Fixed and variable costs. variable costs

Test

Task 1. Determine the average annual cost of the OPF, if it is known:

The cost of the OPF at the beginning of the year is 8825 + 3 * N thousand rubles.

Entered during the year:

Retired during the year:

Based on the results of the calculations, draw conclusions about the dynamics of the BPF.

Task 2. According to Task 2, determine the main performance indicators for the use of the OPF, if it is known that the sales proceeds will be 4400 + 10*N thousand rubles, and the average headcount was 375 + 3*N people.

Task 3.

1. Evaluate the economic feasibility of the technical complex modernization project using two methods under the following conditions:

- the planned duration of the project is 5 years;

The volume of investments is 820+10n thousand rubles;

Unit interest rate 12%+0.1*n;

The planned net profit received by the organization is distributed over the years in thousand rubles:

2. Determine the payback period of investments.

TASK №4

A candy company chooses one of three production technologies, each with a different combination of inputs (labor and capital). Data on the applied technologies are given in Table 1.

Table 1.

Characteristics of candy production technologies

Output level	Technology
Output level	BUT	B	AT
1	(9+x)/(2+x)	(6+x)/(4+x)	(4+x)/(6+x)
2	19+х/3+х	10+x/8+x	8+x/10+x
3	29+х/4+х	14+x/12+x	12+x/14+x
4	41+х/5+х	18+х/16+х	16+х/19+х
5	59+х/6+х	24+х/22+х	20+x/25+x
6	85+x/7+x	33+х/29+х	24+х/32+х
7	120+x/8+x	45+х/38+х	29+х/40+х

Note:

In the numerator - labor costs; the denominator is the cost of capital.

All indicators are measured in units. in Week.

Suppose that the price of a unit of labor is 100 rubles, and the price of a unit of capital is 200 rubles.

§ Establish which production technology the firm will choose at each level of output;

§ Determine the total costs at each level of output;

§ Suppose that the unit of labor has increased to 200 rubles, while the price of a unit of capital has remained the same. Will this change in price affect the firm's choice of technology?

TASK #5

Table 2. shows data on the total costs of the company in the long run.

Table 2.

The company's costs in the long run

Based on the information provided, answer the following questions:

What is average cost and marginal cost?

TASK #6

The firm produces and sells goods, the average variable cost of production and sale of which is 100 rubles. for 1 piece The product is sold at a price of 120 rubles. Fixed costs of the company per month amount to 60 thousand rubles. Calculate how much profit the company can get per month if it sells 4 thousand, 5 thousand, 6 thousand pieces of this product. Determine the coverage amount and average coverage. Enter the data in table 3.

Table 3

Profit of the company with different volumes of output, thousand rubles.

Note: The variant number must be added to all data values.

TASK №7

The company produces and sells two goods at the same time: A and B. Data on sales volumes, prices and costs are shown in table 4. Calculate:

1. The amount of profit received by the firm per month;

2. Average coverage for each product;

3. Coverage ratio for each item;

4. The amount of profit that the company will receive if it expands the sale of product A to 7000 units, and product B to 4500 units.

Enter the data in table 5.

Table 4

Sales volume, prices of goods A and B and production costs

Note: The variant number must be added to all data values in the table.

Table 5

The procedure for calculating the average value and coverage ratio, as well as the size of the company's profit

Indicators
Indicators	BUT	B
Sales volume, pcs.	6000	4000
Variable costs, thousand rubles:
- raw materials
- wage
- variable manufacturing overheads
- variable sales overheads
TOTAL variable costs
Sales proceeds, thousand rubles
Coverage amount, thousand rubles
Fixed costs, thousand rubles
Profit, thousand rubles
Average coverage, rub.
Coverage ratio			-

TASK #8

The company produces and sells one product, the variable costs per unit of which are shown in table 6., rub.

Table 6

Variable unit costs

The goods are sold at a price of 60 + 4x rubles, fixed costs are 136 + 4x thousand rubles. Determine how much goods the company must sell to ensure receipt of 32 + 4x thousand rubles. arrived.

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

Fixed and variable costs, their accounting is an integral part of not only the calculation of the cost of production, but also the analysis of the success of the enterprise as a whole.

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

variable costs

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

Variable costs are either direct or indirect. If, for example, the enterprise produces bread, then the cost of flour is a direct variable cost, which increases in direct proportion to the volume of bread produced. Direct variable costs may decrease with the improvement of the technological process, the introduction of new technologies. However, if the refinery refines oil and as a result receives, for example, gasoline, ethylene and fuel oil in one technological process, then the cost of oil for the production of ethylene will be variable, but indirect. Indirect variable costs in this case, it is usually taken into account in proportion to the physical volumes of production. So, for example, if during the processing of 100 tons of oil, 50 tons of gasoline, 20 tons of fuel oil and 20 tons of ethylene are obtained (10 tons are losses or waste), then the cost of 1.111 tons of oil (20 tons of ethylene + 2.22 tons of waste) is attributed to the production of one ton of ethylene /20 tons of ethylene). This is due to the fact that in a proportional calculation, 20 tons of ethylene account for 2.22 tons of waste. But sometimes all the waste is attributed to one product. For calculations, data from technological regulations are used, and for analysis, actual results for the previous period.

