The cost of production in the enterprise. Calculation of the cost of production and its impact on the financial performance of the organization The impact of cost reduction on net profit
Analysis of the formation and use of profits is carried out in several stages:
1) profit is analyzed by composition in dynamics;
2) a factor analysis of profit from sales is carried out;
3) the causes of deviations in terms of profit components are analyzed;
4) the formation of net profit and the impact of taxes on profits are analyzed;
5) an assessment is given of the effectiveness of the distribution of profits for accumulation and consumption;
6) the use of profits for accumulation and consumption is analyzed;
7) proposals for drawing up a financial plan are being developed.
An analysis of the composition of profit in dynamics is shown on the example in table 45 (data from f. No. 2 “Profit and Loss Statement”). Table 45 shows that gross profit decreased in the reporting year by 340.8 thousand rubles, or by 12.3% (100 - 87.7). In the base year, the share of profit from sales accounted for 51.72% of gross profit, 38.28% of gross profit was a positive balance of non-operating income over expenses. The positive impact of the balance of non-operating income and expenses is reduced by the influence of the negative balance of operating income over expenses, the share of which is 0.47%.
In the reporting year, the share of profit from sales slightly decreased (by 0.06 percentage points). The negative impact of operating income over expenses increased significantly - by 390 thousand rubles, and its share increased by 17.5 percentage points.
Table 45
Composition of gross profit
The profit from the sale of products as a whole for the enterprise depends on four factors of the first level of subordination: the volume of sales of products in natural meters Q, its structure D, the cost price C and the price level p¢. The model of dependence of profit on the listed factors has the following form:
where n is the number of product names in the product range.
The main analytical method in calculating the influence of factors on profit is the method of absolute differences. The calculation is shown in table 46. The average price, cost and profit per unit of production are calculated as weighted averages.
Table 46
Initial data for factor analysis of profit from sales
Consider the impact of changes in price and cost of goods sold on profit (table 47). Profit from the sale of a unit of production decreased for all types of products, despite the increase in prices. Profit was negatively impacted by the outstripping growth of production costs compared to price growth, due to the outstripping increase in resource prices compared to the increase in prices for finished products.
Table 47
Calculation of the impact of price and cost on profit per unit of production
The size of the average profit per unit of production is influenced by structural changes. Therefore, when calculating the impact of prices and costs on the change in the average profitability of one product, it is necessary to eliminate the effect of structural shifts on changes in profits, prices and costs. The data for the calculation are presented in table 48.
Table 48
Data for calculating the impact of structural shifts on changes in the average price level,
cost and profit
The change in the average price level, cost and profit under the influence of structural shifts is calculated by the formulas:
DП (D i) \u003d Dp¢ (D i) - DC (D i) \u003d 1.850 - 1.883 \u003d - 0.034 rubles.
Elimination of the influence of structural shifts on the change in the average level of prices and cost makes it possible to determine the effect of changes in prices and cost for each product on the change in profit. We will also calculate by the method of absolute differences:
Dp¢ (p i) \u003d Dp i - Dp¢ (D i) \u003d 63.98 - 1.850 \u003d 62.126 rubles;
DС¢ (С i) \u003d DC - DC (D i) \u003d 66.17 - 1.883 \u003d 64.285 rubles;
DP¢ (P i) = DP - DP (D i) = -2.19 - (-0.034) = -2.159 rubles.
The change in profit per unit of output is equal to the algebraic sum of the influence of the average price level and cost, adjusted for the actual sales structure:
DП¢ (p¢ С¢) = 62.126 - 64.285 = -2.159 rubles.
Thus, the following factors influenced the change in profit per unit of output:
Structural shifts in the implementation: - 0.034 rubles;
Price level by types of products: +62.126 rubles;
The unit cost of production by types of products: - 64.285 rubles.
Total -2.19 rubles.(the result of column 10 of table 48).
Conclusion: the decrease in profit per unit of sold products is due to an increase in the cost of products.
