculate the cost of each batch of products, which is laborious in mass production |
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1.1.2. At last year's prices |
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Costs are defined as follows: 3 F \u003d C pr Of + D C. where C pr - the average price of the last year; Ац - increase in costs due to prices. |
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The use of the average price for the previous period as a standard, which does not correspond to the goals of the organization and makes it difficult to control. Lack of standards for the amount of resource use. Cost jumps due to the impossibility of creating reserves. Lack of control and analysis of indirect cost variances |
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1.1.3. At planned prices |
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Direct costs are reflected in planned prices. Deviations of direct costs from the planned level are written off at the end of the period. There is no fixed cost planning. The calculation of costs is carried out according to the following formulas: Z. (f \u003d Z. w + Dz + Dch, where Z. (f, Z zp - actual and planned wage costs; Дз, Дч - deviations caused by changes in the average wage rate and the number of personnel; Z MF \u003d Z mp + Ac/+ Dts, where Z mf, Z mp - actual and planned costs for materials; Ac/, Dts - deviations caused by a change in the quantity of materials and a change in prices for them |
Compared to baseline:
and planned values (but only for direct costs) |
Inability to control and analyze deviations of indirect costs. Cost jumps due to the impossibility of creating reserves |
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1.2. Regulatory cost management 1.2.1. Basic option |
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Standard costs mean:
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Possibility of control by comparing actual values with normative ones. Ability to analyze the causes of deviations. Acceleration of cost calculation (costs for each center and for each carrier are calculated independently of each other, which means that simultaneous calculations are possible). No need to calculate the cost for each batch separately. Smoothing cost fluctuations due to redundancy capabilities |
Inconsistency of rationing from what has been achieved or by extrapolation to the requirements of today. With regulatory accounting, there is no justification for adjusting average values, which reduces planning accuracy and hinders effective control |
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Characteristic |
Advantages |
disadvantages |
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1.2.2. Fixed issue |
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The standards are set irrespective of the volume of activity. Variations in price and quantity are taken into account. The calculation of deviations is as follows: Determination of the standard cost rate: With- °n /-? "-and - q ’ where C, - standard cost rate;
Z pr \u003d C n Of, where Z pr - estimated standard costs; Definition of deviation: A \u003d Z f - 3 | f |
In addition to 1.2.1. Relative simplicity. No need to classify costs |
In addition to 1.2.1. Lack of effective control due to ignoring the nature of the dependence of costs on the volume of output. Works only with a given volume. Deviations due to volume changes are not taken into account |
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1.2.2. With variable output |
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Variable cost standards are set per unit of volume, and fixed cost standards - for the entire volume. Deviations in price, quantity, volume are taken into account. Calculation algorithm:
G" and per o costs: \u003d -, where o - total standards nye variable costs; The rate of normative constants is calculated costs: C I | = ™ st, where Z n - total standard fixed costs; The standard cost rate for the standard volume is calculated: С n = С n + С„; G and “per” post
A \u003d Zf - Z nr;
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In addition to 1.2.1. The nature of the behavior of costs depending on the volume is taken into account, which provides a more accurate calculation for operational management. Compared to 1.2.2, the possibilities for control are improved. Volume deviations are taken into account |
Difficulty compared to 1.2.2. The same approach to determining fixed and variable costs (when adjusting for changes in volume, fixed costs are treated as variables), which distorts the result |
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Characteristic |
Advantages |
disadvantages |
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1.3. Planned cost management (standard-cost) 1.3.1. Basic option |
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Planned values are based not on past experience, but on forecasts for the future. Direct variable costs are planned by type of product, the rest - by cost centers. Both prices and quantities are planned |
Advantages of standard cost management. More profound validity of the planned values in comparison with the normative ones provides an increase in the accuracy of forecasts and the effectiveness of control |
Relative difficulty in setting standards |
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1.3.2. Fixed issue |
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Similar to 1.2.2, difference - planned values are used instead of standard values |
Advantages 1.3.1. Relative simplicity. No need to classify costs |
Disadvantages 1.3.1. and 1.2.2 |
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1.3.2. With variable output |
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Similar to 1.2.3, difference - planned values are used instead of standard values |
Advantages 1.3.1. The nature of the behavior of costs depending on the volume is taken into account, which ensures high accuracy of the calculation results and provides information for operational management. Compared to fixed-quantity planned cost control, the control options are improved. Volume deviations are taken into account |
Disadvantages 1.3.1. and 1.2.3 |
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2. Management of the truncated cost price 2.1. Basic option |
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The costing object (product, cost center, etc.) includes only those costs that, with the chosen approach, are considered as directly related to this object |
The financial result for the entire organization and for individual types of products does not depend on the choice of the method of allocation of fixed costs. Ability to compare the cost of different periods only in terms of relevant costs; as a result - a change in the structure of the organization, the irrelevant costs associated with this do not affect the result of the comparison. Accounting for the nature of the behavior of costs depending on the volume. Analysis of the causes of deviations; estimation of the minimum critical volume; risk; cost-benefit planning; optimization of the release structure; pricing; the control; identification of cause-and-effect relationships, that is, cost control levers |
There is no calculation of the full cost of production, required by law. Reduced cost of inventory. The separation of fixed and variable costs is difficult (in the long run, all costs turn into variable costs) |
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Characteristic |
Advantages |
disadvantages |
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2.2. Simple direct costing |
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Separation of costs into variable and fixed (fixed either in the classification of cost types or in the classification of cost centers). Products include only variable costs. A cost center includes only the variable costs of operating the core business of that cost center. Profit calculation: P \u003d X (C,. - Z per.) - Z post, where P - profit; C, - the price of the i-th type of product; Z psr. - variable costs per unit of the i-th type of product; Z post - fixed costs. For each type of product, the amount of coverage (marginal income) is calculated: MD = C - Zper, where MD - marginal income (coverage value); C - price; З lane - variable costs per unit of output. Additional features: calculation of planned and actual marginal income; calculation of coverage amounts for intercompany turnover (using appropriate transfer prices); setting the minimum allowable marginal income; multilevel direct costing |
Advantages 2.1. Relative simplicity (there is no need to allocate fixed costs to products and cost centers). Short term pricing information (short term price floor equals variable costs) |
There is no information for pricing in the long term. The market price of products is not always known, making it difficult to plan marginal revenue. A non-linear cost function is possible. The presence among the fixed costs of those that can be directly attributed to a specific product |
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2.2.1. Fixed Cost Management |
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The system is a logical continuation and extension of simple direct costing. Costs are divided (according to the principle of their relationship to the objects of calculation) into direct and indirect, as well as into fixed and variable. The profit and loss statement is as follows: B - H \u003d V h; SP, \u003d B „ - 3 nepi; P \u003d SP 2 - Z posg, where B is revenue; H - turnover taxes; B, - net proceeds; SP „ SP 2 - coverage amounts 1 and 2, respectively; 3, Z psr2 - variable costs of a product and a group of products. If necessary, fixed costs can be divided into groups (fixed costs of a product, a group of products, a responsibility center, an organization as a whole) and calculate the corresponding coverage amounts |
Availability of information for pricing in the short and long term. Availability of information for investment analysis (relevant costs for making investment decisions can be considered direct costs per product, per group of products and sometimes fixed costs of the center). Availability of information for optimizing the volume of production under resource constraints (maximizing the total marginal income). Availability of information for the choice of technological process and method of organizing production. Availability of information for control, planning of costs and results. Finding the critical volume of production (in the short and long term) in order to assess the risk. Reducing the degree of underestimation of reserves compared to simple direct costing |
It is not always easy to select a group of products. The cost of production includes direct fixed costs that do not actually arise as a result of the production of products, but serve to maintain production facilities in working order. The system converges with the full cost control system. Difficulty classifying costs |
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Characteristic |
Advantages |
disadvantages |
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2.3. Fixed Cost Management with Relative Direct Costs |
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A hierarchy of cost objects is developed, including areas of activity, responsibility centers, types of costs, types of products, and all costs are direct for any object. The costs are divided into the following groups:
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There is no need to allocate indirect fixed costs. All costs are treated as direct, which will give more control. Availability of information to optimize output in a resource-constrained environment. Availability of information to optimize the output structure in conditions of limited resources |
It is difficult to estimate reserves. It is not always possible to find an object for which the costs are direct. Method complexity |
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2.4. Manage Planned Marginal Costs |
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Unlike direct costing, not actual, but planned values are used. Unlike full cost management, actual costs are compared with planned costs only in the variable part, but not in the fixed part. Planned and actual values are compared as follows:
as С = --, where 3„ - planned variables Per and per
P^Ppost^f costs: 3„ = ---;
Only variable costs are included in the cost of production |
Advantages 2.2. Disadvantages 2.2. More control over simple direct costing. Clarity, clarity |
In modern conditions, to ensure the effectiveness of the company's activities, it is necessary to use a system-oriented approach in the organization of management accounting.
