Production is an activity of man as a result of which he satisfies his material needs.Since nature can not provide him with all the good in the required amount, he is forced to produce them.From this we can conclude that the production - an objective necessity.Human needs are divided into spiritual and material, it is only a rough division, but it accurately reflects the social and natural human needs.Satisfaction of the spiritual principle of man no less troublesome than the material, however, they are also provided with a modern industrial power production.
With the development of the standard of living considerably grow and human needs, economic theory is the trend, as the law of increasing requirements.As a result of the growth of human needs production should continue to grow, to provide the necessary human standard of living.Appointment of production - is the complete satisfaction of the needs of human society, it is achieved in part because of the interaction of man and nature.
Every company eventually focused on obtaining the highest possible profit at the same time it is clear that none of the production of goods or services is not without costs.On the acquisition of raw materials, payment of workers and advertising company carries out specific costs.At the same time it seeks to launch a production process in which the desired volume of production will be achieved at minimal cost to the organization of production.
There are variable and fixed costs.The variables include the cost, the amount of which varies depending on the volume of production.These costs include payment for transport services, wages, purchase of raw materials, fuels and other materials.Variable and fixed costs in the amount form the overall costs, which largely determine the profitability of production.
In order to ensure the necessary level of output the firm must implement a series of cost.Depending on changes in the volume of these expenses vary the volume of products.Some volumes are subject to costs adjustment fast enough, while others require more time to resolve the issue.Costs regulation which requires a lot of time, determine the size and parameters of the production capacity of the company and are called fixed costs.
Fixed costs - it costs the use of factors of production, at a cost determined by the consumption of resources in their natural state, while costs represent the cost of manufactured cost.In a separate company or firm fixed costs include individual costs of production, which are the costs of a particular subject, and the public, aimed at the production volume of some products.
Given the above facts, we can conclude that in a market economy can and must manage costs.Economic thinking goes to a whole new level of logic, and it means, variable and fixed costs are subject to a fundamental change, in which the need the need to create new theories, as well as a brand new training staff.All these changes required for the progressive innovative production management, which will inevitably lead to a significant improvement in the welfare of human life.