The total amount of profit, in addition to the factors considered, is influenced by the number of products sold. Based on the formula of the factorial model of profit, the influence of each factor on the total amount of profit can be calculated by multiplying the value of the influence of factors on the profit received from a unit of production by the number of products sold for the reporting period. The influence of the quantity of sold products is calculated as the product of this factor and the basic value of profit per unit of output.
The cumulative influence of the factors is calculated in Table 49. The decrease in the physical volume of sales has a negative impact on the amount of profit in the amount of 17.43 thousand rubles. However, as a result of an increase in the average selling price, the total effect of the volume of sold products is positive and amounts to 4523.97 thousand rubles (4541.4 - 17.43). Such a ratio of the influence of physical volume and the average price level is typical for markets with a high level of concentration or monopolization.
A significant increase in cost leads to an increase in profit by 4699.2 thousand rubles. Therefore, one of the reserves for increasing profits is to reduce the cost of production.
In a generalized form, the initial data and the results of the analysis are presented in tables 50, 51.
Table 49
Cumulative influence of factors on profit
Table 50
Factor analysis of profit from sales
The production of products (works and services) is associated with certain costs or costs. In the production process, labor is expended, means of labor are used, as well as objects of labor. All costs of the enterprise for the production and sale of products, expressed in monetary form, form the cost of production.
The cost price is the most important indicator of the efficient use of production resources.
The purpose of accounting for production costs and calculating the cost of production is to timely, complete and reliably determine the actual costs associated with the production and marketing of products, calculate the actual cost of certain types and all products, control the use of resources and funds. Continuous current cost accounting at cost centers, everyday identification of possible deviations from the established norms, the causes and perpetrators of these deviations must meet the requirements of operational production management.
Of great importance for the correct organization of accounting for production costs is their scientifically substantiated classification. Production costs are grouped according to their place of origin, types of products (works, services) and types of expenses.
At the place of origin, the costs are grouped by production, workshops, sections and other structural divisions of the enterprise. Such a grouping of costs is necessary for organizing intra-plant cost accounting and determining the production cost of products.
By types of products (works, services), the costs are grouped to calculate their cost.
By types of expenses, the costs are grouped by cost elements and costing items.
The costs that form the cost of products (works, services) are grouped according to the following elements:
Material costs (minus the cost of returnable waste);
Labor costs;
Deductions for social needs;
Depreciation of fixed assets;
Other costs (taxes, fees, payments for compulsory property insurance, etc.).
In the conditions of the formation of a market economy, the value of grouping costs by elements at the enterprise level allows you to determine how much they spent during the reporting period of certain types of material, labor and financial resources for production as a whole. To calculate the cost of certain types of products, the costs of the enterprise are grouped and accounted for by costing items.
There are planned (estimated), normative and actual (reporting) costing. Planned costing determines the average cost of products or work performed. It is compiled for the planned period (year, quarter), based on the progressive consumption rates of raw materials, materials, fuel, energy, labor costs, the use of equipment and the cost rates for organizing production maintenance. These expenditure rates are average for the planned period.
A variety of planned are accounting calculations, which are made up for a one-time product or work to determine the price, settlements with customers and other purposes. Normative costing is compiled on the basis of the norms of consumption of raw materials, materials and other costs (current cost norms) that are valid at the beginning of the month. Current cost rates correspond to the production capabilities of the enterprise at this stage of its work. Current cost rates at the beginning of the year, as a rule, are higher than the average cost rates included in the standard cost estimate, and at the end of the year, on the contrary, lower. Hence, the standard cost of production at the beginning of the year, as a rule, is higher than planned, and at the end of the year - lower. The actual (reporting) cost estimate is compiled according to accounting data on the actual costs of production and reflects the actual cost of manufactured products or work performed. It simultaneously characterizes the level of deviation of the cost price established by the standard and planned costing.