The efficiency of the entire company management system and its competitiveness in the market depend on the effectiveness of the cost management system of the cost enterprise. Currently, the following cost management systems have become widespread:
Consider modern enterprise cost management systems in more detail.
standard costing
At the beginning of the 20th century, the Standard costs system appeared in the USA, and then in Europe, as a method of preventing unjustified costs. The name of the system in a broad sense means "the cost price set in advance." The founders of this system are American economists G. Emerson, D.Ch. Garrison, T. Downey, M.H. Zhebrak and others.
The specificity of this system lies in the fact that the accounting reflects not what happened, but what should happen; not what is, but due, is taken into account, and deviations that have arisen are reflected separately. The main principles of this system are as follows:
- all costs incurred in accounting must be correlated with the standards;
- deviations identified when comparing actual costs with standards should be disaggregated by cause.
The main purpose of the system is to identify losses and deviations in the company's profits.
The system is based on preliminary (before the start of the production process) cost rationing. The amount of costs in the coming period is calculated based on their level achieved and the planned reduction. Identified deviations from the established standard cost rates are analyzed to determine the reasons for their occurrence. This allows the administration to quickly manage production costs. Accurate determination of deviations from established cost standards contributes to the improvement of the cost standards themselves.
The advantage of the Standard costs system is the prompt identification and prevention of negative trends in the process of forming the costs and profits of the organization.
A partial analogue of this cost accounting system in domestic practice is the standard method of cost accounting. Its distinguishing feature is that the domestic method focuses only on the production process and is not associated with its implementation. This makes it difficult to determine sales prices.
In the course of further historical development of cost and profit management systems, the integration of the Standard costs system and the cost accounting model by responsibility centers took place. This is how the System in time (SIT) method arose, the founders of which were R.D. McIlhattan, R.A. Howell, S.R. Sauce.
direct costing
The intensive development model of an economic entity required the solution of strategic management tasks based on a clear division of costs into direct and indirect, main and overhead, variable and fixed, production and recurring costs. As a result, in 1936 D. Garrison created the Direct Costing System (direct cost accounting system).
At present, the principles of the Direct Costing system have changed somewhat. The most important principle of grouping costs is their dependence on production (sales) volumes, i.e. division of costs into variable and fixed. The cost of production is planned and taken into account only in terms of variable costs.
The difference between the revenue from the sale of products and variable costs is the marginal income, which is the basis of the process of operational price management and pricing. With this method, fixed costs are not included in the calculation of the cost of production and are written off directly to reduce the profit of the organization.
Just-in-Time (JIT)
Today, manufacturing companies are increasingly focused on producing a high-quality and competitive product while minimizing the cost of its production. This strategy corresponds to the Japanese system Just-in-Time (JIT) - Just in time.
The JIT cost management system emerged in the mid-1970s. at Toyota.
The specificity of the method lies in the fact that the presence of inventory is considered as a negative factor that affects the flexibility and competitiveness of the enterprise, the lack of financial resources.
The Just-in-Time method provides for the supply of production shops with small batches, the practical elimination of work in progress, and the minimization of inventory. When applying this method, part of the costs of the enterprise from the category of indirect goes into the category of direct.
Under the JIT method, the reliability of order fulfillment is greatly increased, since much less time is spent on the purchase and storage of materials. Shorter order lead times and increased order fulfillment reliability also contribute to significantly reducing the need for safety stock and achieving greater production flexibility. At the same time, problems with product quality are easily identified and adjustments are quickly made to the production process.
The main advantages of the Just-in-Time system include:
- minimization of capital investments in inventory and the cost of ensuring their safety;
- reduction of the production and financial cycle of the organization and, as a result, a more rapid response to changes in market conditions, an increase in the turnover of economic resources;
- improving the quality of production, product, labor, reducing production losses, including from marriage;
- the transition of a part of indirect costs to the category of direct ones increases the accuracy of cost formation;
- the system of production cost accounting is simplified, including the procedures for allocating indirect costs.
As a disadvantage of the Just-in-Time system, one can indicate its focus on small-scale (custom) or single-piece production. The basis for the implementation of this system are well-established partnerships with suppliers, contractors, buyers. Failures in the supply chain directly affect the effectiveness and efficiency of the organization. As a result, management guidelines are more related to the supply sector.
Activity based costing (ABC)
As a result of the search for more effective cost and profit management tools, the ABC (Activity Based Costing) cost accounting method appeared. Initially, the ABC method was focused on improving the accuracy of calculating the cost of individual products, but then, over time, it was transformed into an effective business management model.
It is specific to this method that all production is considered as a set of work operations, functions. The definition of the list and sequence of work in the enterprise is carried out by decomposing complex work operations into the simplest components in parallel with the calculation of resource consumption.
Target costing
The homeland of the Target costing system (translated from Japanese as improvement in small steps) is Japan, where it appeared in the 1960s. Today it is spread all over the world, mainly in companies operating in innovative industries (automotive, mechanical engineering, electronics, computer, digital technologies) and in the service sector.
The idea underlying the Target Costing concept is simple and revolutionary at the same time. Japanese managers simply turned the traditional pricing formula inside out: Cost + Profit = Price, which in this concept was transformed into equality: Price - Profit = Cost.
The Target costing system, unlike traditional ones, provides for the calculation of the cost of a product based on a pre-set selling price. This price is determined with the help of market research, i.e. is actually the expected market price of the product or service.
To determine the target cost of products (services), the desired profit of the organization is subtracted from the expected market price. Further, all participants in the production process - from the manager to the simple worker - work to design and manufacture a product that meets the target cost.
