A novice entrepreneur must necessarily consider whether his business will be profitable. One of the main aspects of this issue is production costs .
The economic cost of production is also called the cost of the enterprise for the production and marketing of goods or services. They are expressed in cash and include the valuation of labor services and the investment of capital necessary to carry out productive activities. Production costs directly affect the calculation of the cost of production.
The economic literature describes various types of production costs in several classifications. Let's consider some of them.
Actual - those costs that have a direct impact on the adoption of economic decisions. They are opposed to “sediment” costs — funds spent on insured events, writing off debts, and others that will never return to circulation.
Explicit costs (accounting costs) are expressed in accounting calculations. They are determined in accordance with the Regulation established by the Government of the Russian Federation on the composition of the costs of production and sales of products (from 05.08.1992 g). These include material costs; deductions for social needs; labor costs, depreciation of fixed assets; other costs.
Entrepreneurial costs include, in addition to accounting, financing of investments in fixed assets and working capital, various payments (taxes, excise taxes, dividends on shares, customs duties). This may include the costs of missed opportunities, which are called imputed .
The costs associated with the release of a certain volume of products are called cumulative . Of these, the middle ones are distinguished - they are per unit volume of output. Marginal costs are calculated per unit when the volume changes.
Production costs can be constant and variable. Constants do not depend on changes in factors of production, output, etc. Such costs include the maintenance of the territory, buildings, and management personnel. Variable costs, in contrast, are subject to change depending on the volume of production. This may be the cost of acquiring materials, raw materials, remuneration of additional workers, etc. In this regard, there are still full, or total production costs , including both fixed and variable.
Experts note that the allocation of costs on the principle of fixed and variable has real economic meaning. This approach allows you to determine the competitiveness of the enterprise, plan profit growth and decrease in loss ratio and more.
Direct costs are also allocated , which are calculated specifically in the cost of production. In addition, it is necessary to take into account the operating costs associated with equipment, machinery, transport, etc.
Thus, the costs that significantly affect the development of production in general are divided into groups:
a) for primary economic elements (for example, labor costs);
b) for items of expenditure (these are items of costing - raw materials, fuel, energy, operation, etc.);
c) by the method of allocating costs to the cost of production (direct - indirect);
g) on the role in the formation of the cost of production (the main - invoices); e) according to the degree of dependence on changes in the volume of production; e) depending on the time of occurrence (current or future expenses of future periods).
Cost accounting for entrepreneurial activity is necessary to calculate the cost of goods or services. Moreover, reducing production costs is an important factor in the development of production. There are many ways to reduce costs that experienced managers use. This means that a novice entrepreneur should study this issue.