production costs - is the cost of the acquisition of factors of production: land, capital, labor.Production costs, which include normal profit is called economic or imputed.And they do not amount to the economic costs, which are used in accounting.The owner of the company profits are not included.
So, how is the structure of the costs?
Gross expenses - costs that are necessary for the production of a product at a given time.They are variables and constants.The first group - a direct cost.Fixed costs do not depend on the number of products produced and the organization carries them in any way.These include costs for utilities, purchase of buildings, etc.
Direct production costs - costs that are related to labor costs, the purchase of basic materials and raw materials, fuel, etc.They depend directly on the issue of production.The more is required to produce products, the greater the need to feed.
fixed costs and direct costs include the cost of production.
entity shall clearly identify the possible volumes of production in order to avoid excessive production costs.To do this, you need to study the dynamics of the average cost.If the direct costs and fixed costs attributed to how many products will be produced, we obtain the average cost.
average cost may be higher than the market price, equal or fall below it.The company will be profitable if they are below the market price.When a company compares its costs of production in the various sectors, it receives an amount of opportunity costs.They are a cost of production of other goods, from the issue of which the employer can refuse if it considers that it will be able to create a great product effektivnost.Chtoby formulate a strategy of the company, you need to define additional or marginal costs.They are required under the condition that the company increases the amount of output per unit of product.If it is assumed that the direct costs will be unchanged, the marginal costs are equal to the increase in variable costs (raw materials, labor).
for the company, it is important to compare the marginal cost and average.This helps in managing the organization, determining the optimal production volumes, in which the company makes a profit and has always sustained profitability.
In the current market conditions for the calculation of the efficiency in the production involves the comparison of income and costs.The costs include salaries, expenses for materials, components, utilities, and others.Direct costs can be considered as key, as they affect the volume of production.
To reduce costs you need to spend some of the activities: training of staff, the use of new techniques and technologies of production, the use of new modes of transportation, new advertising and trade.