N. Smirnova argues that Target costing avoids the problems of reducing product quality and its consumer value for the buyer in the context of implementing a cost and cost reduction strategy.
Kaizen costing
A direct continuation and an integral part of Target Costing is Kaizen costing - a system of continuous operational control over the level of costs, small improvements that ultimately lead to grandiose results. At the same time, both systems have the same task: to achieve the target cost.
However, this task is implemented in the first case (target costing) at the stage of designing a new product, in the second case (kaizen costing) - at the production stage.
The difference between the estimated and target costs should be minimized at the design stage of the product, for which an analysis of drifting costs is carried out (an analysis of the impact of each expense item on the cost of the product) and a search for options to reduce them.
If at the design stage the difference between the estimated and target costs is no more than 5%, then a decision is made to start production of such a product with the expectation that this discrepancy will be eliminated during the production process through “kaizen costing”. Reducing the difference between the estimated and target costs is called the kaizen task, which concerns all the personnel of the organization: from production workers to managers. It is set both at the level of each product, and at the level of the enterprise as a whole.
Benchmarking
The method of comparison with the best indicators of competitors (Benchmarking) is to identify gaps in key positions in the production of enterprise products in comparison with the best analogues available on the market, as well as to identify the causes of these gaps, to find opportunities to achieve the characteristics and quality indicators of the best samples. The basis for using this technique is the mandatory presence of a comparative base, which is associated with certain difficulties, given the realities of competition.
This method has the following varieties:
Best practice - comparing the effectiveness of the company's activities with the leaders of world production in various types of economic activity in order to find the best work practice;
Best in class - comparison of the company with leading competitors in this type of economic activity;
Best of best - comparison of individual internal processes with the performance of the best firms.
The problems of using the Benchmarking method have become especially relevant in the face of fierce competition and the development of competitive business intelligence. The study of the Benchmarking methodology and the solution of these problems are devoted to the works of many foreign and domestic scientists, in particular O.V. Alekseeva, I.M. Volkova, Yu.P. Voronova, D.A. Voloshin, I.N. Ivanova, O.E. Nikolaeva, T.V. Shishkova and others.
The Benchmarking method is inherent in the initial analysis of the internal environment of the company, the identification of bottlenecks in management, production, commercial processes, and then the search for best practices from competitors and representatives of related economic activities.
The objects for analysis and comparison can be production processes, innovation, technical solutions, labor motivation system, etc. The composition of indicators characterizing the activities of the organization and its competitors includes costs, cost, price, profit, profitability, etc. It is more expedient to compare by factor indicators - objects of strategic control and management: costs, cost, price, product quality, etc.
Life cycle costing (LCC)
The concept of life cycle costing (LCC) is to determine the cost of the complete life cycle of a product: from design to retirement.
Life cycle - the concept according to which economic goods representing tangible assets have their own period of existence.
The most important principle of this method is the forecast and cost management for the production of a product at the stage of its design.
The beginning of the life cycle is the moment when it becomes possible to use an economic good to satisfy a need. The end of the life cycle is the moment of exhaustion of utility, complete consumption of the economic good. At the same time, the life cycle of a product, project, organization is distinguished.
The main prerequisites for the emergence of this technique are: a reduction in the life cycle of products, an increase in the cost of pre-production and the start of production of products, an almost complete determination of financial indicators (costs and income) at the design stage.
With this method, a necessary element of cost classification is their grouping by life cycle stages:
- stage of new product development;
- the stage of bringing the product to the market (implementation);
- growth stage;
- maturity stage;
- decline stage.
The stages of the product life cycle are specific and affect the process of generating costs and profits. The influence of the stages of the product life cycle on the level of costs, their composition, structure, intended purpose, degree of efficiency is traced.
Planning in terms of product life cycle stages allows you to more accurately predict the main work operations and their corresponding costs.
Functional cost analysis (FSA)
One of the common methods used in making cost management decisions is cost-benefit analysis (FCA), which is aimed at minimizing costs while maintaining quality indicators and indicators of product destination.
Functional cost analysis - a method of systematic research of an object (product, process, organizational structure), aimed at improving the efficiency of the use of material and labor resources.
An element of the FCA is a cost analysis based on consumer value, the purpose of which is the economic justification of costs for the functions of the object, i.e. optimization of the ratio between the consumer properties of the object and the cost of its development.
Bibliography:
- Abdukarimov I.T., Abdukarimova L.G. Evaluation and analysis of production costs and their role in the effective management of entrepreneurial activity // Finance: planning, management, control. 2011. No. 4.
- Voronov Yu.P. Benchmarking in competitive intelligence // Technologies of intelligence for business.
- Ivanov I.N., Fukova D.Yu. Competitive analysis. Benchmarking // Economic Analysis: Theory and Practice, 2009. No. 22.
- Lapusta M.G. Industry Competitive Analysis and Key Success Factors.
- Rumyantseva E.E. New economic encyclopedia: 4th ed. M.: INFRA-M, 2011.
- Smirnova N. Target-costing allows you to manage the cost // Consultant. 2006. No. 7.
- Sheremet A.D. Theory of economic analysis: Textbook. M.: INFRA-M, 2008.
- Usatova L.V. Organization of modern management accounting at an industrial enterprise using foreign methods of cost accounting // Management Accounting. 2008. No. 7.
Chapter 7. The role and place of cost management in the enterprise development system
In modern conditions of a market economy, the main link that carries out economic activity is the enterprise. It is the enterprise that creates the necessary products for the market and provides various services that plays the main role in regulating market relations and filling market segments.
A competent and competent leader knows that in the tough conditions of existing competition, the leader will be the one who most correctly organizes the production of products that will meet the requirements of the modern market and be in demand. Modern market relations are an incentive for production efficiency and a desire to increase labor productivity.
In modern conditions of a market economy, managing an enterprise with full economic and financial independence is a complex labor-intensive process that requires great responsibility, competence and strategic actions in managing costs, making dynamic decisions, and mobility of ideas. Economic independence provides an independent choice of the organizational form of the enterprise, the type of its activity and the choice of business partners.
An enterprise with financial independence draws up its own financial strategy, develops a pricing policy, i.e., takes all the necessary measures for full self-financing.
For enterprises of any form of ownership, it is necessary to keep records of financial results that reflect the dynamics of expenses and income over a certain period of time. However, without an economic analysis of the efficiency of the use of production resources and an assessment of the production strategy, it will be impossible to determine the current financial condition of the enterprise and identify the prospects for its development.
In modern organizations, the solution of these issues can be implemented in the system of management analysis - internal economic analysis, which is based on a comparative analysis of both past and future results of managing the structural divisions of the organization.
For the implementation of management analysis, it is possible to use various methods and scientific developments. With the introduction of information technology, systems that can analyze the financial and economic activities of an enterprise, assess its financial condition and identify its possible reserves are widely used.
When carrying out economic activities, any enterprise in the process of producing any product incurs a number of costs, which are divided into certain types.
The enterprise in the production process carries out a rather complex set of costs associated with:
1) using fixed assets;
2) with the acquisition of raw materials, materials;
3) with the purchase of semi-finished products;
4) with the remuneration of employees;
5) with the cost of fuel, energy and other costs.
