2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16
When organizing production, an institution, a firm, any entrepreneur, manager usually uses the rule: invest the minimum in the business, get the maximum out of everything. But no one can do without costs, or to be more precise, without production costs, the types of which we will consider in this article.
At different times, economists from different countries classified such expenses according to their models. The most popular of these in the twentieth century was the concept of Karl Marx. He divided the costs of production, their types, to be more precise, into circulation and production. The latter included the cost of purchasing raw materials, materials, energy costs, as well as wage payments. The former bore all the costs associated with the sale of products.
Modern reality has made its adjustments. And at the heart of economic analysis today, production costs, their types, structure differ both in quantity and in form with content. So, expenses are generally combined into one large group. It's called gross cost. They're ininclude two subgroups: constants and variables.
The essence and types of production costs will be explained starting with fixed costs. So, any enterprise bears the costs of maintaining, renting, repairing premises, structures, buildings. This is not the only constant factor. Interest on loans, maintenance of security staff or payment of a contract for such a service, purchase and maintenance of equipment - all this must also be included in the amount of costs.
The main types of production costs contain such a variety as variable costs. The latter depend on the volume of products produced and include raw materials, materials, wages of workers, costs for energy carriers, and the like.
In order for the economic analysis of the enterprise to be carried out accurately and scrupulously, it is customary to derive averages. According to a rather simple formula, they are calculated:
- Average fixed costs. To obtain this indicator, you need to find the quotient between the total fixed costs and the amount of output.
- Average variable costs. The calculation algorithm is the same, only the expense variable changes.
But the economic analysis does not end with the above calculations. An important characteristic in it is the value of the maximum profit level. To calculate it, a conclusion is needed about the highest productivity of the enterprise. That is, the calculation of the maximum number of products produced incertain period. There is such a thing as the marginal cost of production, the types of which differ from the above. These are over-costs for the production of additional products.
Production costs, their types, are calculated in Russia and in Western countries using different methods. The point is that the Russian Federation inherited from the USSR the concept of cost, which by and large includes not only the costs associated with the main output of products, but also excess ones. Western economists attribute all additional costs to the main types of costs.
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