Perhaps each counting small change in his pocket, wondering - where does the money go?Moreover, this issue is relevant to the top management of large industrial companies.After all, someone who is, and businessmen have always been the ability to count money.So, in order not to "go to the dogs" would not hurt to get acquainted with the concept of "total cost".
second edition of the modern economic dictionary gives the following brief elegant interpretation of the above terms, "total costs - a combination of fixed and variable costs."
That is, if for purely private individual is extremely important is the question of costs for the purchase of products in the store, for firms and companies, this problem becomes more complicated, since it is necessary to take into account more factors affecting costs than shoplifter range.There are those cost items, the cost of raw materials, payment of wages, taxes, transportation costs, etc.
As can be seen from the definition, economists usually divided the total cost of fixed and variable.This approach simplifies the task of assessing the cost.After all, the complex consists of a simple.And now let's try to deal with these fixed and variable costs.
If you have extra money, feel free to call it capital and invest in production.Of course, it bought as much as possible the new and modern equipment, the ability to bring profit to its owner.Magnitude of the sum invested in equipment will never change, and that it is constant.In addition, fixed costs include the costs for the use of buildings and facilities, major repairs and rent, the cost of administrative expenses is also included here.In the short term, regardless of the output value of the cost element is not changed.
volume variable costs, on the other hand, depends on the volume and dynamics of production.In other words, an increase in output leads to an increase in the cost of its production and sales.Costs of raw materials, auxiliary materials, energy and wages refer to this kind of costs.Naturally, the total variable costs require proper attention to himself, as impractical to stop the production process, for example, due to simple lack of bolts, purchase costs which were not planned in the design process.
combined in the article "overall costs" fixed and variable costs are taken into account when calculating the total cost of the project is necessary in the preparation of project documentation and various business plans.By the way, almost always need to be prepared for an increase in the total cost, particularly when dealing with a new project, have not tried, and, accordingly, do not know how it would be profitable and pay off.
Examples include state programs for economic development in regions with economic necessity.For example, in the export of raw materials from the colonized territories in India was the infrastructure of the whole country.As a result, the effectiveness of the draft at the beginning of its implementation was low.But, in the future, given the huge profits.
total costs can also be taken into account in the implementation of projects that are under a political motivation.Although, where politics begin, end of business.During the Soviet era, for example, was built a huge number of plants abroad, gave a dubious profit for the manufacturer.For example, China had built more than 1,500 plants, with a solid financial base for the kits, etc.in the Union.Total costs for the construction and commissioning of the projects are close to an astronomical figure, they paid for themselves or not, it is not known so far.