Each enterprise for the normal development of its activities and the possibility of implementing all the above costs must be able to control and manage costs.
In order for analytical work in cost management to be effective and financial and economic decisions to achieve the proper quality, it is necessary to accurately organize cost accounting for the following groups:
1) fixed costs;
2) variable costs.
The division of costs into fixed and variable allows the financial manager to:
1) establish a payback period;
2) find out the margin of financial reliability of the enterprise;
3) calculate the optimal value of the profit of the enterprise.
Unreasonable and uncontrolled growth of costs is one of the most urgent problems of most Russian enterprises. The most important task facing the management of the enterprise today is the effective management of production costs. Currently, there are industry regulations on cost accounting, textbooks on planning and cost analysis. However, the main obstacle to the use of the potential accumulated in this area should be considered the significant laboriousness of calculating the cost of production and, as a result, the low efficiency of obtaining the required data. This significantly limits the ability to make quick and optimal decisions in conditions of high price dynamics with changes in market conditions.
In the transition to market principles of management, the Russian economy puts the problem of product competitiveness as the main criterion. In order for a product to be competitive, it must be of high quality, and at the same time, its price must be at a low level. This is the most important condition for competitiveness. Enterprises whose pricing policy is based on a cost approach cannot adequately withstand the dynamics of market conditions.
Foreign experience of enterprises leads to the conclusion that management practice is based on continuous cost analysis, daily work with costs, which is carried out to reduce them, which contributes to the stability of market positions. In conditions of fierce competition, there is a need to create a cost management mechanism. To solve this problem, it is urgently necessary to search for scientific measures and various methods for a targeted impact on the process of cost formation in the course of production. However, in the field of assessing the regulated situation and choosing a corrective impact on management and cost optimization, there are no unambiguous opinions and decisions when creating a cost accounting system in the production process.
One of the most effective methods of influencing the process of cost formation in the course of production is the management of enterprise costs and profits based on the organization of financial responsibility centers.
Center for Financial Responsibility (CFD) is a structural subdivision or a group of subdivisions, which sets itself the main tasks of optimizing profits, finding ways to directly affect profitability, controlling the level of expenses within established limits, and also finding ways to reduce costs.
The purpose of the management system for the Central Federal District is the most effective management of various parts of the enterprise. This management is carried out on the basis of generalized information on the results of activities for each responsibility center. All deviations resulting from the analysis of the information received for each responsibility center will be attributed to a specific manager.
The Financial Responsibility Center is responsible only for those costs that can be influenced by its managers. In order for subsequent results to give a positive assessment when managing an enterprise, it is necessary to correctly identify the CFD. For each allocated CFD, it is necessary to keep records of only those costs and results of economic activity that directly depend on the powers allocated by the head. The accounting system must necessarily reflect the activities of each CFD, each business transaction.
The totality of all CFD is the financial structure of the enterprise. Between the structural divisions of the enterprise, acting as objects of management accounting, CFDs are distributed, which are responsible for income and expenses, for specific financial results, etc. A correctly built financial structure allows you to consider the main points in which profit will be formed, taken into account, as well as accounting for expenses and income.
In order to competently and consistently form a management system for the Central Federal District and, as a result, to come to the effective functioning of this scheme at the enterprise, it is necessary to do the following:
1) determine the main direction of the economic activity of the enterprise, the type of its organizational structure;
2) to analyze the production activities of the enterprise and identify the centers responsible for the technology of the production process;
3) analyze the costs, revenues and profits of the enterprise;
4) identify the CFD, determine their status and rules of interaction;
5) for each CFD, create a list of reporting and a determinant of indications for evaluating the effectiveness of the CFD;
6) establish the rights and obligations of the Central Federal District, their internal situation.
The CFD, depending on the tasks and functions performed by them, are divided into main and auxiliary. The main CFDs are directly involved in the production of products, the performance of work and the provision of services, their costs are directly written off to the cost of production (works, services). Auxiliary CFDs serve the main responsibility centers, their costs are distributed among the main centers, and only then, in the aggregate, in the total result of all the costs of the main centers, they are included in the cost of products, works, services.
According to the degree of coincidence with the cost center, responsibility centers are divided into matching and non-matching. If each cost center has its own area of responsibility, then this situation can be considered optimal. But this is not always the case. For example, if a cost overrun occurs in a production shop due to non-compliance of raw materials with planned parameters, then the responsibility will lie not with the head of the shop, but with the head of supply. It is up to the administration to decide how to classify costs, how to detail where they occur, and how to link them to the CFD.
It is advisable to carry out cost planning by responsibility centers. This approach to cost management allows you to accurately determine how costs are distributed between individual responsibility centers, how the relationship between costs and income is established with the activities of individuals who are responsible for spending specific funds.
Cost management sets the main task of correct and timely reflection of actual costs for the relevant costing items. It is also necessary to compile operational information in order to control the use of production resources, to compare with ready-made norms, standards and estimates, to find reserves for reducing the cost of production, to prevent the possible occurrence of unproductive costs and losses, to determine the results of internal production cost accounting for the structural divisions of the enterprise.
The main attention in the management of costs in the CFD is given to their classification. For the process of control and regulation, costs are divided into controlled and uncontrolled, variable and fixed - for decision-making and planning, direct and indirect - for calculating and evaluating manufactured products. Controllable costs are controllable by the managers of a given responsibility center and can be influenced. Uncontrollable costs do not depend on the activities of the managers of this responsibility center. Variable costs are directly related to sales volume, while fixed costs are independent of sales volume. Direct costs are directly included in the cost of production, they are directly related to the production of any type of product, the performance of services or work. Indirect costs are common for the production of several types of products, services, works. They are included in their cost indirectly.
The CFD cost management methodology follows a strict sequence of allocating costs and determining marginal income for each center. Costs, implementation and results are accounted for by financial responsibility centers. If the costs can be attributed directly to the financial responsibility center, then they are allocated without using indirect allocation methods. When accounting for all variable and direct fixed costs, several marginal incomes are determined.
The advantage of cost management by responsibility center is that it provides comprehensive cost information for each responsibility center. In the course of such an analysis, weak areas are identified where deviations most often occur. An analysis of the structure of fixed and variable costs makes it possible to influence the magnitude of variable or fixed costs, which, in turn, makes it possible to strengthen the financial position of an enterprise and make more effective management decisions on expanding activities and optimizing the production process of modern enterprises.
Cost management is the ability to save resources and maximize the return on them. Let's consider such terms as "costs", "expenses", "payments". What is their difference? Costs include all resources that are involved in the process of production and economic activities of the enterprise. Not all costs are reflected in the income statement for a given period. Expenses include those costs that take part in the formation of profits of a certain period. The remaining part of the costs may represent capital construction projects in progress, finished products in stock, semi-finished products, intangible assets and other assets. Thus, expenses can include an increase in liabilities or a decrease in assets, which, in turn, leads to a decrease in capital, not related to the distribution of profits among shareholders. Payments are understood as the movement of funds paid for the supplied materials and other necessary raw materials. Payments and costs differ from each other by the amount by which inventories and accounts payable have changed over a certain period of time.