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

Thus, the cost of gasoline for the transportation of raw materials during oil refining is indirect, and for a transport company it is direct, as it is directly proportional to the volume of transportation. The wages of production personnel with accruals are classified as variable costs with piecework wages. However, with time wages, these costs are conditionally variable. When calculating the cost of production, planned costs per unit of production are used, and in the analysis, actual costs, which may differ from planned costs, both upwards and downwards. Depreciation of fixed assets of production, referred to a unit of output, is also a variable cost. But this relative value is used only when calculating the cost of various types of products, since depreciation charges, in themselves, are fixed costs / costs.

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Thus, total variable costs can be calculated using the formula:

Rperem \u003d C + ZPP + E + TR + X,

C - the cost of raw materials;

ZPP - salary of production personnel with deductions;

E - the cost of energy resources;

TR - transportation costs;

X - other variable expenses that depend on the profile of the company.

If an enterprise produces several types of products in quantities W1 ... Wn and, per unit of production, variable costs are P1 ... Pn, then the total amount of variable costs will be:

Pchange = W1P1 + W2P2 + ... + WnPn

If an organization provides services and pays agents (for example, sales agents) as a percentage of sales, then the remuneration of agents is a variable cost.

fixed costs

The fixed costs of a business are those that do not change in proportion to the volume of production.

The share of fixed costs decreases with the growth of production volume (scale effect).

This effect is not inversely proportional to output. For example, an increase in production volume may require an increase in the number of accounting and sales departments. Therefore, they often talk about conditionally fixed costs. Fixed costs also include expenses for management personnel, maintenance of the main production personnel (cleaning, security, laundry, etc.), organization of production (communications, advertising, banking expenses, travel expenses, etc.), as well as depreciation. Fixed costs are expenses for, for example, the rental of premises, and the rental price may change due to changes in market conditions. Fixed costs include some taxes. These are, for example, the single imputed income tax (UTII) and the property tax. The amounts of these taxes may change due to changes in the rates of such taxes. The amount of fixed costs can be calculated using the formula:

Rpost \u003d Zaup + AR + AM + H + OR

The sum of variable and fixed costs forms the cost of products (works, services).

The dependence of variable and fixed costs on the volume of production per output and per unit of output is shown in fig. 10.2.

Fig.10.2. Dependence of production costs on the quantity of output

The figure below clearly shows that fixed costs per unit output decreases as output increases. This indicates that one of the most effective ways to reduce the cost of products is to use production capacities as fully as possible.

http://sumdu.telesweet.net/doc/lections/Ekonomika-predpriyatiya/12572/index.html#p1

fixed costs do not depend on the dynamics of the volume of production and sales of products, that is, they do not change when the volume of production changes.

One part of them is related to the production capacity of the enterprise (depreciation, rent, wages of management personnel on time wages and general business expenses), the other part is related to the management and organization of production and marketing of products (costs for research, advertising, employee training, etc.). .d.). It is also possible to allocate individual fixed costs for each type of product and common for the enterprise as a whole.

However, fixed costs calculated per unit of output change with changes in the volume of production.

variable costs depend on the volume and change in direct proportion to the change in the volume of production (or business activity) of the company. As it increases, variable costs also grow, and vice versa, they decrease when it decreases (for example, the wages of production workers manufacturing a certain type of product, the cost of raw materials and materials). In turn, as part of variable costs allocate costs proportional and disproportionate . proportional costs vary in direct proportion to the volume of production. These include mainly the cost of raw materials, basic materials, components, as well as piecework wages of workers. disproportionate costs are not directly proportional to the volume of production. They are divided into progressive and degressive.

Progressive costs increase more than output. They arise when an increase in production volume requires high costs per unit of output (costs for piecework-progressive wages, additional advertising and sales costs). The growth of degressing costs lags behind the increase in output. Degressive costs are usually the costs of operating machinery and equipment, a variety of tools (accessories), etc.

On fig. 16.3. graphically shows the dynamics of the total fixed and variable costs.

Dynamics of unit costs looks different. It is easy to build on the basis of certain patterns. In particular, variable proportional costs per unit of output remain the same regardless of the volume of production. On the graph, the line of these costs will be parallel to the x-axis. Fixed costs per unit of production with the growth of its total volume decrease along a parabolic curve. For regressing and progressive costs, the same dynamics remains, only more pronounced.

