Fixed costs include costs. Variable and fixed costs of an enterprise in examples and explanations. Is advertising included in variable costs?

Constant costs include costs that do not depend on the volume of output, while variable costs include those whose size is determined by the volume of output, and is usually proportional to it.

The above costs can be divided into fixed and variable costs as follows.

Permanent:

1. Depreciation of equipment, the costs of its current and major repairs are constant costs that do not depend on how many products the enterprise produces, since equipment wears out in any case;

2. General shop and plant expenses are constant, since they do not depend on whether the enterprise produces products or not (in any case, it will be necessary to allocate funds for rental payments, wages employees and specialists, and so on).

Note: despite the fact that the rate of production costs is given per unit of production, in terms of economic content this item of expenditure is constant;

Variables:

1. The costs of raw materials, basic materials, purchased semi-finished products and components, as well as auxiliary materials are considered variable, since the more products an enterprise produces, the more raw materials and supplies are consumed;

2. Fuel and energy costs are variable because they are determined by whether the equipment producing the product is running or not;

3. The wages of workers and other items calculated on its basis (additional wages of production workers, deductions) are variable, since piece workers are paid for the products produced;

4. We consider the costs of spare parts for equipment and fast-wearing tools to be variable, since with a larger production output, the wear of parts directly acting on production parts occurs faster;

5. Payment for communication services, mail and transport for commercial purposes depends to a certain extent on the volume of products produced (with a larger volume, more consumers are needed, and these cost items increase accordingly), therefore they are classified as variables.

Table 7.3 - Constants, variable costs

Fixed costs are:

14 157 169,90 * 100% / 505 910 500,95 = 2,8%

Variable costs are:

491 753 331,10 * 100% / 505 910 500,95 = 97,2%

Probably every person who has worked for the “owner” for at least one day wants to start own business and be your own boss. But in order to open your own business, which will bring good earnings, you need to set it correctly financial model economic activity.

Financial model of the enterprise

Why is this necessary? In order to have a correct idea of ​​future income, what level the enterprise’s fixed and variable expenses will have, to understand where it will need to go and what financial policy to use when making decisions.

Basis of construction successful business is its commercial component. According to economic theory, money is goods that can and should generate new goods. If you start your own business, you need to understand that its profitability must come first, otherwise the person will engage in philanthropy.

You can't work at a loss

Profit is equal to the difference between income and costs, which are divided into fixed and variable expenses of the enterprise. When expenses are greater than income, profit turns into loss. The main task The goal of an entrepreneur is to ensure that the business generates maximum income with minimal use of available resources.

This means that you should always strive to sell as many goods or services as possible, while reducing the level of costs of the enterprise.

If everything is more or less clear with income (how much you produced, how much you sold), then with expenses it’s much more complicated. In this article we will look at fixed and variable costs, as well as how to optimize costs and find a middle ground.

In this article, expenses, costs and expenses, as well as in economic literature, will be used as synonymous words. So what types of costs are there?

Types of expenses

All enterprise costs can be divided into fixed and variable costs. This division allows for prompt budgeting and planning of the necessary resources to conduct the business of the enterprise.

Fixed costs are those costs whose level does not depend on the volume of products produced. That is, no matter how many units you produce, your fixed costs will not change.

Variable and semi-fixed costs have different effects on production activities. Why conditionally constant? Because not all types of expenses can be classified as constant, since they can change their properties and accounting procedures from time to time.

What do variable and fixed costs include?

For example, such expenses may include salaries of administrative and management personnel, but only if they receive money regardless of the financial results of the enterprise. Despite the fact that in the West managers have long been making money on their managerial and organizational skills, increasing their client base and expanding markets, in most enterprises Russian Federation heads of different structures receive a stable monthly salary without reference to work results.

This leads to the fact that a person simply has no incentive to improve anything in his work. Because of this, labor productivity is at a low level, and the desire to move forward to new technological processes is generally at zero.

Fixed expenses

In addition to management salaries, rental payments can be considered fixed expenses. Imagine what you are doing tourism business and you don't have your own premises.

