BusinessEntrepreneurship

Costs of production - types and essence

Organizing a production, institution, firm, any entrepreneur, the leader usually uses the rule: invest in a minimum, get the maximum out of everything. But without costs, and to be more precise, no one costs anyone without the costs of production, the types of which we will consider in this article.

At different times, economists of different countries classified such expenses according to their models. The most popular of them in the twentieth century was the concept of Karl Marx. He divided the costs of production, their types, to be more precise, on circulation and production. The latter included the cost of purchasing raw materials, materials, energy costs, as well as payment of wages. The first carried all costs associated with the sale of products.

Modern reality has made its own adjustments. And at the heart of economic analysis, to date, the costs of production, their types, structure differ both in quantity and form with content. Thus, expenses are generally combined into one large group. It is called gross cost. They include two subgroups: constants and variables.

Essence and types of production costs are explained, starting with fixed costs. So, any enterprise bears expenses for the maintenance, rent, repair of premises, constructions, buildings. This is not the only permanent factor. The interest of loans, the maintenance of the security staff or the payment of a contract for such a service, the purchase and maintenance of equipment - all this also need to be included in the amount of costs.

The main types of production costs also contain such a variety as variable costs. The latter depend on the volume of output and include raw materials, materials, workers' wages, energy carrier costs, and the like.

In order for the economic analysis of the enterprise to be conducted accurately and scrupulously, it is customary to deduce the average indicators. By a fairly simple formula are calculated:

  1. Average fixed costs. To obtain this indicator, it is necessary to find the quotient between the total constant costs and the quantity of output.
  2. Average variable costs. The calculation algorithm is the same, only the variable of costs changes.

But economic analysis does not end with the above calculations. An important characteristic in it is the value of the maximum level of profit. To calculate it, a conclusion is needed about the greatest productivity of the enterprise. That is, the calculation of the maximum number of products produced in a certain period. There is such a thing as marginal costs of production, the types of which differ from the above. This is a super-cost, pledged for the production of additional products.

The costs of production, their types, are calculated in Russia and in Western countries using different methods. The thing is that inheritance from the USSR RF got the concept of prime cost, which by and large include not only costs associated with the basic output of products, but also above the standard. Western economists spend all additional costs on the basis of the main types of costs.

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