In order to avoid mistakes in the approach to cost management, it is necessary to distinguish between these concepts. For example, cost control based on income statement data is not cost management. If the volume of sales has decreased and at the same time the inventories of finished goods are increasing, then, based on the income statement, we get information that the costs are decreasing, and the costs have become higher. However, managers can react to this unfavorable situation for the company belatedly, which will entail undesirable consequences.
The confusion of the terms "costs" and "payments" leads to the fact that the company's management is trying to manage costs by limiting payments to creditors. This approach contributes to an increase in the cost of resources required for production, since, in addition to paying for resources, the need to pay a commercial loan in full costs.
Cost management is a whole complex of various activities leading to cost reduction and control. The process of creating a cost management system in an enterprise can be represented by the following steps:
1) establishing the relationship between cost management systems and budget management;
2) identification of promising areas for cost reduction;
3) development of an action plan to reduce costs.
For cost management to have a positive effect, it must be closely linked to the budgeting system. When developing a budget, an enterprise introduces planned costs within a certain framework, limiting them in size, thus trying to manage costs. The company's budget can be drawn up using rationing, using cost standards, as well as using limitation, that is, setting certain limits.
A combination of both methods is considered optimal: the limitation is applied to those cost items for which norms are not established. However, the successful functioning of enterprises using only rationing or only limiting is possible.
One of the most effective cost management tools is enterprise cost planning. Plans for the progressive development of the enterprise must be realistic, but at the same time tough. Usually, the first stage in cost management begins with the submission of applications by departments for the allocation of a certain amount of funds in order to solve the problems assigned to them. A commercial review is then carried out. It is an analysis of the validity of the application in terms of its compliance with the value of the purchased goods (services) by specialists who know the situation on the market.
In order for cost management to interact closely with the budgeting system, it is necessary to have a single governing body - the budget committee. It is most expedient to form a matrix structure of the budget committee, when the costs, line by line, are fully controlled by the heads of the budget center and the functional center at the same time. The chairman of the budget committee is the CEO of the company. A functional center is a section of budget items that are linked by a functional feature. The organizer responsible for the work of the functional center is the company manager (head of the functional center), who is responsible for a certain area of management within the entire enterprise. The heads of the budget centers are the heads of departments.
With the preparation of the first version of the company's budget, cost management begins. If the prepared budget does not satisfy the company's management, then these budget items, including cost items, are adjusted.
If it is necessary to reduce costs, they can be divided into three groups:
1) costs that are not subject to change due to strict obligations;
2) costs associated with obligations, which can be revised;
3) costs that can be rejected or postponed for other periods without significant damage to the enterprise.
After the classification of costs into groups, a phased exclusion of cost groups takes place: first, the third group of costs is adjusted, then the second, and only in extreme cases the first. For example, the costs of the first group include wages. In order to adjust the costs for this item of expenditure, it will be necessary to carry out structural changes: a change in staff, staffing.
Cost optimization at the enterprise in most cases can be carried out by carrying out organizational changes in the company. Often, more global measures may be required, such as replacing outdated equipment with more technologically advanced and productive equipment, and introducing energy-saving technologies.
To select costs that can be reduced and changed, the most successful is the use of the following types of analysis:
1) cost structure analysis;
2) comparative analysis;
3) analysis of cost carriers.
Cost structure analysis is divided into vertical, horizontal and trend analysis. Vertical analysis allows you to calculate the share of each cost item in the total cost of the enterprise. With the help of horizontal analysis, each position is compared by cost items of reporting with the previous period. Thus, the deviations of the indicators of the reporting or planning period from the previous one are determined. Trend analysis helps to determine the possible values of the expected indicators, i.e. it helps to predict the values of various indicators, provided that the current dynamics is maintained.
Comparative analysis is a comparison of the most important indicators of the enterprise with similar results of competitors or with industry average indicators. With it, you can judge how competitive the company is, as well as the available reserves to reduce costs. Cost structure analysis and comparative analysis provide an opportunity to find options for cost optimization. To make the right management decision, it is necessary to carry out a methodology for identifying and analyzing cost carriers.
Cost drivers are factors that have a direct impact on the amount of costs for specific items. All media are divided into three groups: product design (what is produced), production technology (how it is produced), production management (how it is managed).
Diagnostic questionnaires are used to analyze cost drivers. They are made up of managers responsible for the development of measures to reduce costs. The survey is conducted among the employees of the company. Each hotel structural unit is presented with those issues, the solution of which is within its competence.
As a result of filling out the questionnaires, costs are allocated that can be dispensed with, which are not fully used by the company, in which there is no particular need, or if refused, there will be no damage to product quality and a reduction in sales volumes.
Based on the foregoing, it can be seen how the analysis identifies costs that increase monthly, and costs that occupy a major share in the total costs of the company; a comparison of important results of the company with the results of competitors is carried out, and, finally, cost carriers that affect their value are identified.
The next step is to develop an action plan to minimize costs. This plan will include a number of the following provisions:
1) the name of the event;
2) the cost item to which this event is directed;
3) an indication of cost carriers that affect this cost item;
4) the decision made to optimize this cost item;
5) the cost of this event;
6) the expected effect of the event;
7) persons responsible for this event;
8) the timing of the implementation of this project.
When developing an action plan to reduce costs, the correct assignment of responsible persons for the implementation of each activity plays an important role. Often economists, financiers and accountants are appointed responsible for cost management. This is the wrong approach to this issue. It is necessary to appoint company managers (heads of production departments, functional directors) as responsible for cost management, because their direct activities involve production management, making global decisions to manage the production and economic activities of the enterprise, and process control. The financial and economic service should participate in the development of classifiers and catalogs, in the development of management accounting and budgeting, as well as in presenting information to managers for decision-making. The main stakeholder in cost management should be the CEO of the company, under his leadership the entire process of cost management should be carried out.
A good prerequisite for stimulating cost reduction in an enterprise is the motivation of employees. Labor resources, labor relations - this is one of the most difficult aspects of the enterprise. The human factor plays a significant role in achieving high-quality work of the enterprise. You can not discount the psychological atmosphere of the team, personal attitudes, individual characteristics, psychological preferences. It is easier to deal with technical problems than to resolve a conflict situation. For the operation of the enterprise to be effective, it is necessary to pay attention to the human resource. After all, everything ultimately depends on a healthy working atmosphere in the team, the ability and desire to work in a team, on people with their qualifications and determination, with their desire and desire to achieve the best results. It is human capital that is the primary link in achieving the economic growth of an enterprise, production efficiency, competitiveness, and then the secondary is equipment and inventories. Therefore, it is necessary to encourage employees to achieve positive results. Therefore, it is important to develop provisions for rewarding employees for cost reduction. If both ordinary employees and company managers are involved in cost reduction, then cost management should give positive results. For example, the following system of employee motivation could be very effective: after the implementation of the developed measures and the reduction of costs at the end of a certain point in time, the unit is provided with 50% of the saved amount at its disposal, part of the amount goes to corporate expenses, and the other part goes to material incentives employees based on the quality of their work.
A sufficiently high level of requirements in the management of production costs of a modern enterprise dictates the need to automate the financial and economic activities of the enterprise. Moreover, only the introduction of an integrated system that covers interacting services and processes, created on the basis of mass-produced specialized modules, can bring a real effect.