In this case, you will be forced to pay someone for rent commercial real estate. And no one is saying that this is the worst option. The cost of building your own office from scratch is very high and in many cases will not pay off even in 5-10 years if the business is small or middle class.

Therefore, many people prefer to take the necessary square meters as rent. And you can immediately guess that regardless of whether your business has gone well or you are in deep loss, the landlord will demand the monthly payment specified in the contract.

What could be more stable in accounting than paying wages? This is depreciation. Any fixed asset must be depreciated month after month until its initial cost is zero.

Methods for calculating depreciation may be different, but, of course, within the framework of the law. These monthly expenses are also included in fixed costs enterprises.

There are many more such examples: communication services, communications, waste removal or recycling, provision of necessary working conditions, etc. Their main feature is that they are easy to calculate both in the current period and in future ones.

Variable expenses

Such costs are those that vary in direct proportion to the volume of products produced or services provided.

For example, in the balance sheet there is such a line as raw materials and supplies. They indicate the total cost of those funds that the enterprise needs to production activities.

Let's assume that you need 2 square meters of wood to produce one wooden box. Accordingly, to create a batch of 100 such units of product you will need 200 sq.m of material. Therefore, such costs can be safely classified as variable.

Wages can relate not only to fixed, but also to variable expenses. This will happen in cases where:

• the changed volume of production requires a change in the number of employees employed in the manufacturing process;
• workers receive percentages that correspond to deviations in working standard production.

Under such circumstances, it is quite difficult to plan the amount of labor costs in the long term, since it will depend on at least two factors.

Also, in the process of production activities, fuel and various types of energy resources are consumed: light, gas, water. If all these resources are used directly in the manufacturing process (for example, the production of a car), then it would be logical that a large batch of products would require an increased amount of energy consumption.

Why do you need to know what fixed and variable costs exist?

Of course, such a classification of costs is needed to optimize the cost structure in order to increase profits. That is, you can immediately understand which costs you can save on, and which ones will exist in any case, and they can be reduced only by reducing the level of production. What does an analysis of variable and fixed costs look like?

Let's say you produce furniture at an industrial level. Your cost items are as follows:

• raw materials and supplies;
• wage;
• depreciation;
• electricity, gas, water;
• other.

So far everything is easy and clear.

The first step is to divide all this into fixed and variable expenses.

Permanent:

1. Salaries of directors, accountants, economists, lawyers.
2. Depreciation deductions.
3. Used Electric Energy for lighting.

The variables include the following.

1. Wages of workers, the standardized number of which depends on the volume of furniture produced (one or two shifts, the number of people in one assembly box, etc.).
2. Raw materials and supplies necessary to produce one unit of product (wood, metal, fabric, bolts, nuts, screws, etc.).
3. Gas or electricity, if these resources are consumed directly for the manufacture of furniture. For example, this is the electricity consumption of various furniture assembly machines.

Impact of expenses on production costs

So, you have listed all the expenses of your business. Now let's see what role fixed and variable costs play in cost. It is necessary to go through all the fixed costs and see how the structure of the enterprise can be optimized so that less management personnel are involved in production during the production process.

The breakdown of fixed and variable expenses above shows where to start. You can save on energy resources either by switching to alternative sources, or during modernization, in order to increase the level of equipment efficiency.

After this, it’s worth going through all the variable costs, tracking which of them depend more or less on external factors, and which ones can be counted with confidence.

Once you understand the cost structure, you can easily transform any business to suit the needs and requirements of any owner and his strategic plans.

If your goal is to reduce product costs in order to win several positions in the sales market, then you should pay more attention to variable costs.

Of course, as soon as you understand what constitutes fixed and variable expenses, you will be able to easily navigate and quickly understand where you need to “tuck your tails between your legs” and where you can “loose your belts.”

Financial planning is the search for the most profitable ways of development and further functioning of the organization. As part of planning, the efficiency of investment, production and financial activities. Therefore, for any enterprise, drawing up a plan of expenses and income allows you not only to obtain data on product costs and profitability, but also to find out comprehensive information about the development of the organization in a certain direction.

