Any production is not without costs.The costs (or costs) - is the cost of acquiring the various factors of production.
Such costs can be considered and analyzed in different ways.During the formation of economic theory formed dozens of different classification systems and formulas for calculating costs.C mid-20th century have spread two main types of classification:
- estimated production costs;
- in relation to the magnitude of the costs of production.
costs by the method of cost estimates are divided into economic, accounting and alternative.
economic costs - is all business expenses incurred directly employed in the production process.As a rule, the cost of acquiring external resources (materials for the production, tools, etc.), payment of the internal resources of the company, which are not included in the market turnover, and receive normal profit as compensation for the risk of the business.
Accounting costs - these are payments and other financial expenses incurred by the company for the purchase of external inputs.
Accounting costs can be divided into direct (directly in the production costs) and indirect (overhead, amortization, payments to the bank, etc.).
between economic and accounting there are alternative costs.In fact - this is the opportunity cost that every entrepreneur hopes yourself.
In relation to the volume of production costs in the short period of time, they are divided into fixed, variable and total.
standing - it costs that do not depend on the value and volume of production, to be paid in any case.These include wage permanent staff and managers, amortization, mortgage payments and insurance, rental of premises and areas, and other expenses related to the very existence of the company.
Variable costs - is the amount of cost to variable resources that can vary depending on the volume of production.This includes the cost of materials, wages of production personnel, transport costs, payment of electricity, etc.The greater the volume of production - the higher variable costs.
Fixed and variable costs add up to the total cost of production.If the value of production is equal to zero, the overall costs consist only of a constant value.When production begins, the overall costs are gradually increasing their value respectively add variable costs to the general.
To evaluate and compare the efficiency of production, calculated its average costs, which can be briefly defined as the profitability of the production of a certain amount of product, conventionally called units.
Average costs - it costs, which account for one unit of product.They are also divided into fixed, variable and total.
constant average costs - these are the same fixed costs, but in terms of unit of production.Their peculiarity is that they vary depending on the volume of sales, not on the volume of production.
Average total cost - is the variable costs, the amounts expressed in the unit.They directly affect the principle of diminishing and increasing returns on factors of production.Under the influence of the principle of increasing returns overall average costs initially fall, reaching a certain level, and then begin to grow steadily under the influence of the principle of diminishing returns.
Total average costs - the sum of all costs per unit of production.To count them, you can use two ways:
- divide the total cost by the number of products;
- add up the average variable and average fixed costs.
smallest value of the average total cost determines the most efficient and profitable in the short-term level of production.