First you need to select the most time-consuming tasks and transfer them to the computer. This will shorten the cost calculation cycle and increase the frequency of possible recalculations. Labor-intensive tasks include material and time consumption rates, work rates, allocating overhead costs to types of products and orders, accounting for actual output, as well as maintaining order journals and statements of actual costs, planned calculations and cost analysis for cost planning.
When using an automation system in an enterprise, it is necessary to combine the functions of technical and economic planning and accounting for actual costs into a single cost management subsystem. And also to ensure the interaction of the cost management subsystem with the accounting system and the planning and production management system.
Consider an approximate scheme for organizing the cost management process when using an automation system in an enterprise.
The sales management system captures consumer orders. Based on these orders, the marketing service forms an order for production under each contract with the consumer.
The production planning system checks the order for availability of production capacities and forms a production plan and production programs for workshops based on it. The production planning system or the technical production preparation system notify of changes in norms, adjustments of normative cost management information. Designers in the computer-aided design system develop and update design documentation for products. Technologists in the system of technical preparation of production make adjustments to the technological documentation, which contains the composition of manufactured products, certain indicators of the cost of producing products, the consumption of materials and time for manufacturing products. The information received is accumulated in the system of technical and economic planning and forms the base of regulatory information.
The production department in the system of technical and economic planning calculates the standard consumption of materials for the planned output of products by workshops; calculates the standard labor intensity of production, calculates the needs of production in materials and raw materials; prepares a production order for the missing raw materials and supplies.
The supply service in the procurement management system, based on the production order, generates a procurement plan, taking into account the number of balances in warehouses, and then issues orders to suppliers.
The planning department in the system of technical and economic planning forms the planned prices for raw materials and materials, based on contracts with suppliers, calculates direct material and labor costs for output. The formation of the project of planned prices for materials is based on the data of the accounting system. The department of labor and wages calculates and plans the needs of production in the necessary labor resources, plans the number of workers and the wage fund. Using planned prices, the calculation of direct material costs is carried out using the rates of work - calculation of the basic wage fund; additional wages and deductions are calculated as a percentage of the fund.
Along with the main production, the cost of services of auxiliary production is calculated in a similar way; further, the cost of services is distributed among the shops in proportion to the volumes of services consumed. Auxiliary production services in the system of technical and economic planning draw up work plans, determine the need for materials and provide an order to the supply service, make calculations for the need for labor resources, the number of workers and the wage fund (which is in many ways similar to the main production).
Planning and economic services draw up cost estimates, consistently calculate the planned cost of auxiliary production services, semi-finished products and finished products, produce the resulting distribution of overhead costs by type of product, and also carry out the formation of planned calculations and other reporting. During the entire production process, the system keeps records of the actual output of products by the main production and the actual volume of services of auxiliary production, based on the data obtained, the standard and non-standard consumption of materials is calculated. In the system of technical and economic planning, planning and economic services calculate the standard cost of actual output, analyze actual costs, conduct a comparative analysis, calculate profitability and all necessary economic indicators.
The accounting system takes into account the movement of materials in production: tracks the release of material into production, standard and non-standard costs, conducts an inventory of work in progress, keeps records of the release of finished products.
In the accounting system, the accounting department controls the actual production costs and calculates the actual cost, fixes the actual overhead costs, which are then distributed to the accounts of the main production in proportion to the established bases.
The personnel, labor and wages management system records the actual production of workers, then it is replenished with the amounts of additional wages and deductions, after summing up the data on cost codes are transferred to the accounting system.
After the end of the billing period and summing up all the final data, the necessary financial statements and cost analysis forms are generated.
The proposed scheme for organizing the cost management process generally corresponds to the traditional process of planning and cost accounting. The introduction of an automation system into such a scheme will make it possible to reduce the complexity and time of calculations, allow us to calculate several possible options and choose the most optimal one. In the event that there is a sharp change in the prices of materials, with the presence of an automation system, you can quickly get a new cost of production and make timely and balanced decisions on selling prices.
The above functional composition of the cost management system represents the accounting and planning layer of management. Above this layer, there should be a layer constituting a decision support system that predicts and analyzes possible situations represented by other analysis tools.
To introduce an automation system into a generally accepted planning scheme at an enterprise, it is necessary to carry out a number of the following preliminary activities:
1) it is necessary to unify the coding system for accounting and planning department indicators to ensure comparability of planned and actual costs;
2) unification is also necessary for information prepared by technologists and designers and used by planners and economists;
3) it is necessary to fill in the regulatory framework of the system, which is carried out either by manually entering significant amounts of information, or with the help of specialized programs for transferring data from existing arrays, and then carry out work on reconciling the norms;
4) before starting practical work with the system, it is necessary to achieve the correct functioning of its logistics component, and then move on to the economic component;
5) it is possible to create and modify accounting reporting forms, set up means of tabular and graphical display of the analysis results.
As a result of using such a system at the enterprise, the information received will be more accurate and reliable, and it will be possible to carry out planned calculations in a shorter period. Thanks to the integration of applications both among themselves and with other modules of the system, it became possible to comprehensively automate the activities of the planning and economic department, production accounting, economists and accountants in the shops within a single interface. The release of economists from routine work contributes to a more thorough and high-quality approach to conducting economic analysis, strengthening their activities in cost analysis, comparison of economic indicators. Due to the fact that the calculations will be carried out on a computer, it will be possible to detail the accounting and calculations: go to accounting by type of product, to accounting for individual sections, processes, teams, etc. and on the cost of variable costs will increase the accuracy of the analysis, which will lead to the discovery of previously hidden reserves to reduce costs. This, in turn, will lead to a reduction in the cost of production and will enhance the competitiveness of production.
One of the options for automating manufacturing enterprises is the cost management subsystem offered by Parus Corporation. It consists of two applications - "Cost Accounting and Costing" and "Cost Planning" - oriented respectively to users of production accounting and economic planning department, but working in a single database. Both applications use a common description of the production process and a single regulatory framework. The cost management subsystem is based on interaction with accounting and warehouse accounting, financial management applications, as well as with third-party production planning modules, which facilitates the use of all the advantages of a corporate information system for data and process integration.
A very effective method of cost management in the enterprise development system is the involvement of a special working group that analyzes the enterprise's costs for the "Cost Reduction" project and finds reserves that help reduce costs at these facilities. The work of the involved group to reduce costs is carried out together with the employees of the enterprise, activities are jointly carried out aimed at improving the efficiency of the enterprise. A distinctive feature of the program is the direct participation of ordinary employees of the enterprise involved in all stages of work. Ordinary employees are trained according to a special program. They are trained in the methods of economic analysis, the ability to approach cost optimization economically savvy and gained experience in practice. The formation of a group of employees in the enterprise who have gained experience and have been practically trained in cost reduction work is a good prerequisite for continuing to optimize the production process after the departure of the cost reduction group by the enterprise.
The final product of the involved group is a series of activities aimed at analyzing the operation of the enterprise as a whole and developing methods for more efficient operation of the enterprise, the possibility of reducing costs that form the cost of the enterprise. Activities can be both technological and organizational in nature.