Calculation issues arise before the accountant at all stages of the circulation of economic assets: in the process of procurement of raw materials and materials, production and sales of products. In the broadest sense, costing is a way of systematizing costs and obtaining information about the cost of a product in order to identify reserves for improving production efficiency and managing this process. The complexity of the issues of costing is primarily associated with the variety of economic processes, which are complicated by the technological and organizational conditions of production. The complexity of the calculation lies in the fact that it is necessary to ensure the delimitation of costs between finished and unfinished objects, evaluating the marriage, by-products and production waste.
In countries with a developed market economy, any company, when choosing its development priorities, both at the tactical and strategic levels, always gives priority to a clear accounting and analysis of the formation of financial results.
One of the most important stages in the circulation of enterprise funds is the production process. During the production process, material, labor and financial resources are spent and the cost of finished products is formed. The process of cost formation significantly affects the financial performance of enterprises, profit or loss. In this regard, it is important to organize accounting and control of the production activities of the enterprise and make the right management decisions in order to increase the financial result by reducing the costs of the enterprise. Today, in the general accounting system, accounting for production costs occupy a leading place. In this regard, in the practice of enterprises, this section of accounting is allocated to the management accounting system. The purpose of management accounting is to provide the administration of the enterprise with internal information necessary to control the production activities of the enterprise and make decisions based on the results of this activity. Such information includes: information on production costs, on the cost of production, on the release of products from production, on its profitability and factors that affect the reduction in the cost of production. As a rule, information about production costs and product costs is internal and confidential. Unfortunately, at present, due to an imperfect tax system, business leaders are striving not to reduce costs, but to artificially increase it in order to reduce the tax base. In addition to determining the costs of production and the cost of production, management accounting also involves planning and forecasting the cost of production for the future, as well as developing proposals to increase the profitability of manufactured products or the development of new types.
In accounting, the result of the company's work is calculated by comparing the costs calculated by the elements of past and newly created value with the release (sales proceeds) of products.
In management accounting, costs are collected according to costing items, which are compared with revenue from the sale of products. The resulting financial result should be equal to the result calculated in financial accounting, since both of them use the same information with varying degrees of grouping and generalization.
International practice shows that the calculation of gross profit from the sale is achieved by comparing revenue not with the full cost, but only with its variable part (excluding fixed costs). The resulting total is the so-called "marginal income" of the enterprise, which is then reduced by the total amount of fixed costs. Thus, the volume of accounting work is sharply reduced, since there is no need to calculate the shipped and sold products. In addition, the administration of the enterprise focuses in the management of the cost on the use of basic materials in production, the main wages of production workers. The formation of fixed costs becomes an object of attention only if they deviate from the established estimate.
Self-sufficiency indicator
Another important economic indicator of activity is the self-sufficiency ratio - the ratio of money received for sold products to the costs incurred in the production of goods. This value is also called the current cost coverage ratio.
This indicator is an assessment of the ability of the enterprise to cover its current expenses at the expense of income from the sale of products. Self-sufficiency means that every ruble spent on the production and sale of products is covered by revenue.
Attention: To draw positive conclusions about the self-sufficiency of the enterprise, the value of this value should be less than 1.2.
How are they interconnected?
When planning a business process, it is important to understand the relationship between these two indicators. If the money received for sold products is more than production costs, the company makes a profit, if the revenue is less than the costs incurred, the business is unprofitable.
Effective measures to increase the proceeds:
- expansion of production and growth in the production of sold goods;
- increase in the price of products;
- improving the quality of goods;
- conducting marketing activities.
We talk in more detail about how you can increase revenue and how to measure its growth.
To reduce production costs, you need to:
- reduction in the norm of material and labor costs for production;
- use of cheaper raw materials of similar quality;
- regulation of working capital.
We calculate one indicator, knowing the other
Very often, the cost price means only the cost of producing one unit of output, with a maximum of total costs added to the total amount. Which is fundamentally wrong. In fact, the total amount of the calculation must include the costs associated with organizing a business.
There are several different ways to calculate the cost of production. They are applied depending on the nature of the work, services or products.
C / C \u003d B minus P shaft, where:
- c / c is the cost of sales;
- c - the company's revenue;
- n shaft - gross profit.