For qualitative analysis An objective assessment of costs based on changing production volumes is required. As a rule, the main types of expenses include the costs of an enterprise of variable and fixed types. So what are fixed and variable costs, what does it include and what is their relationship?

Variable costs are expenses that change in size based on increases or decreases in sales activity and production volumes. In addition to direct costs, variables may include financial costs for the purchase of tools, necessary materials and raw materials. When recalculated per commodity unit, variable costs remain stable, independent of fluctuations in production volumes.

What are variable costs in production?

Fixed cost type: what is it?

Fixed costs in entrepreneurship are those expenses that a company incurs, even if it does not sell anything. In addition, it is worth remembering that when converted to a commodity unit, this type of expense changes in proportion to the increase or decrease in production volumes.

Fixed costs include:

Interdependence of production costs

The relationship between variable costs and fixed costs is an important indicator. Their interdependence in relation to each other is the break-even point of the organization, which consists in what the enterprise needs to do in order to be considered profitable and have costs equal to zero, that is, absolutely covered by the company’s income.

The break-even point is determined using a simple algorithm:

Break-even point = fixed costs / (cost of one unit of goods - variable costs per unit of goods).

As a result, it is easy to see that it is necessary to produce products of such a production volume and at such a cost that it can cover fixed costs that remain unchanged.

Conditional classification of production costs

In fact, it is quite difficult to draw a clear line between variable and fixed costs with some certainty. If production costs change regularly during the operation of the enterprise, it is recommended to consider them semi-fixed and semi-variable costs. Do not forget that almost every type of cost has elements of certain expenses. For example, when paying for the Internet and telephone communication you can find out the constant share of the required costs (monthly package of services) and the variable share (payment depending on the duration of long-distance calls and minutes spent in mobile communications).

Examples of basic expenses of a conditionally variable type:

1. Variable expenses in the form of components, necessary materials or raw materials in the manufacture of finished products are defined as conditionally variable costs. Fluctuations in these costs are possible due to rising or falling prices, changes technological process or reorganization of production itself.
2. Variable costs related to piecework direct wages. Such costs change in quantitative terms and due to fluctuations in wage payments during growth or daily norms, as well as when the incentive share of payments is updated.
3. Variable costs, including a percentage share to sales managers. These costs are always changing, since the size of payments depends on sales activity.

Examples of basic expenses of a semi-fixed type:

1. Fixed expenses for payments for renting space vary throughout the entire period of operation of the organization. Costs can either increase or decrease, depending on the increase or decrease in rental costs.
2. The accounting department's salary is considered a fixed cost. Over time, the amount of labor costs may increase (which is associated with quantitative changes in staff and expansion of production), or may decrease (when accounting is transferred to).
3. Fixed costs can change when they are moved to variable costs. For example, when an organization produces not only goods for sale, but also a certain proportion of components.
4. The amounts of tax deductions also vary. may increase due to rising space costs or changes in tax rates. The size of other tax deductions considered fixed expenses may also change. For example, transferring accounting to outsourcing does not imply the payment of salaries, and accordingly, there will be no need to accrue unified social tax.

The above types of semi-fixed and semi-variable costs clearly demonstrate why these costs are considered conditional. During his work, the owner of the enterprise tries to influence changes in profits. For example, to reduce costs and increase profits, at the same time the market and other external conditions also have a certain impact on the activities of the enterprise.

As a result, costs regularly change under the influence of certain factors, taking the form of costs of a semi-fixed or semi-variable type.

It is advisable to maintain a balance between expenses from the very beginning of the enterprise. Remember, in order not to need to take out a loan or, you need to rationally approach the analysis of fixed and variable expenses. Since it is precisely this that allows you to build the most effective financial plan companies.

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Costs that are practically independent of the volume of products produced. All fixed costs per unit of output produced or produced decrease as production volume increases. This indicates an increase in the company's revenues.

