The concept and types of production costs are familiar to almost every modern person. They represent costs, which in any case are required to ensure the normal functioning of the organization, the implementation of its marketing and production activities. The costs associated with economic activity are faced by each company, without exception, but at the same time they are very diverse. Types of costs can have the following classification:
According to the role in the formation of the cost of services, works, products, the main and overhead costs are distinguished. The main costs attributable directly to the production and technological process. Overhead costs are aimed at creating all the necessary conditions for the normal operation of the enterprise, which is associated with the manufacture of products.
In terms of homogeneity, spending is simple and complex. Simple expenses are made depending on the specialization of the company. Comprehensive costs are the sum of the costs of all departments and production units of an organization.
Depending on the time of occurrence, such types of costs as current and future are noted. Current costs are those that arise directly in the manufacturing process of goods. They are the basis for further work planning. Future is the organization’s expenses that it will have to bear in the future.
In order to correctly decide how to organize output, costs, distribution of factors of production and resources, one should take into account any potential opportunity, especially those that seem most acceptable from the point of view of profitability and profit. The ability of alternative or more economical use of resources must also be considered. This can help the organization reduce production costs when planning financial activities.
At the planning stage, the organization notes the following types of costs:
- Accounting - determine all the expenses of the current period for the acquisition of fixed assets, raw materials and manufacturing factors, the main of which is labor.
- Internal - this is the amount of income that could be obtained with a more rational and economical expenditure of production factors and material resources.
- Economic. They are expressed by the total value of accounting and internal costs.
- Reimbursable - expenses of the organization that over time come back. An example is production costs, which after implementation will be fully covered.
- Non-repayable - one-time expenses, for example, such as the creation and registration of an organization, its insurance, etc. It must be said that non-repayable types of costs are the only ones that cannot be found an alternative.
In the case when the basis of cost analysis of the enterprise is the volume of output, we can identify two types of costs:
- Permanent. They are in no way dependent on the production of goods and the provision of services. This includes monthly regular costs, for example, rent, electricity and gas, workers' salaries.
- Variables. This type of expense directly depends on the amount of production.
Together, fixed and variable types of costs are represented by gross, i.e. they also include depreciation.
Average production costs are due to expenses per unit of manufactured products. Marginal costs determine the cost of the produced additional unit of production.
It should be noted that to know the concept and types of costs is very important, because this will help to avoid unnecessary expenses.