Calculation of variable costs formula. Variable costs per unit

To calculate the cost of production, it is necessary to calculate conditionally fixed and variable costs for the entire volume of production and per ton of coal.

Conditionally fixed costs C total for the volume of production are calculated using the formula:

Amount of costs according to the estimate;

V total - total variable costs per volume of coal.

M z – costs of materials;

Z z.s. – annual salary of production workers with UST deductions;

Z e – fuel and energy costs.

Variable costs per unit of production V unit are calculated using the formula:

VP – volume of coal production.

The cost of 1 ton of coal is determined by:

Conditionally fixed costs for the entire planned volume:

V total = 448367.86+ 503261.60+261864.66= 1213494.12 thousand rubles.

With total = 1818013.32–1213494.12 = 604519.2 thousand rubles.

Variable costs per unit of production:

RUB/t

Conditionally fixed costs per unit of production:

Vusl-post/unit=Sed-Ved, rub/t

Vusl-post/unit=452.24-301.87=150.37rub/t

2.6. Development of the mine's pricing policy

Using the data obtained on the cost of coal mining and the planned profitability of mining, it is necessary to calculate the possible selling price of the product.

The price of a unit of production is determined by the formula:

R is the level of profitability, set based on the goals of maximizing profits, but subject to the price guidelines of the main competitors in the market.

=542.7 rub/t

Based on the obtained sales price, calculate the volume of the open-pit mine production program in value terms:

542.7 * 4020 = 2181654 thousand rubles.

2.6.1. Justification of planned performance results

Using the data obtained, we will calculate the break-even point.

Thousand tons

At this level of costs, it is enough for the open pit to extract 2510.15 thousand tons of coal to cover all expected mining costs. In comparison with the planned production volume of 4020 thousand tons per year, an underfulfillment of the plan by 37% is allowed to cover costs.

2.7. Education and profit distribution plan

Planning for the formation and distribution of profits is carried out using the balance sheet method in a tabular version.

In conditions market economy enterprises independently plan their profit margins and areas of use. In these conditions, the purpose of profit planning is to determine its possible amount and reserves based on forecasting the cost of production and sales of products, market conditions, inflation growth, and government tax policy. When developing a profit plan, it should be borne in mind that VAT and excise taxes are not reflected in this plan, since they are collected before profit is generated. Profit planning begins after calculating the planned cost of production and sales of products according to the economic elements of costs.

Table 13– Education and profit distribution plan for the year

The profit remaining at the disposal of the enterprise after paying all production costs and repaying tax obligations amounts to 290,913 thousand rubles, which can serve as the basis for further modernization of the mine and the acquisition of the necessary technological improvements to increase the productivity of the mine.

Financial planning is necessary for the normal functioning of any company, forecasting production efficiency and profitability of all areas of activity. Its basis is a detailed analytical picture of all income received and costs incurred, which are classified as fixed and variable costs. This article will tell you what these terms mean, what criteria are used to distribute expenses in an organization, and why there is a need for such a division.

What are costs in production

The components of the cost of any product are costs. They all differ in the characteristics of their formation, composition, and distribution, depending on the production technology and available capacities. It is important for the economist to divide them according to cost elements, corresponding items and place of origin.

Expenses are classified into different categories. For example, they can be direct, that is, incurred directly in the production process of the product (materials, machine operation, energy costs and wages of workshop personnel), and indirect, proportionally distributed over the entire range of products. These include costs that ensure the maintenance and functionality of the company, for example, the uninterruption of the technological process, utility costs, salaries of the auxiliary and management units.

In addition to this division, costs are divided into fixed and variable. We will consider them in detail.

Fixed production costs

Costs, the value of which does not depend on the volume of products produced, are called constant. They usually consist of costs vital for the normal implementation of the production process. These are costs for energy resources, rent of workshops, heating, marketing research, AUR and other general expenses. They are permanent and do not change even during short-term downtime, because the lessor charges rent in any case, regardless of the continuity of production.

Despite the fact that fixed costs remain unchanged over a certain (specified) period of time, fixed costs per unit of output change in proportion to the volume produced.
For example, fixed costs amounted to 1000 rubles, 1000 units of product were produced, therefore, each unit of production has 1 ruble of fixed costs. But if not 1000, but 500 units of a product are produced, then the share of fixed costs in a unit of goods will be 2 rubles.

When fixed costs change

Note that fixed costs are not always constant, as companies develop production capacity, update technology, increase area and number of employees. In such cases fixed costs also change. When conducting economic analysis, you need to take into account short periods when fixed costs remain constant. If an economist needs to analyze a situation over a long period of time, it is more appropriate to break it down into several short time periods.

