Any commercial structure is engaged in profit. In any case, such a wording is very often found in the charter documents of legal entities. Profit is calculated as the difference between income and expenses. The economic analysis system contains various indicators on the basis of which the monitoring of the current activity of the company is carried out. They are natural and settlement. Among these indicators are gross output, labor productivity, profitability, and many others.
Companies involved in the production of goods need to constantly monitor the market. On the one hand, one must have information about the quality of the goods that competitors produce. About what requirements and wishes for quality products expressed by consumers. On the other hand, it is necessary to keep abreast of the technical policy pursued by suppliers of raw materials, materials and components. Replacing any component in a complex technical product may affect its performance and cost. And such an indicator as gross output is always the subject of consideration by managers and technical specialists.
Focusing on market demand, the company's management is developing a production program for a certain period. Once, under the conditions of planned housekeeping, such programs were drawn up for five years. At the same time, the five-year plan was developed for annual tasks. Today, a common approach is not observed, and each company organizes its activities in its own way. It often happens that you want to “throw on the market” a test batch of products. It can be televisions or washing machines, or cars. All costs associated with the production of this batch are accounted for separately. And such an indicator as gross output, including.
A large number of different services and specialists are involved in the production of technically complex products. From design to packaging of the finished product. In order for the washing machine to make life easier for many hundreds of thousands of people, designers and logisticians show their intellectual abilities and capabilities of modern technologies. Materials and components are delivered to assembly lines from different parts of the world. And all this set is subject to strict accounting. After all, gross output is the sum of all finished products that are transferred to the warehouse, and those that are still in the process of production. It should be clarified that the account is maintained in monetary terms.
Experienced economists and managers, when evaluating production efficiency, are usually interested in two or three indicators. Indeed, gross output, the formula of which is very simple, can broadly characterize the profitability of the company. It also shows the quality of management. With a high quality of management and an appropriate level of technological culture, gross output should be equal to marketable. In other words, if the materials and components were prepared for the production of, say, two hundred washing machines, then after their final assembly in the warehouse there should not be a single unused part.
Of course, in real conditions, only leading companies in their production sector achieve such results. As practice shows, collecting the same washing machines, logistics specialists make an excess supply of particularly complex components. For example, for the production of ten machines, they order eleven electric motors. Such a reserve of 10% of the required volume is considered quite normal. However, it is reflected in the reporting documents as the freezing of working capital. Washing machines of this type are no longer planned to be produced, and the extra engine will have to be written off at a loss.