Fixed costs are the basis for creating production. They arise at a point in time when the production of its goods has not yet begun. Costs for the modernization of production, the purchase of modern machines and mechanisms, or the construction of production premises.

It is beneficial for an entrepreneur to reduce fixed costs and increase the number of goods produced. In such a situation, there is an increase in profits. This situation is typical for a market with constantly changing demand for goods. Provided that demand remains virtually unchanged, reducing fixed costs will only lead to a one-time profit.

Fixed costs may change over a period of time as the company operates in a constantly changing environment. external environment. Therefore, in practice they are often called semi-fixed costs.

Basic fixed expenses

When determining the cost of products, it is necessary to take into account all fixed costs, which include:

• Payment of rent or property of the enterprise. These costs are considered constant, so their changes over time are insignificant. The amount of tax or rent represents the same amount over a long period of time. These costs can be reduced by renting production premises or equipment.

• Depreciation of enterprise equipment. With the linear method of calculating monthly depreciation deductions, their value is classified as a fixed type expense, since they are paid in equal payments throughout the entire service life.

• Payment of wages to employees involved in the management of the enterprise. Their wages are not affected by the volume of production. Reducing this cost item is achieved by optimizing the number of management personnel.

• Payment for services related to general management enterprises. First of all, these are costs associated with enterprise security, utility costs, and fees.

• Payment of accrued interest on loans and borrowings. This type expenses can be included in the list of costs for the profitable operation of production. If regular interest payments lead to a reduction in profits, and after some time to bankruptcy of the enterprise, then these payments should be completely suspended. Otherwise, the company will declare itself bankrupt.

The production costs of a business can be divided into two categories: variable and fixed costs. Variable costs depend on changes in production volume, while constant costs remain fixed. Understanding the principle of classifying costs into fixed and variable is the first step to managing costs and improving production efficiency. Knowing how to calculate variable costs will help you reduce your unit costs, making your business more profitable.

Steps

Calculation of variable costs

Classify costs into fixed and variable. Fixed costs are those costs that remain unchanged when production volume changes. For example, this may include rent and salaries of management personnel. Whether you produce 1 unit or 10,000 units in a month, these costs will remain approximately the same. Variable costs change with changes in production volume. For example, these include the costs of raw materials, packaging materials, product delivery costs and wages of production workers. The more products you produce, the higher your variable costs will be.

Add together all the variable costs for the time period under consideration. Having identified all variable costs, calculate their total value for the analyzed period of time. For example, your manufacturing operations are fairly simple and involve only three types of variable costs: raw materials, packaging and shipping costs, and worker wages. The sum of all these costs will be the total variable costs.

Divide total variable costs by production volume. If you split total amount variable costs for production volume for the analyzed period of time, you will find out the value of variable costs per unit of production. The calculation can be represented as follows: v = V Q (\displaystyle v=(\frac (V)(Q))), where v is the variable cost per unit of output, V is the total variable cost, and Q is the volume of production. For example, if in the above example the annual production volume is 500,000 units, then the variable cost per unit would be: 1550000 500000 (\displaystyle (\frac (1550000)(500000))), or 3, 10 (\displaystyle 3,10) ruble

Application of the minimax calculation method

1. Identify combined costs. Sometimes some costs cannot be clearly classified as variable or fixed costs. Such costs may vary depending on the volume of production, but may also be present when production is at a standstill or there are no sales. Such costs are called combined costs. They can be broken down into fixed and variable components to more accurately determine the amount of fixed and variable costs.

   Estimate costs according to the level of production activity. To break down combined costs into fixed and variable components, you can use the minimax method. This method estimates combined costs for the months with the highest and lowest production volumes and then compares them to identify the variable cost component. To begin the calculation, you must first identify the months with the highest and lowest volume of manufacturing activity (output). For each month in question, record production activity in some measurable quantity (for example, machine hours expended) and the associated combined cost amount.