Variable costs

In addition to the fixed costs of the enterprise, there are variables. Their value is a value that changes with fluctuations in output volumes. Variable expenses include:

According to the materials used in the production process;

According to the wages of shop workers;

Insurance deductions from payroll;

Depreciation of workshop equipment;

On the operation of vehicles directly involved in production, etc.

Variable costs vary in proportion to the quantity of goods produced. For example, doubling production volume is impossible without doubling total variable costs. However, the cost per unit of production will remain unchanged. For example, with a value variable costs To produce one unit of product costs 20 rubles, to produce two units it will take 40 rubles.

Fixed costs, variable costs: division into elements

All costs - fixed and variable - constitute the total costs of the enterprise.
To correctly reflect costs in accounting, calculate the sales value of the manufactured product and implement economic analysis The company's production activities are all accounted for by cost elements, dividing them into:

• supplies, materials and raw materials;
• staff remuneration;
• insurance contributions to funds;
• depreciation of fixed and intangible assets;
• others.

All costs allocated to elements are grouped into cost items and accounted for as either fixed or variable.

Example of cost calculation

Let us illustrate how costs behave depending on changes in production volume.

Analyzing the change in the price of a product, the economist concludes: fixed costs did not change in January, variables increased in proportion to the increase in the volume of product output, and the cost of the product decreased. In the presented example, the decrease in the price of the product is due to the constant costs of fixed costs. By predicting changes in costs, the analyst can calculate the cost of the product in the future reporting period.

Enterprise expenses can be considered in the analysis with various points vision. Their classification is made on the basis of various characteristics. From the perspective of the influence of product turnover on costs, they can be dependent or independent of increased sales. Variable costs, an example of the definition of which requires careful consideration, allow the head of the company to manage them by increasing or decreasing sales of finished products. That's why they are so important to understand proper organization activities of any enterprise.

general characteristics

Variable Costs (VC) are those costs of an organization that change with an increase or decrease in the growth of sales of manufactured products.

For example, when a company ceases operations, variable costs should be zero. In order for a company to operate effectively, it will need to regularly evaluate its costs. After all, they influence the cost of finished products and turnover.

Such points.

• The book value of raw materials, energy resources, materials that are directly involved in the production of finished products.
• Cost of manufactured products.
• Salaries of employees depending on the implementation of the plan.
• Percentage from the activities of sales managers.
• Taxes: VAT, tax according to the simplified tax system, unified tax.

Understanding Variable Costs

To correctly understand such a concept, their definitions should be considered in more detail. Thus, production, in the process of carrying out its production programs, spends a certain amount of materials from which the final product will be made.

These costs can be classified as variable direct costs. But some of them should be separated. A factor such as electricity can also be classified as a fixed cost. If the costs of lighting the territory are taken into account, then they should be classified specifically in this category. Electricity directly involved in the process of manufacturing products is classified as variable costs in the short term.

There are also costs that depend on turnover but are not directly proportional to the production process. This trend may be caused by insufficient (or over) utilization of production, or a discrepancy between its designed capacity.

Therefore, in order to measure the effectiveness of an enterprise in managing its costs, variable costs should be considered as subject to a linear schedule along the segment of normal production capacity.

Classification

There are several types of variable cost classifications. With changes in sales costs, they are distinguished:

• proportional costs, which increase in the same way as production volume;
• progressive costs, increasing at a faster rate than sales;
• degressive costs, which increase at a slower rate with increasing production rates.

According to statistics, a company's variable costs can be:

• general (Total Variable Cost, TVC), which are calculated for the entire product range;
• average (AVC, Average Variable Cost), calculated per unit of product.

According to the method of accounting for the cost of finished products, a distinction is made between variables (they are easy to attribute to the cost) and indirect (it is difficult to measure their contribution to the cost).

Regarding the technological output of products, they can be production (fuel, raw materials, energy, etc.) and non-production (transportation, interest to the intermediary, etc.).

General variable costs

The output function is similar to variable cost. It is continuous. When all costs are brought together for analysis, the total variable costs for all products of one enterprise are obtained.

When common variables are combined and their total sum in the enterprise is obtained. This calculation is carried out in order to identify the dependence of variable costs on production volume. Next, use the formula to find variable marginal costs:

MC = ΔVC/ΔQ, where:

• MC - marginal variable costs;
• ΔVC - increase in variable costs;
• ΔQ is the increase in output volume.

Calculation of average costs

Average variable costs (AVC) are the company's resources spent per unit of production. Within a certain range, production growth has no effect on them. But when the design power is reached, they begin to increase. This behavior of the factor is explained by the heterogeneity of costs and their increase at large scales of production.

