The cost is ... Labor costs. Cost of production - costs

Any enterprise tries to make decisions that ensure its maximum profit, which depends on the cost of sales and production. Naturally, the price of such products is a consequence of the interaction of supply and demand. Costs are the factor that forms the cost price. However, this is not such a simple concept as it may seem. So, the cost is what?

Problems of terminology

Costs are a component of the cost of production. They can both increase and decrease, which depends on the volume of material and labor resources, the organization of production and the level of technology. The manufacturer can manage the cost reduction. It is necessary to understand that the difference between the concept under consideration and such terms as "expenses" and "costs", which are often given in normative documents and economic literature, in fact, and no.

Economic costs

If you look closely at these concepts, then "cost" is used mainly in economic theory and means the total expenditure of the enterprise on the performance of certain operations. This includes accounting, alternative and estimated costs. Estimated costs are the actual expenditures, which are caused by the expenditure of various economic resources during the production and turnover of goods, products and services. Alternative (they also imputed) - the lost profit of the enterprise, which it could get by producing at another (alternative) price of another product that would be produced in the alternative market.

Economic costs and expenses

The cost is the actual and estimated cost of a particular enterprise. Expenses mean an increase in the company's debt obligations in the course of its operations, or a decrease in its own funds. The expense is the use of material, services, raw materials, which is recognized in the loss and profit reports as a link between costs and direct receipts for income items. In accounting, income should be correlated with such an item as the cost of production.

Cost Accounting

This concept from the accounting point of view is considered for some items, such as separate accounts: "Amortization", "Payment settlements", "Materials", "Finished products" and "Basic production". The cost is a component of the report that is not written on the sales account, which accumulates in the above accounts until all the goods and services associated with them have been fully realized.

Product cost index

Performance indicators of any enterprise can not do without such a parameter as the cost of production. The costs of labor, economic, financial and production activities are reflected precisely in this indicator. The level of the cost price influences the size of profit, on profitability. The more economically the organization uses material, financial and labor resources for performing works, providing services and manufacturing products, the higher the efficiency of the process and the greater the profit.

Such different costs

From the list of all the components that form the cost price of any product (service or work), you can see that they are not homogeneous in composition or in importance in the process of manufacturing the product, performing services and works. There are costs for products (for raw materials, materials, production, wages for workers and so on). There are - for management and maintenance (maintenance of the administration), for maintaining the fixed assets in an efficient condition. The third types of costs are those that are not directly related to the production process, but still included in the cost of finished products, albeit indirectly, and relate to allocations for raw materials and mineral resources, for social needs and so on.

Organization of accounting

For an efficient organization of production, a well-founded classification of costs by different characteristics is necessary. This allows you to analyze and plan the costs, identify the relationships between their different types and calculate the degree of influence on the levels of profitability and cost of the enterprise. The goal of any classification of costs is to help the leader in making informed and correct decisions, and also to identify the part that can and should be influenced.

Drury Classification

According to this researcher, the cost is information that has accumulated from different categories: overhead, labor and material costs. Then Drury summarized the classification in the direction of accounting:

1. To evaluate and calculate the cost of manufactured products.
2. For decision-making by managers and adequate planning.
3. To regulate and control the process.

To date, this classification limits the ability of management accounting, which is designed to help achieve the intended objectives of the enterprise. That is why it became necessary to divide the functions of costs by goals, objectives, methods, methods and methods of achievement.

Generalized classification

Calculation of costs is a very important moment for accounting, during which certain decisions are taken on the tactics and strategies of the enterprise development. For this purpose, we can distinguish the following classification:

- alternative and explicit;

- irrelevant and relevant;

- Ineffective and effective.

Management decisions are made based on explicit and implicit costs. Explicit costs are called for, which are transferred to the enterprise for the duration of its commercial and production activities. An alternative cost is the rejection of one type of product in favor of another (alternative). If there are no restrictions on resources, then these costs will be zero, because of what they are often called additional. Relevant costs depend on the management decisions considered at the moment, that is, those that can be influenced. Effective are called such expenses in which the income is received from the sale of products. Inefficient, respectively, are unprofitable. They include losses in production, from marriage, shortages, downtime, damage to material and commodity values, and so on.