   • Let's say that your company uses a waterjet cutting machine in production to cut metal parts. For this reason, your company has variable water costs for production, which depend on its volume. However, you also have constant water costs associated with maintaining your business (for drinking, utilities, and so on). In general, the costs for water in your company are combined.
   • Let's say that in the month with the highest volume of production, your water bill was 9,000 rubles, and at the same time you spent 60,000 machine hours on production. And in the month with the lowest production volume, the water bill was 8,000 rubles, while 50,000 machine hours were spent.

2. Calculate the variable cost per unit of production (VCR). Find the difference between the two values ​​of both indicators (costs and production) and determine the value of variable costs per unit of production. It is calculated as follows: V C R = C − c P − p (\displaystyle VCR=(\frac (C-c)(P-p))), where C and c are costs for months with high and low production levels, and P and p are the corresponding levels of production activity.

   Determine the total variable costs. The value calculated above can be used to determine the variable part of the combined costs. Multiply the variable costs per unit of production by the appropriate level of production activity. In the example under consideration, the calculation will be as follows: 0.10 × 50000 (\displaystyle 0.10\times 50000), or 5000 (\displaystyle 5000) rubles for the month with the lowest production volume, and 0.10 × 60000 (\displaystyle 0.10\times 60000), or 6000 (\displaystyle 6000) rubles for the month with the highest production volume. This will give you the total variable water costs for each month in question. Then their value can be subtracted from the total value of the combined costs and obtain the amount of fixed costs for water, which in both cases will be 3,000 rubles.

Using variable cost information in practice

Assess trends in variable costs. In most cases, increasing production volume will make each additional unit produced more profitable. This happens because fixed costs are distributed across large quantity units of production. For example, if a business that produced 500,000 units of product spent 50,000 rubles on rent, these costs in the cost of each unit of production amounted to 0.10 rubles. If the production volume doubles, then the rental costs per unit of production will already be 0.05 rubles, which will allow you to get more profit from the sale of each unit of goods. That is, as sales revenue increases, the cost of production also increases, but at a slower pace (ideally, in the unit cost of production, the variable costs per unit should remain unchanged, and the component of the fixed costs per unit should fall).

Use the percentage of variable costs in the cost price to assess risk. If you calculate the percentage of variable costs in the unit cost of production, you can determine the proportional ratio of variable and fixed costs. The calculation is made by dividing the variable costs per unit of production by the cost per unit of production using the formula: v v + f (\displaystyle (\frac (v)(v+f))), where v and f are respectively variable and fixed costs per unit of production. For example, if fixed costs per unit of production are 0.10 rubles, and variable costs are 0.40 rubles (with a total cost of 0.50 rubles), then 80% of the cost is variable costs ( 0.40 / 0.50 = 0.8 (\displaystyle 0.40/0.50=0.8)). As an outside investor in a company, you can use this information to assess the potential risk to the company's profitability.

Swipe comparative analysis with companies in the same industry. First, calculate your company's variable costs per unit. Then collect data on the value of this indicator from companies in the same industry. This will give you a starting point for assessing your company's performance. Higher variable costs per unit may indicate that a company is less efficient than others; whereas a lower value of this indicator can be considered a competitive advantage.

• The value of variable costs per unit of output above the industry average indicates that the company spends more money and resources (labor, materials, utilities) on production than its competitors. This may indicate its low efficiency or the use of too expensive resources in production. In any case, it will not be as profitable as its competitors unless it cuts its costs or increases its prices.
• On the other hand, a company that is able to produce the same goods at a lower cost is selling competitive advantage in obtaining greater profits from the established market price.
• This competitive advantage may be based on the use of cheaper materials, cheaper labor or more efficient production facilities.
• For example, a company that purchases cotton at a lower price than other competitors can produce shirts with lower variable costs and charge lower prices for the products.
• Public companies publish their reports on their websites, as well as on the websites of the exchanges on which their securities are traded. Information about their variable costs can be obtained through analysis of "Reports on financial results"of these companies.

1. Conduct a break-even analysis. Variable costs (if known) combined with fixed costs can be used to calculate the break-even point for a new manufacturing project. The analyst is able to draw a graph of the dependence of fixed and variable costs on production volumes. With its help, he will be able to determine the most profitable level of production.

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