Gross profit is the difference between the cash received for the products sold and the valuation of the resources spent to sell the products. Keep in mind that gross profit is different from operating profit.
Payback ratio
Now consider, the cost divided by the revenue - what indicator will this turn out to be. If you divide one by the other, this will be the self-sufficiency ratio. Otherwise, it is called the "point of insolvency". The value of this indicator corresponds to the minimum load level, which ensures the coverage of all cash costs of the enterprise. It is obtained by dividing the potential cash received for products sold by the cost. Other income is usually not taken into account.
The calculation of the self-sufficiency factor allows you to determine the minimum load factor. If it is exceeded, the cash balance will become positive.
Rates of decrease and increase
The performance of the enterprise is also assessed by the growth rate of its main indicators. To do this, you need to compare two or more periods and track their changes.
Growth rates must exceed the growth rates of expenditures on the production of goods, which will lead to an increase in sales profits. The rate of cost reduction should be higher than the rate of decline in revenue, which leads to a less significant decrease in profit received from sales.
When the growth rate of the enterprise's profit is faster than the growth rate of its sales, this allows us to talk about reducing the costs of the enterprise. And the growth rate of sales, exceeding the rate of change in assets, is about the efficient use of resources and an increase in the economic potential of the business.
Conclusion
In today's economy, in order to make the right management decisions, business leaders need to have complete and reliable information about the financial situation of the business. This requires a correct understanding, correct planning and calculation of the main results of the business, such as revenue and cost.
41. What impact does the cost of production have on the profit of the enterprise
The cost of production is one of the main factors in the formation of profit. If it has increased, then, other things being equal, the amount of profit for this period will necessarily decrease due to this factor by the same amount. There is an inverse functional relationship between the size of profit and cost. The lower the cost, the higher the profit, and vice versa. The cost price is one of the main parts of economic activity and, accordingly, one of the most important elements of this management object.
42. List the main methods used in the process of analyzing the cost of products (works, services)
43. What are the main areas of reserves to reduce the cost of production
When analyzing the actual cost of manufactured products, identifying reserves and the economic effect of its reduction, the calculation of economic factors is most often used. Economic factors most fully cover all elements of the production process - means, objects of labor and labor itself. They reflect the main areas of work of teams of enterprises to reduce costs: increasing labor productivity, introducing advanced equipment and technology, better use of equipment, cheaper procurement and better use of labor items, reducing administrative and management and other overhead costs, reducing scrap and eliminating unproductive costs and losses. .
It is possible to use the following economic factors: 1. Increasing the technical level of production.
2. Improving the organization of production and labor.
3. Changes in the volume and structure of products, which can lead to a relative decrease in fixed costs (except for depreciation), a relative decrease in depreciation, a change in the range and range of products, and an increase in its quality.
4. Better use of natural resources.
44. What methods can be used in planning the cost of production
Simple Method
The essence of a simple or one-part method is that direct and indirect costs (without overhead costs or with them, depending on the adopted accounting policy) are taken into account according to the established costing items for the entire output.
Cost summation method
This method lies in the fact that the cost of a type or unit of production is calculated by summing up the pre-calculated costs for its manufacture at all stages (repartitions, operations) of the technological process or by summing up the costs for the production of individual parts of the product (parts, assemblies, machine kits).
Cost Elimination Method
The cost elimination method consists in subtracting the cost of related products from the total cost of production, and the resulting value is considered the cost of the main product.
Cost distribution method (coefficient) The coefficient method of costing products has found application in industries where products of various brands, varieties, and so on are simultaneously manufactured. The essence of this method lies in the fact that the total (complex) production costs are distributed among the products obtained in proportion to the economically justified coefficient
proportional method
The proportional costing method is used in industries where several grades of product brands are used. The essence of this method lies in the fact that the costs of producing finished products are distributed among individual products in proportion to any sign: price, actual weight, planned cost. Then, by dividing the costs by the number of products produced for each item, its cost is determined.
Combined method
It is used in the case of obtaining several basic and related products in complex production.
Custom method
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