In the concept of management accounting costsoccupy an important place, because in the course of their current activities, their analysis is mandatory. Conditionally constant costs are general economic expenses, advertising costs, as well as those that do not depend on the volume of production. This part of the costs is for each organization, so its study and optimization make it possible to increase profits.
Why do you need to divide costs into classes?
To analyze the costs of the enterprise, it waseasier and more efficient, they are usually classified according to certain criteria. This division allows us to determine their correlation and to calculate how each separate item of costs affects the cost of production and the profitability of the business as a whole.
That the structure of expenses of the enterprise hadorder, it is necessary to effectively maintain accounts and assign costs to objects. For this purpose, expenses are classified according to similar characteristics. The choice of differentiation determines the object: if it changes, it can entail a change in the cost category.
Types of classifications:
- Subjective. Costs are grouped according to specific characteristics: direct or indirect, permanent or variable.
- Objective. In this case, subjective classification is attached to a specific object.
At each enterprise costs can bedifferentiated in different ways, so that the cost structure is clear and understandable. Management accounting allows you to choose the most optimal method. It should be noted that all costs are grouped by type of expenditure, cost bearers and the place where they arise.
By types, costs can be divided according to economically similar factors and by costing items.
Cost carriers are products, types of work or services. This category of expenditure is necessary in order to determine the unit cost of production.
The costs and their classification depend on the placeappearance: it can be production workshops or other units. It is advisable to group expenses in the accounting so that the information is as accessible as possible for the analysis of costs and the definition of an economy strategy.
Costs and their classification
The enterprises distinguish the main types of costs:
- conditionally fixed costs;
- conditionally variable costs.
Conditional-constant costs are those that do notdepend on the time period and production volumes. These costs increase with the increase in the scale of economic activity, but at a slower pace. In some cases, their growth tends to jump.
Simply put, conditional-constant costs are those that arise with a sharply increased volume of production, for example, the cost of additional equipment.
Conditional variable costs include costs that are associated with the purchase and sale of products. Their magnitude depends on many factors: the prices of suppliers, the rate of inflation and others.
Gross costs are calculated as the sum of conditional variables and conditionally fixed expenses.
To calculate in a co-operative buildingconditional-constant costs, the formula should be the following: it is necessary to add down expenses for all enterprises and institutions that belong to the cooperative building.
Internal and external costs
In relation to the environment costsare classified into internal and external. The company finances internal costs on its own, and cares for external costs to other organizations or to society as a whole.
Grouping of costs by directions and articlesis used to calculate the costs of manufacturing and selling goods or services. To make it more convenient to calculate losses and profits, to analyze the cost price and establish prices, a calculation sheet is compiled. By items, costs are divided according to the role they play in the enterprise and what needs are used.
Indirect and direct costs
Indirect or direct costs are divided according to the method of assigning costs to cost.
Indirect are those costs that are notare accrued per unit of output, but accumulated in the accounts. After that, they are included in the cost price by calculation. As a rule, indirect costs are taken into account at the places of their origin, and then distributed among the types of products. These include the salary of temporary workers or the cost of purchasing additional materials.
Direct costs are based onprimary documents for each unit of output. All costs that relate to a particular product are called direct: the purchase of raw materials and material, the wages of the main workers, and any other material costs. Carrying out the calculation of the object, it is necessary to understand that the greater the proportion of direct costs, the more accurately you can calculate the unit cost of goods.
Costs of technical and economic nature
According to the technical and economic purpose, the costs can be divided as follows:
The main costs are usually those thatdirectly related to the production process or the provision of services. These are the expenses necessary to carry out production and release a specific product: the cost of purchasing materials, the cost of electricity, fuel, labor and so on.
General production and business expenses are considered indirect. They are connected with the maintenance of the structural divisions of the enterprise.
Expenses characterizing the activities of the enterprise
To analyze the activities of the company inin general, and give an estimate of the finished products, the structure of the costs of the enterprise is as follows: expenses are divided into incoming and outgoing. Inbound refers to the acquired funds that are used to make a profit. If, over time, they have lost relevance or are consumed, they are transferred to expired costs.
In the asset balance, incoming costs can be reflected as goods, finished goods, stocks or work in progress.
Costs that relate to social ormanagement programs of development, it is customary to call discretionary. To obtain average unit costs, it is necessary to add specific constant and variable costs.
Types of variable costs
Depending on changes in production volumes, non-permanent costs can be divided into types:
- Proportional. These costs change at the same rate as the scale of production.
- Progressive. Such costs increase much faster than the growth rate of enterprise activity. This can be due to interruptions in work or downtime.
- Degressive. To increase profits and reduce costs, the pace of these costs should exceed the pace of progressive and proportional costs.
Conditional variables and conditionally fixed costs are important indicators in any business, so it is necessary to clearly understand the mechanism of their formation.</ p>