These activities give a huge positive result in reducing costs and increasing efficiency, but the most valuable is the formation of a labor resource, a potential that begins to think in economic categories. An ordinary worker is already interested not only in the issue of performing work, but also how much this work will cost, taking into account the costs incurred. People acquire the skills of economic analysis, they will already be able to ensure the implementation of the developed measures and, if necessary, will be able to find ways to reduce costs on their own without the help of involved groups, by the employees of their enterprise.
In management accounting, the main task is the efficiency and reliability of financial information. A manager who receives accurate financial information in a timely manner and in the required volume will be able to make the best management decision in a better position than with belated information.
When making managerial decisions, the manager's awareness of the costs of his enterprise is of great importance. More accurate cost accounting contributes to their correct and reasonable classification.
How competently the head of the enterprise will make a management decision that concerns the costs of the enterprise, prices, volume and sales of products, the financial position and financial results of the company will be so stable.
When analyzing the work of an enterprise, forecasting and planning its activities, the most convenient and effective method is the analysis of the ratio "costs - volume - profit". This analysis allows the manager to identify the ratio of fixed and variable costs, optimize the price and sales volume, and insure against possible risks.
When costs are divided into variable and fixed, this makes it possible to conduct a more in-depth management analysis based on the ratio of "costs - volume - profit". The activity of various business segments is subjected to analysis. The analysis is carried out on the basis of management accounting data. Having carried out such an analysis, it is possible to assess how efficient the use of material, labor and financial resources is, to predict the behavior of costs for various production volumes.
Such a management analysis allows the company to identify its weaknesses in time to avoid losses, to select more suitable and cost-effective products for production, to plan the work of production so that the company is profitable.
When the commodity market conditions are unfavorable, the level of sales may be reduced. In addition, in the early stages of the life cycle of an enterprise, when the break-even point has not yet been overcome, it is necessary to strive to reduce the fixed costs of the enterprise. When the position of the enterprise is stable, the products are in demand in the market, and the weight of the enterprise reaches a certain stability, the desire to reduce fixed costs can be weakened. During such a period, the enterprise can carry out its modernization and improvement.
When managing fixed costs, keep in mind that fixed costs are less amenable to rapid change. Their high level depends on the industry specifics of the enterprise, which determine the different levels of capital intensity of manufactured products, the differentiation of the level of mechanization and automation of labor.
However, any enterprise has a number of opportunities to reduce the share and amount of fixed costs. Among the ways to reduce fixed costs include reducing overhead costs, management costs, reducing the volume of a number of consumed utilities. In order to reduce the flow of depreciation deductions, it is possible to sell part of the unused equipment and intangible assets, instead of acquiring ownership of equipment, use short-term forms of leasing machines.
When managing variable costs, the main focus should be on ensuring their constant savings, since there is a direct relationship between the total value of costs, sales and production. Saving variable costs before the company overcomes the break-even point leads to an increase in marginal income, which allows more rapid overcoming of this point. When the break-even point is overcome, saving variable costs will directly increase the profit of the enterprise. It is possible to carry out a reduction in the number of workers in the main and auxiliary production, subject to an increase in the growth of their labor productivity. This may be a reduction in the quantity of raw materials, materials and finished products during periods of unfavorable commodity market conditions, and the conclusion of contracts on more favorable terms for the enterprise for the supply of necessary materials, etc.
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1The system of cost management at the enterprise in modern conditions is reflected. An integral part of the enterprise management system is the cost management system for the production and sale of products. The most important tasks for a unified information and control system of costs are: daily monitoring of the state of production facilities; the quantity and quality of raw materials used, production products; energy intensity and energy consumption of production facilities; accounting for costs at their places of origin, both for the main and for auxiliary production, with the ability to control costs up to the document; calculation of products, calculation of its cost; accounting and control of the movement of materials and reagents in the warehouses of the enterprise and the company as a whole; daily control of the availability of finished and certified products in the company's fleets, its movement upon shipment with automatic reflection in accounting; control over the execution of contracts; organization of a single information space at the enterprise.
cost management
cost price
cost reduction
the control
1. Tax code of the Russian Federation (part two). dated 05.08.2000 N 117-FZ (as amended on 04.10.2014).
2. Regulation on accounting "Expenses of the organization" PBU 10/99.
3. Labzunov P., Popov R. On the organization of the controlling system at industrial enterprises in Russia // Problems of theory and practice of management. – International Journal - 2003, No. 2.
4. Trubochkina M.I. Enterprise Cost Management: Proc. allowance. – M.: INFRA-M, 2007. – 218 p. - (Higher education).
5. David P. Doyle. Cost management: Strategic guidance / [transl. from English. I.V. Kozyrev and N.S. Sologub]. - Moscow: Wolters Kluver, 2006. - 264 p.
Management is a human activity that consists in influencing objects and processes, as well as the participation of people in them, carried out in order to give a certain direction to economic activity and obtain the desired results.
Enterprise management is the activity of an enterprise aimed at realizing the goals of the management object, subject to the rational use of available resources.
A control system is a set of interrelated elements, methods of implementing control technology, involving an impact on an object in order to change its state and process characteristics.
An integral part of the enterprise management system is the cost management system for the production and sale of products. This system has such management functions as cost forecasting and planning, organization and coordination of cost management, cost regulation, cost accounting and control (monitoring), their analysis, and others.
Forecasting the dynamics and level of costs for product groups and individual types of goods is associated with the strategy of the enterprise and is calculated mainly for 3-5 years. This forecast is based on a quantitative assessment of the factors that affect the level of costs, and their changes in the coming years in terms of quantity and cost. The main purpose of the production cost forecast is to determine the total cost of resources consumed in the production process (material, labor, cash) and calculate the expected profit for the long term.
Cost planning is the most important function of managing the production and economic activities of the enterprise. Cost plan - an integral part of the annual business plan of the enterprise, which plays an important role in the formation of the plan for labor and wages, the plan for the logistics of production and the production plan as a whole.
When drawing up a cost plan in modern conditions, it is necessary to provide for a decrease in unit costs compared to the base period. Cost reduction calculations should be based on technical and economic factors. Calculations by factors should be made taking into account the specifics of the enterprise.
The factors on the basis of which planning is carried out should be innovative and include: increasing the technical level of production; improvement of the organization of production and labor; increase in volume and change in the structure of production; production development.
Coordination of costs (normative method) is a comparison of actual costs with planned (normative), the definition of deviations and the adoption of prompt measures to eliminate them. Timely coordination and cost control allows the organization to stick to the plan and achieve planned performance.
Current costs are the object of short-term forecasting. Current costs are reflected in estimates (annual, quarterly, monthly) for the enterprise as a whole, its individual divisions or individual elements (items) of expenses.
At enterprises, an estimate of production costs is compiled, including labor costs along with social security contributions, material costs, expenses for the maintenance and operation of machinery and equipment, as well as other expenses associated with production; an estimate of management expenses, which provides for the costs of personnel management; and an estimate of commercial expenses, which takes into account the costs associated with the sale of products. One of the main tasks of short-term forecasting is the substantiation of priority expenditures.