The presented indicator is calculated as follows:

AVC=VC/Q, where:

• VC - the number of variable costs;
• Q is the quantity of products produced.

In terms of measurement, average variable costs in the short run are similar to the change in average total costs. The greater the output of finished products, the more total costs begin to correspond to the increase in variable costs.

Calculation of variable costs

Based on the above, we can define the variable cost (VC) formula:

• VC = Material costs + Raw materials + Fuel + Electricity + Bonus salary + Percentage on sales to agents.
• VC = Gross profit - fixed costs.

The sum of variable and fixed costs is equal to the total costs of the organization.

Variable costs, an example of calculation of which was presented above, participate in the formation of their overall indicator:

Total costs = Variable costs + Fixed costs.

Example definition

To better understand the principle of calculating variable costs, you should consider an example from the calculations. For example, a company characterizes its product output with the following points:

• Costs of materials and raw materials.
• Energy costs for production.
• Salaries of workers producing products.

It is argued that variable costs increase in direct proportion to the increase in sales of finished products. This fact is taken into account to determine the break-even point.

For example, it was calculated that it amounted to 30 thousand units of production. If you plot a graph, the break-even production level will be zero. If the volume is reduced, the company’s activities will move to the level of unprofitability. And similarly, with an increase in production volumes, the organization will be able to receive a positive net profit result.

How to reduce variable costs

The strategy of using “economies of scale”, which manifests itself when production volumes increase, can increase the efficiency of an enterprise.

The reasons for its appearance are the following.

1. Using the achievements of science and technology, conducting research, which increases the manufacturability of production.
2. Reducing management salary costs.
3. Narrow specialization of production, which allows you to perform each stage of production tasks with better quality. At the same time, the defect rate decreases.
4. Introduction of technologically similar product production lines, which will ensure additional capacity utilization.

At the same time, variable costs are observed below sales growth. This will increase the efficiency of the company.

Having become familiar with the concept of variable costs, an example of the calculation of which was given in this article, financial analysts and managers can develop a number of ways to reduce overall production costs and reduce production costs. This will make it possible to effectively manage the rate of turnover of the enterprise’s products.

As we remember, we need a business plan not only to understand the goals and ways to achieve them, but also to justify the profitability and possibility of implementing our investment project.

When making calculations for a project, you come across the concept of fixed and variable costs, or expenses.

What are they and what is their economic and practical meaning for us?

Variable expenses, by definition, are those expenses that are not constant. They change. And the change in their value is associated with the volume of products produced. The higher the volume, the higher the variable costs.

What cost items are included in them and how to calculate them?

All resources that are spent on production can be classified as variable costs:

• materials;
• components;
• employees' wages;
• electricity consumed by a running machine engine.

The cost of all the necessary resources that must be spent to produce a certain volume of output. These are all material costs, plus wages of workers and maintenance personnel, plus the cost of electricity, gas, water spent in the production process, plus packaging and transportation costs. This also includes the costs of creating stocks of materials, raw materials and components.

Variable costs need to be known per unit of output. Then we can calculate at any time the total amount of variable costs for a certain period of time.
We simply divide the estimated cost of production by the volume of production in physical terms. We obtain variable costs per unit of production.

This calculation is made for each type of product and service.

How does unit costing differ from the variable cost of producing one product or service? Fixed costs are also included in the calculation.

Fixed costs are almost independent of production volumes.

These include:

• administrative expenses (costs of maintaining and renting offices, postal services, travel expenses, corporate communications);
• production maintenance costs (rent of production premises and equipment, machine maintenance, electricity, space heating);
• marketing expenses (product promotion, advertising).

Fixed costs remain constant until a certain point when production volume becomes too large.

An important step for determining variable and fixed costs, as well as everything financial plan is the calculation of personnel costs, which can also be carried out at this stage.

Based on the data we received in terms of organizational structure, staffing table, operating mode, and also based on the production program data, we calculate personnel costs. We make this calculation for the entire period of the project.

It is necessary to determine the amount of remuneration for management personnel, production and other employees, as well as the total amount of expenses.

Don’t forget to take into account taxes and social contributions, which will also be included in the total amount.

All data is presented in tabular form for ease of calculation.

Knowing fixed and variable costs, as well as product prices, you can calculate the break-even point. This is the level of sales that ensures the enterprise’s self-sufficiency. At the break-even point, there is equality in the sum of all costs, fixed and variable, and the income from the sale of a certain volume of products.

Analysis of the break-even level will allow us to draw a conclusion about the sustainability of the project.