Variable costs, calculated per unit of output, are a constant value under given production conditions.

More accurately named permanent and variable costs conditionally fixed and conditionally variable. The addition of the word conditionally conditionally means that the variable costs per unit of output may decrease with a change in technology at large output volumes.

Fixed costs can change abruptly with a significant increase in output. At the same time, with a significant increase in output, the technology of its manufacture changes, which leads to a change in the proportional relationship between the change in the quantity of production and the value of variable costs (the slope on the graph decreases).

/> variables

Figure Total costs of the enterprise

The cost of all products calculated as follows:

C - total cost, rub.; a - variable costs per unit of output, rub; N - output volume, pcs; b - fixed costs for the entire volume of production.

Cost calculation units of production:

C ed \u003d a + b / N

With a more complete use of production capacity, the unit cost of production decreases. The same happens with a significant increase in the scale of output, when variable and fixed costs per unit of output are simultaneously reduced.

Analyzing the composition of fixed and variable costs, we deduced the following relationship: an increase in revenue will lead to a significantly greater increase in profit if fixed costs remain unchanged.

Besides, there are mixed costs, which contain both constant and variable components. Some of these costs change when the volume of production changes, while the other part does not depend on the volume of production and remains fixed during the reporting period. For example, a monthly telephone fee includes a fixed amount of the subscription fee and a variable part that depends on the number and duration of long-distance telephone calls.

Sometimes mixed costs are also called semi-variable and semi-fixed costs. For example, if an enterprise's economic activity is expanding, then at some point there may be a need for additional storage facilities to store its products, which, in turn, will cause an increase in rental costs. Thus, fixed costs (rent) will change with activity levels.

Therefore, when accounting for costs, they must be clearly distinguished between fixed and variable.

The division of costs into fixed and variable is important in choosing an accounting and costing system. In addition, this grouping of costs is used in the analysis and forecasting of the break-even production and, ultimately, for the choice of the economic policy of the enterprise.

In paragraph 10 of IFRS 2"Reserves" defined three groups of costs, included in the cost of production, namely: (1) production variable direct costs, (2) production variable indirect costs, (3) production fixed indirect costs, which will be called production overheads.

Table Production costs in cost according to IFRS 2

Cost type	Composition of costs
variable direct	raw materials and basic materials, the wages of production workers with accruals, etc. These are the costs that can be attributed directly to the cost of specific products based on primary accounting data.
indirect variables	such costs that are directly dependent or almost directly dependent on changes in the volume of activity, however, due to the technological features of production, they cannot or are not economically feasible to be directly attributed to manufactured products. Representatives of such costs are the costs of raw materials in complex industries. For example, when processing raw materials - coal - coke, gas, benzene, coal tar, ammonia are produced. Divide the costs of raw materials by types of products in these examples can only indirectly.
permanent indirect	overhead costs that do not change or hardly change as a result of changes in the volume of production. For example, depreciation of industrial buildings, structures, equipment; the cost of their repair and operation; expenses for the maintenance of the shop management apparatus and other shop personnel. This group of costs in accounting is traditionally distributed by type of product indirectly in proportion to any distribution base.

Similar information.

As we remember, we need a business plan not only to understand the goals and ways to achieve them, but also to justify the profitability and the possibility of implementing our investment project.

When doing project calculations, you come across the concept of fixed and variable costs, or expenses.

What is it and what is their economic and practical meaning for us?

Variable costs, by definition, are costs that are not fixed. They are changing. And the change in their value is associated with the volume of output. The larger the volume, the higher the variable costs.

What cost items are included in them and how to calculate them?

All resources that are spent on the production of products can be attributed to variable costs:

materials;
accessories;
employees' wages;
electricity consumed by a running machine engine.

The cost of all the necessary resources that need to be spent to produce a certain amount of output. These are all material costs, plus the wages of workers and maintenance personnel, plus the cost of electricity, gas, water spent in the production process, plus the cost of packaging and transportation. This also includes the costs of creating stocks of materials, raw materials and components.

Variable costs need to be known per unit of output. Then we can calculate at any time the total amount of variable costs for a certain period of time.
We simply divide the estimated volume of production costs by the volume of production in physical terms. We get the variable costs of producing a unit of output.

This calculation is done for each type of product and service.

How is unit costing different from the variable cost of producing one product or service? Fixed costs are also included in the calculation.

Fixed costs are almost independent of production volumes.

These include:

management expenses (expenses for maintaining and renting offices, postal services, travel expenses, corporate communications);
expenses for the maintenance of production (rental of industrial premises and equipment, maintenance of machine tools, electricity, space heating);
marketing expenses (product promotion, advertising).

Fixed costs remain unchanged until a certain point, until the volume of production becomes too large.