When managing costs, strategic and innovation-oriented goals for the development of the enterprise in the long term are priority. An increase in costs should be considered justified if it contributes to the growth of the competitiveness of products and the preservation of a competitive position. At the same time, new ways to reduce costs without sacrificing product quality should be sought. And if, on the basis of marketing research, a trend of sustainable demand for products in the long term is revealed, the cost minimization strategy should maintain the innovative orientation of the enterprise.
In order to maintain leadership in low costs, in the current economic conditions, it is necessary to control all factors affecting costs at all stages of the production cycle. And this means that it is necessary to look for possible ways to save on the volume of production; to try to increase the intensity of the use of production capacities; optimize communication with suppliers and customers; continuously implement measures to reduce costs; strive to shorten the operating cycle.
Organizational and economic methods of cost reduction in modern conditions include:
1. Using competition between suppliers of material resources, informing suppliers about more favorable terms of supply offered by their competitors.
2. Cosourcing - organization of joint purchases of material resources jointly with other enterprises, including competitors, in the interests of obtaining discounts for the volume of purchases; creation of joint "electronic platforms", etc.
3. Outsourcing - transfer to third parties (outsourcers) of performing certain functions, works, business processes, operations, etc. [, with. 47-54].
A cost management system will be effective if its requirements are fully met.
To improve cost management activities, it is extremely important to properly organize cost accounting, as close as possible to the time and place of their occurrence. The marginal cost level that meets market requirements must be determined in advance, i.e. to the organization of the production of a product, starting directly from the stage of its design and construction.
As stated above, cost management at an enterprise includes the process of planning production costs for the elements of costs and the cost of certain types of products, monitoring the implementation of these plans, identifying reserves to reduce the costs of the enterprise and the cost of certain types of products.
The cost price is one of the components of economic activity and, accordingly, one of the most important elements of the management object. The cost price reflects the costs of the enterprise associated with the production and sale of a particular product.
The costs of production and sale of products (works, services) are the costs of the enterprise, expressed in cash and associated with the use of raw materials, components, fuel, energy, labor, fixed assets, intangible assets and other non-capital costs in the production process .
The concept of cost appears in many regulations of the Russian Federation. At the same time, at least two aspects of this term should be distinguished - economic and tax.
A prerequisite for obtaining reliable information about the cost of production is a clear definition of the composition of costs.
The composition of costs for tax purposes is reflected in the Tax Code. The accounting regulation "Expenses of the organization" determines the costs attributable to the cost of products (works, services) and the costs incurred from the relevant sources of financing (profits of the organization, special purpose funds, targeted financing and targeted revenues, etc.) for the purposes of financial reporting.
In accordance with the current tax legislation of the Russian Federation, for tax purposes, the costs incurred by the organization are adjusted taking into account the limits, norms and standards approved in the prescribed manner. This means that in the tax legislation, part of the costs does not reduce the tax base, or is not reduced in full. That is, the company carries out part of the costs at the expense of its net profit.
In accounting, when determining the composition of costs, the main document is PBU Regulation on the composition of costs 10/99. When organizing accounting for production costs, it is necessary to use industry instructions on planning, accounting and calculating the cost of production in the part that does not contradict the above Regulation.
Based on the Tax Code and PBU 10/99, ministries, departments, intersectoral state associations, concerns and other organizations develop sectoral regulations on the composition of costs and guidelines on planning, accounting and calculating the cost of products (works, services) for subordinate organizations.
Cost analysis is one of the elements of the control function in the cost management system. It allows you to evaluate the efficiency of using all the resources of the enterprise, identify reserves to reduce costs, prepare the basis for making effective management decisions.
Thus, cost management is a dynamic process that includes management actions, the purpose of which is to achieve the main goal of the enterprise.
Cost management is based on the search for cost-effectiveness, and characterizes only the use of a certain type of resources. For a complete picture of the overall cost effectiveness, a generalized description of cost and natural indicators is needed. This goal is served by overall and comparative cost-effectiveness.
When managing costs in an enterprise, you should pay attention to the following points:
1. The efficiency of the cost centers largely depends on the content of the cost center reports.
2. Should pay more attention to ways to reduce production costs.
Obtaining the greatest effect at the lowest cost, saving labor, material and financial resources depends on how the enterprise solves the issues of reducing the cost of production.
The savings that cause the actual cost reduction are calculated according to the following composition of factors:
1) Raising the technical level of production. This is the introduction of a new, progressive technology, mechanization and automation of production processes;
2) Improving the use and application of new types of raw materials and materials;
3) Changing the designs and technical characteristics of products.
3. Improving the organization of production and labor. Cost reduction can occur as a result of changes in the organization of production, forms and methods of labor with the development of production specialization.
4. It is necessary to increase the profit of the enterprise by reducing the cost of works and services by improving technology, mechanizing work, saving fuel, electricity, and efficient use of transport.
Increase the volume of works and services provided by:
1) increase in sales markets for manufactured products;
3) improving the quality and reducing the time of work and services performed, creating maximum convenience for customers.
5. When calculating the cost of finished products, costing can be used with the inclusion of all costs (absortpting costing) or only part of them, that is, direct costs (direct costing). The choice of one of the two methods affects the value of the cost of production, as well as the financial statements of the enterprise.
The most important tasks for a unified information and control system of costs are:
Daily monitoring of the state of production facilities; the quantity and quality of raw materials used, production products; energy intensity and energy consumption of production facilities;
Accounting for costs at their places of origin, both for the main and for auxiliary production, with the ability to control costs before the document; calculation of products, calculation of its cost;
Accounting and control of the movement of materials and reagents in the warehouses of the enterprise and the company as a whole;
Daily monitoring of the availability of finished and certified products in the enterprise's fleets, its movement upon shipment with automatic reflection in accounting;
Daily monitoring of the status and dynamics of receivables and payables, based on a single reference book of the company's clients;
Monitoring the execution of contracts;
Organization of a single information space at the enterprise.
As surveys of specialists of enterprises in the West show, controlling can be an effective tool in operational management. Its practical application extends entirely to cost management. The main tasks of operational cost management coincide with the tasks of controlling, but among them it is useful to highlight:
Regular monitoring of the implementation of planned targets;
Establishment of deviations from planned targets, norms and standards of costs;
Determination of the reasons for deviations and growth of costs and identification of managers responsible for them;
Development of proposals to eliminate negative trends and save costs.
Creation of an independent control and analysis center at enterprises is the main condition for the effective solution of these tasks.
Summing up, it should be noted once again that in the current economic situation on the market, cost management for production and sales of products should be given special attention in order to minimize costs to maintain a stable position in the market and the competitiveness of products and the enterprise as a whole.
Reviewers:
Biryukov A.N., Doctor of Economics, Professor of the Department of Economic Theory and Analysis, Bashkir State University, Sterlitamak Branch, Sterlitamak;
Kazakova OB, Doctor of Economics, Professor of the Department of Innovative Economics, Bashkir State University, Institute of Economics, Finance and Business, Ufa.
Bibliographic link
Ibragimova G.M., Akchurina A.M. SYSTEM OF MANAGEMENT OF COSTS OF AN ENTERPRISE IN RUSSIA IN MODERN CONDITIONS // Modern problems of science and education. - 2014. - No. 6.;URL: http://science-education.ru/ru/article/view?id=16460 (date of access: 03/30/2019). We bring to your attention the journals published by the publishing house "Academy of Natural History"
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