Business, Entrepreneurship
Costs of production - types and essence
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.
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:
- Average fixed costs. To obtain this indicator, it is necessary to find the quotient between the total constant costs and the quantity of output.
- Average variable costs. The calculation algorithm is the same, only the variable of costs changes.
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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