An enterprise should strive to reduce variable and fixed costs per unit of production, but this is not a direct indicator of production efficiency. It is necessary to take into account the specifics of the enterprise. High-tech industries may have high fixed costs, while low ones may occur in underdeveloped ones with old equipment. This can also be observed when analyzing variable costs.

The main goal of your company is to maximize economic profit. And this is not only cutting costs in any way, but also using various instruments, allowing to reduce production and management costs through the use of more productive equipment and increased labor productivity.

In the activities of any enterprise, making the right management decisions is based on an analysis of its performance indicators. One of the objectives of such analysis is to reduce production costs, and, consequently, increase business profitability.

Fixed and variable costs and their accounting are an integral part of not only calculating product costs, but also analyzing the success of the enterprise as a whole.

Correct analysis of these items allows you to make effective management decisions that have a significant impact on profits. For analysis purposes in computer programs at enterprises it is convenient to provide for automatic allocation of costs into fixed and variable based on primary documents, in accordance with the principle adopted in the organization. This information is very important for determining the “break-even point” of a business, as well as assessing profitability various types products.

Variable costs

To variable costs These include costs that are constant per unit of production, but their total amount is proportional to the volume of output. These include the costs of raw materials, Consumables, energy resources involved in the main production, salary of the main production personnel(together with charges) and cost transport services. These costs are directly included in the cost of production. In monetary terms, variable costs change when the price of goods or services changes. Specific variable costs, for example, for raw materials in physical terms, can be reduced with an increase in production volumes due, for example, to a reduction in losses or costs for energy resources and transport.

Variable costs can be direct or indirect. If, for example, an enterprise produces bread, then the costs of flour are direct variable costs, which increase in direct proportion to the volume of bread production. Direct variable costs may decrease with the improvement of the technological process and the introduction of new technologies. However, if a plant processes oil and as a result receives one technological process, for example, gasoline, ethylene and fuel oil, then the cost of oil for the production of ethylene will be variable, but indirect. Indirect variable costs in this case, they are usually taken into account in proportion to the physical volumes of production. So, for example, if when processing 100 tons of oil, 50 tons of gasoline, 20 tons of fuel oil and 20 tons of ethylene are obtained (10 tons are losses or waste), then the cost of producing one ton of ethylene is 1.111 tons of oil (20 tons of ethylene + 2.22 tons of waste /20 t ethylene). This is due to the fact that, when calculated proportionally, 20 tons of ethylene produce 2.22 tons of waste. But sometimes all waste is attributed to one product. Data from technological regulations are used for calculations, and actual results for the previous period are used for analysis.

The division into direct and indirect variable costs is arbitrary and depends on the nature of the business.

Thus, the cost of gasoline for transporting raw materials during oil refining is indirect, and for transport company direct, since they are directly proportional to the volume of transportation. Wages production personnel with accruals are classified as variable costs for piecework wages. However, with time-based wages, these costs are conditionally variable. When calculating the cost of production, planned costs per unit of production are used, and when analyzing actual costs, which may differ from planned costs, both upward and downward. Depreciation of fixed assets of production per unit of production volume is also a variable cost. But this relative value is used only when calculating the cost of various types of products, since depreciation charges, in themselves, are fixed costs/expenses.

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Thus, total variable expenses can be calculated using the formula:

Rperem = C + ZPP + E + TR + X,

C – costs of raw materials;

ZPP – salary of production personnel with deductions;

E – cost of energy resources;

TR – transport costs;

X – other variable expenses that depend on the company’s activity profile.

If an enterprise produces several types of products in quantities W1 ... Wn and per unit of production variable costs are P1 ... Pn, then the total variable costs will be:

Rvari = W1P1 + W2P2 + … + WnPn

If an organization provides services and pays agents (for example, sales agents) as a percentage of sales, then remuneration to agents is considered a variable cost.

Fixed costs

Fixed production costs of an enterprise are those that do not change in proportion to the volume of production.

The share of fixed costs decreases with increasing production volume (scaling effect).

This effect is not inversely proportional to production volume. For example, an increase in production volume may require an increase in the number of accounting and sales departments. Therefore, they often talk about conditionally fixed costs. Fixed costs also include expenses for management personnel, maintenance of key production personnel (cleaning, security, laundry, etc.), organization of production (communications, advertising, bank expenses, travel expenses, etc.), as well as depreciation charges. Fixed expenses are expenses, for example, for renting premises, and the rental price may change due to changes market conditions. Fixed costs include some taxes. This is, for example, single tax on imputed income (UTII) and property tax. The amounts of these taxes may change due to changes in the rates of such taxes. The amount of fixed costs can be calculated using the formula:

Рpost = Zaup + AR + AM + N + OR