Production costs and their classification

production costs and profits.

under the cost of production to understand the costs of creating the goods.The expenses include the cost of the payment of raw materials, wages employees, depreciation, and other costs associated with the activities of the enterprise.As a result of its products, the company derives revenues.Part of the proceeds offset the costs of production, and the other is pure profit.This means that they must be less than the value of the goods on the net profit.There are production and distribution costs.The former include the costs associated with the material existence of the product.And the second to arise in connection with the sale of products produced by the enterprise.They include net and additional distribution costs.Chistye- is the cost of rent retail space, advertising revenue accounting.Additional arise in connection with the transport, warehousing, storage and packaging products.

production costs and their classification.

There are obvious and not obvious opportunity cost.Using the productive resources of most of them.Resources have properties of scarcity and limitation, that is, if they are used for one purpose, on the other can no longer be used.For example, the money spent for the purchase of cement, you will not be able to subsequently spent on the purchase of gravel.Opportunity costs are considered from the perspective of the lost possibilities of using resources in a different sphere.These include payments to persons working for the company, the owners of natural resources investors.These payments are made in order to attract production factors, apart from the alternative application.Under the explicit costs understand the opportunity costs, expressed in the form of cash payments.Among the obvious include: staff costs, raw materials, transport costs, utility bills, payment of banks.

Under the implicit understanding unpaid costs of other alternative costs for the use of company-owned resources.

production costs and their classification.

There is a division of the costs of economic and accounting.Economic - a cost which include the normal or average income.These include the costs of the company, subject to the better economic decisions on consumption of resources, that is, that is what should be the ideal and what the enterprise should strive for.Accounting as opposed to the economic, do not include the cost of factors of production owned by the business owners.

production costs and their classification.

internal costs arising from the use of its own products, turning into a resource for further production of goods firm.Outside is the cost of money for the acquisition of resources that are not owned by the company.

production costs and their classification.

Fixed costs arise regardless of the volume of production in the short term.They arise due to the existence of production equipment and have to be paid under any circumstances, even if the firm does not produce goods.They can be avoided only stop the activities of the company.If they can not be avoided even in this case, they are called non-returnable.

Variable costs - costs, depending on the volume of output of goods company.This is the cost of raw materials, energy, fuel, transportation, etc.The bulk of these costs fall on the production of materials.

limit - linked with the production of additional units.