An important step for determining variable and fixed costs, as well as the entire financial plan, is the calculation of personnel costs, which can also be carried out at this stage.

Based on the data that we received in the organizational plan on the structure, staffing, mode of operation, as well as focusing on the data of the production program, we calculate personnel costs. We make this calculation for the entire period of the project.

It is necessary to determine the amount of remuneration for management personnel, production and other employees, as well as the total amount of expenses.

Do not forget to take into account taxes and social contributions, which will also be included in the total amount.

All data are presented in tabular form for ease of calculation.

Knowing fixed and variable costs, as well as product prices, you can calculate the break-even point. This is the level of sales that ensures the self-sufficiency of the enterprise. At the break-even point, there is an equality of the sum of all costs, fixed and variable, and income from the sale of a certain volume of products.

Analysis of the break-even level will make it possible to draw a conclusion about the sustainability of the project.

The enterprise should strive to reduce variable and fixed costs per unit of output, but this is not a direct indicator of production efficiency. It is necessary to take into account the specifics of the enterprise. High fixed costs can be in high-tech industries, and low - in underdeveloped with old equipment. This can also be observed in the analysis of variable costs.

The main goal of your firm is to maximize economic profit. And this is not only reducing costs in any way, but also using various tools to reduce production and management costs by using more productive equipment and increasing labor productivity.

They are divided into variables and constants. Their main difference is that some change with an increase in production volume, while others do not. However, fixed and variable costs include costs related to the production and sale of products. With the termination of production activities, part of the costs disappears and becomes equal to zero. Consider what variable costs include. An example of costs will also be given in the article.

Composition of expenses

Variable costs include:

Commercial expenses (percentage of sales to sales managers and other remuneration, as well as % that are paid to outsourcing companies).
Cost of goods produced.
Salary of working personnel (part of the salary, which depends on the standards met).
The cost of fuel, raw materials, materials, electricity and other resources involved in production activities.

Variable costs also include some taxes: VAT, excises, deductions for the simplified tax system, UST from premiums.

Purpose of calculation

Behind each coefficient, indicator or concept, it is necessary to see their economic meaning. If we talk about the goals of the enterprise, then, in general, there are two of them: reducing costs or increasing income. When generalizing these concepts, the profitability (profitability) of the company arises. The higher this indicator is, the more stable the financial position of the company will be, there will be more opportunities to attract additional borrowed funds, expand technical and production capacities. The enterprise in this case can increase its own value in the market, enhance investment attractiveness. Separation is used in management accounting. Company managers need to know what variable costs include. The line on which this group of expenses is reflected is not in the financial statements. Determining the magnitude of these costs in the overall structure allows you to analyze the company's activities. Management, knowing what the variable costs include, the balance of expenses and income gets the opportunity to consider different management strategies to increase the profitability of the company.

Production and sales volume

To better understand what variable costs include, you should consider their division depending on certain features. According to the volume of production and sales, there are:

How to reduce costs?

One of the options for reducing variable costs is the use of "scale effects". It appears with an increase in production volume and the transition from serial to mass production of products. The graph shows that as output increases, a certain point is reached. In it, the relationship between the amount of costs and production volume becomes non-linear. At the same time, the rate at which the change in variable costs occurs is lower than the intensity of growth in the output/sales of goods. Reasons for this effect include:

Static indicator

On this basis, the costs are divided into:

General.
Medium.

Total variable costs include all costs related to this category across the entire product range. The average cost is for 1 unit. product or group of products.

Financial Accounting

When accounting, allocate:

Attitude to process

According to this criterion, production and non-production types are distinguished. The first relate to the production process directly. Such variable costs include the cost of materials, raw materials, energy, fuel resources, wages of workers, and so on. Non-production costs are not directly related to output. These include, for example, transportation costs, commissions to agents and other administrative and commercial costs.

Calculation

The formula looks like this:

- Variable costs = Costs for raw materials + materials + fuel + electricity + bonus to salary +% of sales.

- Variable costs = gross - fixed costs.

Breakeven point

Consider the role of variable costs in its determination. The break-even point directly depends on these costs. When a company reaches a certain production volume, a moment of equilibrium occurs. At this point, the amount of losses and profits are the same. In this case, net income is equal to 0, and marginal income is equal to fixed costs. This point shows the minimum critical production level at which the enterprise is considered profitable. The company's task is to form a safety zone and create such a level of output and sales of products that would ensure maximum remoteness from the break-even moment. The further the company is from this point, the higher its financial stability, profitability, competitiveness. As variable costs increase, this point shifts.

Important point

The model discussed above usually operates with linear relationships between production volume and profit/costs. In practice, these relationships are often non-linear. This situation is due to the fact that the size of output is influenced by a number of factors. These include: