Cost reduction is extremely important in the overall development of the enterprise. it gives the company a competitive advantage and allows it to take a strong position in the market.

Cost reduction plays a primary role in the overall increase in production efficiency. Of course, production efficiency can be improved in different ways: it can be a cost reduction or some changes (improvements) to the product, which can ultimately increase the demand for these products and, as a result, increase the profit of the enterprise. At the same time, reducing the cost of production is more important for improving production efficiency, since it has a much greater economic effect than an increase in sales caused by making some improvements to the product. We will try to demonstrate this using the example of the AN-31 product considered in this work (while rounding some values ​​​​for better perception) and present the data in the form of table 12

Table 12

line number	Factors affecting profit		initial conditions	decrease in m/s by 7%	increase in sales volume by 7%
	unit cost products
	volume of sales
	unit price products
	profit (2)*((3)-(1))

As we can see from the table, with a 7% cost reduction and, in another case, an increase in sales by 7%, the increase in profit is 50% in the first case, and only 7% in the second (1500/1000 \u003d 1.5 i.e. by 50%, 1070/1000=1.07 i.e. increase by 7%). Thus, ceteris paribus, cost reduction gives a 40% greater effect than an increase in sales (1500/1070=1.4, i.e. 40% more).

Cost reduction implies economical consumption of resources, which indicates not only a quantitative, but also a qualitative impact on the country's economic potential and its prospective changes.

Since the cost of production consists of different items, then, accordingly, there are various ways to reduce the cost. These include: increasing labor productivity, improving the use of basic and auxiliary raw materials, fuel, energy per unit of output, and reducing losses. However, there is another way mentioned in the theoretical part - increasing the volume of production due to a more complete use of the production capacity of the enterprise - and, as a result, reducing the amount of semi-fixed costs per unit of output. Below we consider two cost reduction measures based on these methods.

First event:

At the heart of this activity is the economies of scale mentioned above. Thus, the production capacity of the ion-exchange resins department in shop No. 13 is designed for the production of AN-31 resin in the amount of 270 tons per month. At the same time, only 70 tons are actually produced, i.e. equipment is only 26% loaded ((70 / 270) * 100 = 26%). This is a rather low indicator of equipment utilization, and in this case the overall production efficiency is low, due to unreasonably high costs for the operation and maintenance of equipment per unit of production. To correct this situation, I propose to increase the production of this product to 150 tons per month. Thus, with the intensification of commercial efforts and taking into account the uniqueness of the product, as well as the almost complete absence of competitors in Russia, it is possible to achieve an increase in sales up to 150 tons per month.

Let's make a calculation taking into account the event (under the conditions of the reporting year 2002) and compare it with the planned one in table 13:

Table 13 Comparison of standard costing and activity-based costing

Name of articles	Planned costing for 2002, rub. (issue 70 volumes)	Planned costing 2002, rub. (issue 150 t.)	Deviations
Auxiliary materials
Semi-finished products
Total material costs
Energy costs
Basic salary
Social contributions fear
Total Recycling
shop expenses
2nd redistribution
shop cost
Other productions. expenses
Production cost
Factory overhead
Non-manufacturing expenses
Full cost

The table shows that the total cost decreased by 10897.28 rubles, which is 14.7% ((62513.52 / 73410.81 - 1) * 100 = 14.7%). The conditionally variable costs in this case did not change, but the conditionally fixed costs were adjusted as follows:

we will show on the example of the basic salary (it is worth noting that with an increase in the output of additional labor, it will not be required, since the production process is in a semi-automatic mode and constant human intervention is not required)

Main salary (issue 150 tons) \u003d 2209.28 * 70 / 150 \u003d 1031 rubles.

That. fixed costs have been reallocated.

Second event

Consider another opportunity to reduce costs. This time the event is aimed at saving energy resources. The essence of this event is as follows: in the preparation of hot air for drying chambers, hot steam is used, which condenses during heat transfer, and the condensate is then removed from the apparatus - thus it was proposed to first heat the air with condensed water (the temperature of which is still quite high), and only then steam from which the condensate for the initial stage would be obtained. All this will lead to saving steam, reducing its consumption by about 1.8 times, while the implementation of this project does not require significant reconfiguration of equipment and, therefore, material costs in this case will be minimal.

Cost recalculation taking into account activities:

As a result of this measure, we get a reduction in steam consumption from 7.5 Gcal to 4.1 Gcal, which will reduce the cost of steam from 2235 rubles. up to 1221.8 rubles. As a result, we obtain the results presented in Table. 14:

Table 14

In this case, the cost reduction will be 1013.2 rubles, i.e. 1.4% ((72397.61 / 73410.81 - 1) * 100 = 1.4%).

This event gives an average annual economic effect of 851,088 rubles. (1013.2 * 12 * 70 = 851088 rubles, where 70 is the average monthly output in tons). Considering all this, a decision has already been made on the implementation of this project and it is currently being implemented.

Complex event

In this section, we will find the changes in the cost of both events and compile a summary table of changes in the cost:

Table 15 Cost calculation taking into account all activities

Name of articles	C / C for 2002, rub. (issue 70 volumes)	C / C for 2002, rub. (issue 150 tons with energy changes)	Deviations
Auxiliary materials
Semi-finished products
Total material costs
Energy costs
Basic salary
Social contributions fear
Total Recycling
shop expenses
2nd redistribution
shop cost
Other productions. expenses
Production cost
Factory overhead
Non-manufacturing expenses.
Full cost

Thus, the total cost reduction amounted to 11910.48 rubles. or 16.22% - which is a very big savings.

Let's calculate the average annual economic effect of the proposed measures:

11910.48 * 12 * 150 \u003d 21438864 rubles, or about 21.44 million rubles / year.

This is a very large savings, which will provide a significant competitive advantage for the enterprise and increase its overall profitability.

The cost of production is the cost of its production and sale, expressed in monetary terms. In addition, it is a qualitative indicator that reflects the results of economic activity, its achieved results and the availability of reserves. Low costs for the production and sale of goods contribute to saving labor, improving the use of fixed assets, materials, fuel and energy reserves.

By performing management accounting using historical cost, the manager can clearly represent the costs of production. The use of various methods for calculating the cost of production depends on the complexity of solving the management problem. Costs that are not included in the factory price of the goods during accounting may take part in the calculations.

There are the following cost types:

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• finished goods;
• sold goods.

Thus, taking into account the cost of production, the procedure for its calculation is simplified. This allows you to abandon the search for objective ways to share the total economic costs. Using this approach, the company's income will always remain minimal, since general business costs depend on the financial result for a certain reporting period and do not constitute the cost of finished products.

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Cost of production cost

Modern economists distinguish types of costs:

• costs associated with the choice of production capacities, the launch of their work;
• expenses that show investments in the sale of products, the use of different technologies, the search for management decisions and their implementation;
• costs associated with the enterprise's investments in the development of the scientific and technical foundation, various research and development projects;
• service and maintenance costs;
• investment in the modernization of working conditions;
• employee salaries, paid vacation, social package;
• insurance premiums;
• ownership of fixed assets, depreciation;
• purchase of materials and raw materials.

According to many economists, the bulk of the cost is the purchase of materials and raw materials that need to be further processed.

Some industries account for about 80% of the total costs. Sometimes the cost of production of an enterprise is formed from the working moments of the factory (accounting for defective goods, technological downtime, etc.).

What is not included in the cost? Based on modern economic theories, you can find out what does not constitute the cost of production. This includes costs and unrealized profits that are associated with the implementation of temporarily stopped projects. Moreover, these can be projects, both objective and unrelated to the desire of the leadership. The costs also do not take into account court costs, fines and other sanctions provided by law. Some economists suggest not to use receivables that cannot be collected or that have already been written off in the cost of production of goods.

Costs of the cost of goods are classified into two categories.

1. Components of a single kind (this may include the remuneration of employees).
2. Complex (may include the cost of purchasing equipment).

There are a number of fixed costs. Their value does not depend directly on the amount of output (rent of premises, for example), but there are variable costs that correspond to production rates (purchase of raw materials, wages to staff, hiring new personnel).

A number of economists classify expenses based on their belonging to individual financial elements. Here, the share for a specific category of expenses in the general formula for the cost of production is calculated. The costs, in the presented situation, are distributed according to their individual economic properties. At the same time, their essence depends on the industry in which the enterprise operates.

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There are some industrial segments that require a lot of labor. The main amount of expenses is allocated to the salaries of employees. In resource-intensive areas, for example, spending on the purchase of materials and raw materials is more prevalent. There are also a number of energy-intensive segments with high equipment costs.

Production cost factors are represented by the three most common economic elements of costs - raw materials (materials), wages and depreciation.

Financial costs indicate the cost of purchasing resources, semi-finished products, components from different distributors. This also includes payment for alleged outsourcing services to contractors, which is associated with the supply of material and raw materials. Sometimes the cost of production includes work related to the identification of optimal distributors.

Given the policy of building production processes, you can see how the costs in the presented area are reduced. This is facilitated by the potential for the sale of balances of unspent materials. In the case when a company is engaged in self-sufficiency of raw materials, extracts it, for example, from the depths of the earth, then the cost of production of the required resource is calculated.

Financial costs that make up the cost of production represent a set of costs:

• purchased raw materials, materials and those components that require subsequent processing using the factory's facilities;
• services (works) that relate to the stages of production and are performed by other companies;
• raw materials of natural origin (land resources, water, wood) and corresponding rents;
• different types of fuel (fuel);
• electricity.

In some cases, the cost of production includes a lack of resources in amounts indicating the amount of actual natural loss.

It turns out that the price of materials and raw materials depends on the offered market price, the commission and the corresponding costs of suppliers (for example, payment of customs duties, compensation for the work of brokers).

The basis of any business is personnel. Indeed, practically the main factor affecting the cost of production is the remuneration of employees. This is determined by the segment in which the company operates. That is, in different industries there may be common labor costs. Somewhere it is 10% or 50% of the cost of total costs, and in other industries about 90%.

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Economists use two methods of accounting for the cost of production, which are related to the wages of employees. According to the first, associated costs are divided into two types:

• remuneration in the form of monetary compensation for the work performed,
• mandatory payments to social funds.

Supporters of the first concept believe that wages and contributions to the PFR, FSS and MHIF are usually always interconnected. When the accounting department calculates labor compensation for the personnel of the enterprise, then naturally, about 30% of the salary and bonuses are transferred to the social funds indicated above. In addition, 13% personal income tax is paid. Thus, it turns out that it is not entirely correct, when taking into account the cost of production, to divide wages and payments to social funds among themselves.

Proponents of the second concept note that such varieties as outsourcing (labor functions are transferred to another enterprise) and outstaffing (employees officially registered in another company are invited to work) are gaining momentum. In this case, the company does not pay contributions to social funds.

Naturally, this method will be the most attractive for most businessmen, as it helps to reduce the cost of production, which depends on the cost of paying for the labor activity of personnel. Usually the use of outsourcing and outstaffing increases the profit of the organization. In any case, this has nothing to do with payments to the PFR, FSS and MHIF. Thus, when considering costs, it is best to analyze these items separately from labor compensation costs.

Analyzing the second method, economists propose to perceive the costs of outsourcing and outstaffing as material. The clause on settlements with contractors will help here. However, some experts use a counterargument for this thesis. They believe that more than 50% of the company's employees are personnel represented through outstaffing, and the bulk of the work is outsourced.

The main types of expenses in terms of wages are fixed payments, bonuses, incentive payments, as well as expenses that indicate an increase in labor incentives.

For example, social and maternity payments are not included in the cost of production, as they are paid by state funds. In this case, the company's expenses will be only during accounting support. That is why, the following types of costs are included in the salary.

Cost and depreciation. The cost of production during the release of products using new machines is lower than when working with old ones. This suggests that materials are used more efficiently, the number of defects is reduced, and possible downtime due to equipment repair does not occur. That is, from the economic side, it is much more profitable to buy new equipment than to use outdated equipment. Although this way is not always correct. Sometimes breakdowns are minor and easier to fix the machine. In any case, do not hide from the depreciation costs of the enterprise. It forms part of the main component in the manufacturing process.

The criteria by which an enterprise makes a decision - whether to purchase new equipment or repair the current one - vary greatly.

Some factories set their standards based on the estimated percentage of depreciation of funds. Others, for the main criterion, take - the period of operation, the time of use of equipment, which is indicated in machine hours. In any case, the production cost of products depends on which industry the company belongs to.

A number of economists deal with separate economic costs - "other expenses". Some experts propose to group them, in terms of individual components, with the rest of the costs. However, in life for them there is a separate category.

"Other expenses" - tax, insurance payments, compliance with environmental obligations, compensation of interest on loans, payment for communication services, settlement and cash support, repair work.

Formation of the cost of production: calculation formula

The factory price for the goods is formed by revising the calculation objects, that is, using the range of manufactured goods. Instructions in this case are methodical recommendations and instructions. The main methodological problems are presented:

• the choice of the object of calculation;
• the method of estimating the remaining production and finished goods;
• cost accounting method;
• the order of division of indirect costs;
• way of establishing the cost of production (production or full).

The process of generating information in accounting is conditionally divided into a number of stages:

Cost group on expense accounts.

In this case, direct costs, which are closely related to the release of goods, the implementation of work and services, relate to a specific unit of the finished product, are formed on the debit of account 20 “Main production”, and indirect costs are first studied on accounts 25, 26, 28. This allows you to distribute the accounts of the main production with respect to any indicator involved in the order that implements the accounting policy of the organization.

Formation of the factory price for labor activities, services of other enterprises and companies in the service sector.

Auxiliary enterprises apply similar methods of cost analysis in production and methods of calculating the cost of production during manufacture, as well as in the main production process. In addition, the direct costs that are responsible for the manufactured products, the performance of work and the provision of services related to a specific unit of the finished product, after the implementation of a special processing method in the shops of additional and service enterprises, refer to the debit of account 20 “Main production”.

Expenses for the cost of production, which are written off indirectly, are allocated to accounts that take into account the direct costs of the main production (account 20), finished goods (accounts 40 "Output of products (works, services)", 43 "Finished products"), sales (account 90 ), which establishes the accounting policy for the indicator in equal proportions.

Location of costs for production maintenance and management.

Indirect costs, which take into account accounts 25, 26, based on the above methodology, diverge according to the accounts of the main production. Thus, the current regulatory documents on the expense accounts can form both the full actual cost of production and the current production initial cost. Chooses one or another method - the accounting policy of the enterprise. However, the accounting method used does not affect the costs collected by account 25. In any case, all of them fall into account 20 “Main production”, 23 “Auxiliary production”.

In the same way, the distribution of expenses takes place, accounted for by account 26 “General business expenses”, when the full real cost of production is formed on the calculation accounts. In the case when the accounting policy writes off general business costs to sales accounts, then the expense accounts form the actual production initial cost of the goods.

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Identification of marriage and its accounting in the formation of the production cost of products.

In this case, the price of marriage is reduced to:

• the price of the rejected goods at the price of the intended use;
• the amount to be recovered from the persons who committed the marriage;
• the amount to be recovered from the distributor for the sale of materials and semi-finished products of poor quality, because of which the marriage occurred, etc.

Thus, the cost of production includes - the costs of defective products, which are distributed in equal quantities to all other products.

The initial cost of the residual production of the main manufacturing process and products.

Product costs related to the respective types are also calculated - they diverge between the finished product and the work in progress. The actual amount of work in progress costs is determined using the methods of production cost, which is established by the accounting policy of the enterprise, based on inventory information or intrashop accounting data.

Based on clause 64 of the Accounting Regulations, an unfinished production process may be present in the balance sheet:

• as the actual production cost of products;
• as a standard (planned) production initial price;
• as direct items of expenditure;
• as the price of raw materials, materials and semi-finished products.

At the same time, the price for the production program (output products) is formed by accounting rules as the sum of the main production costs for a certain period, taking into account the absolute changes in the stock of the unfinished manufacturing process, relative to the beginning of this period, without considering returnable waste.

For the general case, the real production cost of production is calculated by the formula:

FS \u003d NZPnm + Zfact - VO - NZPkm, where:

FS - the real initial cost of the released goods in the production process;

NZPnm (km) - the amount of work in progress by the beginning of the month (end of the month);

Zfact - operating costs for the manufacture of goods per month;

VO - the price of returnable waste.

Recycled production waste means:

• raw material residues that make up the cost of production;
• unused materials
• semi-finished products,
• coolants,
• other types of material resources that were formed at the time of manufacture of products (services, works), which completely or partially lost the consumer appearance of the resource received (lost their physical or chemical characteristics). Therefore, they are used with increased costs (reducing the yield of goods) or are not intended for their direct purpose at all.

Recyclable waste does not include residuals of material resources, which, thanks to established technologies, are distributed to other workshops, divisions. There they are used as a full-fledged material for the manufacture of other types of products (services, works).

By combining the information obtained about the stages of production and the cost of finished products, the current production initial price of a unit of goods and all products for a specific period is calculated.

The cost of selling finished products (sales expenses). Such expenses are taken into account on account 44 “Sales expenses”.

However, the costs responsible for the commercial promotion of marketable products must be written off every month (in part or in full) to accounts that take into account the sale of goods (services, works). Thus, the full actual factory price of the finished product, together with selling expenses, contributes to the realization of the cost of production.

Partial write-offs are incurred for transportation and packaging costs. These may be separate types of shipped and sold products that have a certain weight, volume, production cost or other relevant indicator.

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Production cost: calculation example

Consider an example of the cost of production using the table below.

Costing Calculation Method:

• We receive returnable waste from raw materials and materials (a certain percentage is taken).
• To determine the additional wages, we take into account the following points: with a basic salary exceeding 200 thousand rubles, additional allowances will be 10%, if less than 200, then 15%.
• Accruals for wages - 30% of the main and additional wages (10% allowance, which has been introduced since 2015 for annual income exceeding 600 thousand rubles, is not taken into account here).
• Costs for maintenance of production equipment - 5% of the basic wage.
• Expenses for household needs - 9% of the average level for basic wages.
• Costs for production needs - 18% of (25% OZP + 75% DZP). OZP - basic salary, DZP - additional.
• The production cost of production is equal to the volume of costs for maintaining the operability of equipment, material resources, components, basic and additional wages, wage allowances, expenses for household and production needs, minus returnable waste.
• Costs not related to production activities - 3% of the production initial cost.
• The full selling price consists of the production cost of production and production costs.
• The revenue of the enterprise is taken into account as a percentage of the total cost of production.
• The wholesale price is the full cost and profit of the manufacturer.
• VAT is calculated from the wholesale price.
• The selling wholesale price consists of the manufacturer's wholesale price and indirect taxes.

Based on the diagram, we enter the available values ​​​​and formulas for calculation in an Excel spreadsheet.

Clarifications on the calculation of some costing items:

• Returned waste - = B2 * 12.54% (percentage is taken from the 1st table).
• Additional pay - \u003d IF (B6<200;B6*0,15;B6*0,1). Функция «ЕСЛИ» помогает рассчитать различные способы начисления.
• Payroll accruals - = (B6 + B7) * 30%. If we rely on the law and take an additional 10% from the annual salary of more than 600 thousand rubles, then we use the same “IF” function.
• The cost of maintaining the operation of the equipment - = B6 * 5%.
• Total production costs – =18%*(B6*25%+B7*75%).
• General housekeeping costs – =9%*B6.
• The production selling price is =(B2+B3+B5+B6+B7+B8+B9+B10+B11)-B4.
• Production costs – =3%*B12.
• The total cost of production is =B12+B13.
• Manufacturer's profit - \u003d B14 * 3.45%.
• The manufacturer's wholesale price is =B14+B15.
• The formula to calculate VAT is =B16*20%.
• To calculate the selling wholesale price - =B16+B17.

In the same way, the cost of production B and C is calculated.

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Expert opinion

Production cost and costing

Elena Breslav,

Head of Business Matrix, Riga

An excellent tool for increasing efficiency is costing, especially complete and especially when combined with price data offered by competitors. For example, the production of 1 m³ of polystyrene foam boards costs $29 for you, while other manufacturers are able to sell them for $28. This suggests that you need to look for reserves. They are divided into 2 groups: reserves for cost savings and reserves for output growth.

Let's imagine that the cost of production of polystyrene boards is lined up like this: 64% of the costs are allocated to variable costs. These are raw materials and piecework wages. Accordingly, it is necessary to search for significant ways of saving here. To do this, it is necessary to find cheaper raw materials and opportunities to increase labor productivity. However, there is also a situation where the main reserves will be hidden in a decrease in specific stable costs. In this case, not only will it be necessary to reduce costs in order to control the cost of production, but also to look for ways to increase output. However, different metrics are allowed for management. For example, the most convenient volume indicator for a motor transport company will not be profit and not the total number of flights, but the number of flights per 1 car for a certain time period. The higher this indicator, the less stable costs are required for 1 flight and the lower its initial cost.

The underutilization of production capacity is an indirect signal that the problem will not be wastefulness, but insufficient sales. Depending on the branch of the operating enterprise, the critical load factor is calculated (30, 50 or 70%). The manager always intuitively feels this edge and can give the right answer whether it is necessary to look for additional workload or reduce costs. Naturally, it would be better to allow a full calculation of the cost of production and analyze its dependence on the load of equipment, the financial service, and also search for cost items that can be reduced in various ways.

How is the cost of production calculated?

It is quite difficult to take into account the initial cost of production. This process involves the use of a wide range of possibilities, including the statistical method of analyzing the manufacturing process. This is done in order to compile a list of necessary expenses, without which it is impossible to release the goods. Also, to optimize their use, appropriate resource standards are created.

Based on the previously stated, the main volume of production costs is raw materials. Thus, accounting at enterprises focuses on this component, which is the cost of production. Experts distinguish three main accounting methods:

• document flow;
• conducting an inventory;
• evaluation of the factory line.

The first method fixes with the help of paper such moments as: the norms of raw material use, possible deviations from them during the production process. There are cases when documents reflect conditions that allow spending outside the norms of resources or prohibit it. Also, in order to optimize the manufacture of a product, it is often indicated what is the potential for replacing one type of raw material with another.

Inventory - carried out to count the existing resources. This method of accounting for the cost of production is carried out with a certain interval (shift, day, week, etc.), which is set by the company's managers.

Analysis of the effectiveness of the factory line - complements the method of documentation (document flow). Here they analyze not only the degree of backlog from the norms, but also the reasons why this happened.

In the process of elimination, the goal is to solve the problems found with an increase in costs. This helps to reduce the cost of production.

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Production cost management and analysis

The stability of an enterprise depends on the effectiveness of its management. The ability to develop and compete in the market is largely determined by the quality of product cost management, which is of increased importance in a rapidly changing economic environment.

Efficiency reserves

The search for information about competitors' prices for similar products directly affects the calculated cost. And if you understand that competitors offer the same product at a lower price, you will have to look for reserves to increase your own efficiency.

Errors in costing

Product cost analysis is not always correct. Sometimes attempts to calculate the cost price give incorrect results. The risk of making a mistake is high. For convenience, we divide them into two groups:

• meaningful errors in the calculation of the cost (incorrectly chosen indicators of cost or volume);
• calculation errors (incorrect calculation)

There are also purely technical errors, typos, random errors.

Why do all these errors occur? Is it only the illiteracy of the economist that is to blame? Often, an error in calculation is precisely the error of an economist, caused by the wrong choice of approach in the calculation. For example, a specialist used the method of taking into account all existing costs to calculate the full cost, while in economically developed countries only the direct hosting method has long been used (a reduced calculation that takes into account only direct costs). Errors can also be caused by an incorrect choice of the distribution base, for example, the cost of purchasing raw materials and materials instead of the cost of production. If the distribution base is chosen incorrectly, then the result of calculating the cost of production can turn out to be completely opposite. A high-margin product using the wrong distribution base can be unprofitable.

Errors in the calculations themselves are also common.

Is it worth making a loss-making product?

Production cost management and analysis does not imply the termination of production of products that, according to calculations, seem unprofitable. It's all about the right distribution of costs. It is possible that the product itself would have shown a loss, but it is sold in tandem with a popular and well-purchased one, thus forming the organization's income. Refusal to implement it would be an extremely wrong step. It is advisable to consider these two goods as a single product and take into account their total cost.

We know many examples from the history of the world economy, when a manufacturer used a loss-making product in order to make a profit and achieved significant results. Take the same unprofitable airline flights that are nonetheless used to transfer passengers to profitable flights. It should not be forgotten that excessively low prices for computer equipment and household appliances are offset by high prices for consumables.

But despite possible errors in the calculations, it is still necessary to carry out an analysis of the cost of production. At the same time, it is important to correctly determine the choice of cost control mechanism. Perhaps you will have this constant systematic analysis and search for efficiency reserves. Or maybe you will use the situational search for new suppliers. In difficult times, you can choose the method of reorganizing the enterprise, or you can invest as much money as possible in advertising and promoting the business. Many different approaches provide a variety of ways out of difficult situations and effective company management.

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How to sell at a price lower than the cost of production

Managing and analyzing the cost of production does not always result in increased profits. Often, a company is forced to sell goods below cost in order to attract new customers (stocks, sales), arouse interest in its products, expand sales markets through dumping wars. Or maybe a reduction in price compared to cost is necessary in order to become a winner in the competition for a government contract or simply get rid of products with an expiring shelf life. Be that as it may, the method of artificially lowering prices is associated with increased risks that must be weighed and assessed before using dumping tools.

Method 1. Hidden dumping

Some businesses sell goods at below market prices in order to take advantage of a competitive market and increase profits. But sales at prices below cost are sometimes associated with the goal of optimizing taxation. For example, in the case when the exporter sells products at the same price, and the importer understates it when reselling. Such operations will not pass by the control of the tax inspectorate, therefore it is desirable to provide evidence of the legality of the operations performed (the parties to the transaction are not interdependent). Otherwise, it will not be possible to avoid the collection of taxes and fines.

Method 2: Occasional Selling

Production cost management is often used when it is necessary to get rid of unnecessary products: to free up space in the warehouse, to sell goods that are not in great demand. Reducing prices relative to cost is a sure way to attract new customers and arouse their interest in the rest of the company's products.

Method 3. Deliberate dumping

Dumping wars are waged in order to gain a monopoly in a certain sector of the market. Deliberate dumping is often used when participating in competitive procedures. For example, a contractor company has set a goal to receive an order for the construction of a shopping complex. To this end, she reduced the cost of design by 15%, thereby reducing the cost of work from $600,000 to $510,000. As soon as the competition for the creation of the project was won, the company received an order for the construction of the complex as a whole. And if the cost of construction initially amounted to 1200 thousand dollars, now the company is forced to increase the cost of the remaining types of work in order to compensate for losses in the creation of the project. Thus, having increased the cost of construction work by 35%, the company received 1320 thousand dollars for the construction as a whole. Of these, 120 thousand dollars was profit. Consequently, the management of production costs (in this case, these are design and construction works) has brought a positive result.

• If you decide to reduce the price of products compared to the cost, do not go beyond what is permitted. Because if the cost is significantly underestimated, the transaction may be recognized as fictitious.
• Provide written evidence that the price reduction is appropriate. It is most useful to include a clause on the possibility of price reductions in certain cases in the Company's Policy, as a reasonable marketing ploy. Under no circumstances should the price reduction be personalized. The condition is legal only if it applies to all customers without exception.
• Competently draw up primary documentation, because it is subject to a thorough check by the tax authorities. Do not provide false information in it.

Do not make transactions with a sign of interdependence.

The tax authority will have to prove that a transaction made at a lower price is illegal. However, organizations should not relax, because if they do not give the tax authorities a serious rebuff, they will use all the accumulated legal tools to win the court. If the price is lowered by more than 20% below the cost, the taxpayer will be forced to justify the need for such a decision (Article 40 of the Tax Code of the Russian Federation).

Is it possible to reduce the cost of production

How is the initial cost of production analyzed?

There are a number of key indicators. These, for example, include the general estimate, the number of expenses in accounting for one commodity unit, as well as for 1 ruble of goods sold.

The first indicator reflects the amount of expenses that were recorded by the company when using all types of production capacities, payment for engineering and installation services, and setting up the release of new products.

This indicator can be divided by the number of units of goods produced, and also serve as the basis for calculating the coefficient, which correlates with 1 ruble of the cost of production.

Cost components can be classified according to a number of other criteria.

This may include the composition of expenses for a certain department of the enterprise - a scientific department, a workshop, retail, etc., the length of the period for using funds (a week, a month, etc.), a reporting method (forecast, current, etc.) .

Factors affecting the cost of production

Economic and technical factors also affect the initial cost of production. They are classified into four groups:

1. Technical.
2. Organizational.
3. Issuers.
4. Household.

The first group is represented by criteria that determine the degree of technical and scientific progress, as well as their role in the cost of production. The reduction of this economic indicator in this group of factors is possible due to the use of new equipment and manufacturing technologies, automated conveyor lines and improvement of the technical properties of the product, which means its cost. Thus, this group of factors helps to reduce the cost of production by reducing manufacturing costs: automation of the conveyor, a decrease in the number of employees, and consequently, wages.

The group of factors number two reduces the initial cost by improving human labor. It is important here: to use working time correctly, to ensure the improvement of working conditions, to improve the management system, and also to eliminate possible downtime and losses.

In the third group of factors, the quantity and quality of the goods produced are important. This includes the improvement and increase in output without increasing production capacity, which will lead to a decrease in the cost of production per unit of goods.

The fourth group of factors is represented by changes in market prices, tariff rates, the cost of transport services, changes in the order of tax collection and the values ​​of the general price increase, and other changes associated with the monetary system.

• 8 ways to improve financial literacy and put it into practice

How to reduce the cost?

The goal of every business is to become more profitable. When an enterprise conducts an analysis of the cost of production that goes into production, it comes to the same conclusions: cost reduction, creation of an effective business. How?

Specialists distinguish the following areas of work:

• use of methods of careful attitude to raw materials;
• improvement of labor activity (reduction of downtime);
• use of new production technologies;
• measures to reduce the cost of products (new distribution channels);
• reduction of managerial positions, if necessary.

As a rule, the adoption of all measures is carried out comprehensively. However, each of them can be given a higher priority.

Expert opinion

Should the company reduce the cost of goods (services)

Zoya Strelkova,

Head of the "Company Economics" direction of the "Training Institute - ARB Pro" group of companies, Moscow

Before you start cutting prices, analyze the following factors.

1. Profitability. In the case when the company's products are not popular, then discounts will be unprofitable. Thus, there is no need to increase turnover, because they will require an increase in costs. You can temporarily reduce sales and during this period find new opportunities to reduce the cost of production.

2. Revenue per employee for the year. This is a fairly average value, however, it can be used to evaluate the effectiveness. When profits decrease, the company needs to work on optimizing a number of operations and reducing indirect costs. The increase in turnover will have a negative impact on profitability and income. The solution here is to reduce costs and increase the efficiency of business processes.

3. Assets. If office, warehouse and any other premises do not belong to the organization, then some areas should be reviewed and abandoned. If it is the property of the company, then maximize the use of all the space so that there is a profit to cover the costs of their maintenance.

4. Purchase prices. When an enterprise is interested in suppliers and is one of the leading customers, it is possible to agree on an increase in the volume of purchases and the provision of discounts, which will reduce the cost of production. If the supplier has no desire to conduct such a scheme, then buying large volumes from him also does not make sense. In this case, it is better to find new distributors.

5. Accounts receivable and inventory. These are assets in which the funds of the enterprise are mothballed. If you notice a trend that when you ship more, you lose more money, then it is better to take action and ship less. This will increase turnover and liquidity.

Reducing the cost of production: 5 ways

Method 1. Remove a part/part/element that the customer already has. Managing and analyzing the cost of production includes changing the configuration of products. Often, when reviewing a set of goods sold, it turns out that some part of it has no value and is practically imposed on the buyer. This means that it is quite reasonable to reduce the cost of products by excluding this part without compromising the functionality and integrity of the product.

Method 2. Leave the basic equipment if it does not harm functionality. Leaving the basic package, which allows you to operate the product, although it deprives it of some additional functions, you can significantly reduce the price of products.

Method 3. Simplify packaging. As you know, good packaging design costs a lot of money. And these costs are then included in the cost of production. If you save on packaging and choose a cheaper option, the cost of production will also decrease.

Method 4. Sell ​​individual items online only. Manage the cost of production by selling it via the Internet. This method will reduce the cost of selling. Some goods can only be bought through websites, and this is a characteristic feature of the modern economy.

Method 5."Change from the plane to the train." Another opportunity to reduce the price of a product as part of product cost management is to save on shipping. It is not necessary to use air mail at all, delivery by land transport is cheaper. In this case, the main thing is to deliver on time and in proper condition. And the way to complete this task is up to you.

ABSTRACT

Department: Enterprise Finance

Topic: Ways to reduce production costs

Is done by a student

Groups K-3-2

Kupriyanova A.B.

Scientific director

Assoc. Seregina E.Yu.

MOSCOW

Chapter 1: Technical and economic factors and reserves to reduce the cost of production……………………………………………………………………………………….2

Chapter 2: Reserves for reducing complex costs………………….……………………8

Chapter 3: Ways to reduce production costs……………………………………...10

References………………………………………………………………………………………………………17

INTRODUCTION

At present, in the conditions of a long and painful transition for Russia to a market economy, the effective organization of production is of great importance.

Gone is the state planning of the work of enterprises, most of the economic ties are lost. And in the new conditions, survival is possible only by increasing the efficiency of the enterprise, minimizing costs and maximizing profits.

One after another, economic crises put not only enterprises in a difficult position, but also ordinary citizens - consumers, the level of purchasing power of which determines the volume of sales of manufactured products.

Thus, it is necessary to identify ways to reduce the cost of production. In this essay, I will try to show these ways.

Technical and economic factors and reserves for cost reduction

Currently, in the analysis of the actual cost of manufactured products, the identification of reserves and the economic effect of its reduction, the calculation of economic factors is used. Economic factors most fully cover all elements of the production process - means, objects of labor and labor itself. They reflect the main areas of work of teams of enterprises to reduce costs: increasing labor productivity, introducing advanced equipment and technology, better use of equipment, cheaper procurement and better use of labor items, reducing administrative and management and other overhead costs, reducing scrap and eliminating unproductive costs and losses. .

The savings that cause the actual cost reduction are calculated according to the following composition (typical list) of factors:

1. Raising the technical level of production. This is the introduction of a new, progressive technology, mechanization and automation of production processes; improving the use and application of new types of raw materials and materials; change in the design and technical characteristics of products; other factors that increase the technical level of production.

For this group, the impact on the cost of scientific and technological achievements and best practices is analyzed. For each event, the economic effect is calculated, which is expressed in the reduction of production costs. The savings from the implementation of measures is determined by comparing the cost per unit of output before and after the implementation of measures and multiplying the resulting difference by the volume of production in the planned year:

E \u003d (C C - C H) * A H,

where E - savings in direct current costs

C C - direct current costs per unit of output before the implementation of the measure

C N - direct current costs after the implementation of the measure

A H - the volume of production in natural units from the beginning of the implementation of the event until the end of the planned year.

At the same time, carry-over savings from those measures that were implemented in the previous year should also be taken into account. It can be defined as the difference between the annual estimated savings and its part taken into account in the previous year's planned calculations. For activities planned over a number of years, savings are calculated based on the volume of work performed with the help of new equipment, only in the reporting year, without taking into account the scale of implementation before the beginning of this year.

Cost reduction can occur when creating automated control systems, using computers, improving and modernizing existing equipment and technology. Costs are also reduced as a result of the integrated use of raw materials, the use of economical substitutes, and the full use of waste in production. A large reserve is fraught with the improvement of products, reducing their material consumption and labor intensity, reducing the weight of machinery and equipment, reducing overall dimensions, etc.

2. Improving the organization of production and labor. Cost reduction can occur as a result of changes in the organization of production, forms and methods of labor with the development of production specialization; improvement of production management and cost reduction; improving the use of fixed assets; improvement of material and technical supply; reduction of transport costs; other factors that increase the level of organization of production.

With the simultaneous improvement of technology and the organization of production, it is necessary to establish the savings for each factor separately and include them in the appropriate groups. If it is difficult to make such a division, then the savings can be calculated based on the targeted nature of the activities or by groups of factors.

The reduction in current costs occurs as a result of improving the maintenance of the main production (for example, the development of in-line production, increasing the shift ratio, streamlining utility work, improving tool management, improving the organization of control over the quality of work and products). A significant reduction in the cost of living labor can occur with an increase in norms and service areas, a reduction in the loss of working time, and a decrease in the number of workers who do not fulfill production standards. These savings can be calculated by multiplying the number of redundant workers by the average wage in the previous year (including social security contributions and taking into account the cost of clothing, food, etc.). Additional savings arise from the improvement of the management structure of the enterprise as a whole. It is expressed in the reduction of management costs and in the savings in wages and accruals on it in connection with the release of managerial personnel.

With the improvement of the use of fixed assets, the cost reduction occurs as a result of an increase in the reliability and durability of equipment; improving the system of preventive maintenance; centralization and introduction of industrial methods of repair, maintenance and operation of fixed assets. Savings are calculated as the product of the absolute cost reduction (other than depreciation) per unit of equipment (or other fixed assets) by the average operating amount of equipment (or other fixed assets).

The improvement of material and technical supply and the use of material resources is reflected in a reduction in the consumption rates of raw materials and materials, a reduction in their cost by reducing procurement and storage costs. Transportation costs are reduced as a result of a decrease in the cost of delivering raw materials and materials from the supplier to the enterprise's warehouses, from factory warehouses to places of consumption; reducing the cost of transporting finished products.

Certain reserves for cost reduction are laid down in the elimination or reduction of costs that are not necessary in the normal organization of the production process (excessive consumption of raw materials, materials, fuel, energy, additional payments to workers for deviation from normal working conditions and overtime, payments on regressive claims, etc.). P.). Identification of these unnecessary costs requires special methods and attention of the enterprise team. They can be identified by conducting special surveys and one-time accounting, when analyzing data from standard accounting for production costs, and a thorough analysis of planned and actual production costs.

3. Changes in the volume and structure of products, which can lead to a relative decrease in fixed costs (except for depreciation), a relative decrease in depreciation, a change in the range and range of products, and an increase in its quality. Semi-fixed costs do not directly depend on the quantity of output. With an increase in production volume, their number per unit of production decreases, which leads to a decrease in its cost. Relative savings on semi-fixed costs is determined by the formula

E P \u003d (T * P C) / 100,

where E P - savings of semi-fixed costs

П С - the amount of semi-fixed costs in the base year

T is the growth rate of marketable output compared to the base year.

The relative change in depreciation charges is calculated separately. Part of the depreciation (as well as other production costs) is not included in the cost, but is reimbursed from other sources (special funds, payment for services to the side, not included in the composition of marketable products, etc.), so the total amount of depreciation may decrease. The decrease is determined by the actual data for the reporting period. The total savings on depreciation allowances are calculated using the formula

E A \u003d (A O K / D O - A 1 K / D 1) * D 1,

where E A - savings due to the relative decrease in depreciation

A 0, A 1 - the amount of depreciation in the base and reporting year

K - coefficient taking into account the amount of depreciation charged to the cost of production in the base year

In order to avoid a repeated account, the total amount of savings is reduced (increased) by the part that is taken into account by other factors.

Changing the range and range of products is one of the important factors affecting the level of production costs. With different profitability of individual products (in relation to the cost), shifts in the composition of products associated with improving its structure and increasing production efficiency can lead to both a decrease and an increase in production costs. The impact of changes in the structure of products on the cost is analyzed in terms of variable costs according to the costing items of the standard nomenclature. The calculation of the impact of the structure of manufactured products on the cost price must be linked to indicators of increasing labor productivity.

4. Better use of natural resources. This takes into account: changes in the composition and quality of raw materials; change in the productivity of deposits, the volume of preparatory work during extraction, methods of extraction of natural raw materials; change in other natural conditions. These factors reflect the influence of natural (natural) conditions on the amount of variable costs. The analysis of their impact on reducing the cost of production is carried out on the basis of sectoral methods of the extractive industries.

5. Industry and other factors. These include: the commissioning and development of new shops, production units and industries, the preparation and development of production in existing associations and enterprises; other factors. It is necessary to analyze the reserves for reducing costs as a result of the elimination of outdated and the commissioning of new shops and industries on a higher technical basis, with better economic indicators.

Significant reserves are laid down in the reduction of costs for the preparation and development of new types of products and new technological processes, in the reduction of the costs of the start-up period for newly commissioned shops and facilities. The calculation of the amount of change in expenses is carried out according to the formula

E P \u003d (C 1 / D 1 - C 0 / D 0) * D 1,

where E P - change in the costs of preparation and development of production

C 0, C 1 - the sum of the costs of the base and reporting year

D 0, D 1 - the volume of marketable products of the base and reporting year.

The impact on the cost of commercial products of changes in the location of production is analyzed when the same type of product is produced at several enterprises that have unequal costs as a result of the use of various technological processes. At the same time, it is advisable to calculate the optimal distribution of certain types of products among the enterprises of the association, taking into account the use of existing capacities, reducing production costs and, based on a comparison of the optimal variant with the actual one, identify reserves.

If changes in the value of costs in the analyzed period are not reflected in the above factors, then they are referred to others. These include, for example, a change in the size or termination of various kinds of mandatory payments, a change in the amount of costs included in the cost of production, etc.

The cost reduction factors and reserves identified as a result of the analysis must be summarized in the final conclusions, the total impact of all factors on reducing the total cost and cost per unit of output should be determined.

Reserves for reducing complex costs

An analysis of complex costs makes it possible to identify additional reserves for reducing production costs and increasing production efficiency. The composition of the cost of commercial products includes complex costs, which are the costs of servicing production and management, the costs of preparing and mastering the production of new types of products, losses from marriage; other production expenses; non-manufacturing expenses. each item of complex costs includes costs of various economic nature and purpose. When accounting, they are detailed into more fractional items that combine expenses of the same purpose, and savings on one of them do not result in overspending on others. When analyzing deviations from the cost estimates, they are determined not by the article as a whole, but by the individual items included in it. Then, the amounts of excess of the estimate for one item of expenditure and savings for others are calculated separately. Therefore, in the analysis, it is impossible to carry out mutual cancellation of deviations by summing them up.

In production and management maintenance costs includes three items: the cost of maintaining and operating equipment, workshop costs and general factory costs.

The costs of maintenance and operation of equipment occupy a significant share in the total amount of complex costs. They include the costs associated with the operation of the equipment, i.e. the costs of maintenance, depreciation, current repairs of production and handling equipment, shop transport, maintenance of workplaces, as well as depreciation and compensation for wear and tear of tools and fixtures, etc. They are distributed among individual types of products in proportion to the estimated (normative) rates and increase with overfulfillment of the production plan. However, this growth is disproportionate to the increase in the volume of production, and its rate depends on the factors that led to the above-plan increase in production.

Shop expenses include expenses for maintenance of shop personnel, depreciation and expenses for maintaining buildings, structures and equipment, for current repairs of buildings and structures, expenses for testing, experiments and research, for rationalization and invention of a shop nature, for labor protection measures, etc. .d. The composition of the actual workshop expenses additionally includes unproductive expenses: losses from downtime, from damage to material assets and technological equipment during storage in workshops, shortage of material assets and work in progress (minus surpluses), other unproductive expenses and surpluses.

General factory expenses, which are associated with the maintenance and management of the production of the entire enterprise, are divided into five groups: expenses for the maintenance of the management apparatus; general running costs; taxes, fees and other mandatory deductions and expenses; unproductive expenses; excluded income (non-planned income of the enterprise received by it during the reporting period). Workshop and general factory expenses are distributed among various types of products in proportion to the sum of the basic wages of production workers (without additional payments under progressive bonus systems) and the costs of maintaining and operating equipment, or in proportion to another base.

When analyzing the costs of servicing production and management, it is necessary to assess the overall level of costs; determine the fulfillment of the estimates of the indicated expenses as a whole, by groups and individual items; identify potential cost savings.

A decisive role in shop and general factory expenses is played by the costs of maintaining the administrative apparatus, a large place is occupied by depreciation and current repairs of fixed assets, and compensation for the wear and tear of low-value and wearing items.

When considering other complex cost items, it must be taken into account that the costs of preparation and development of production, losses from marriage, other production costs are production losses. Main part expenses for the preparation and development of production associated with the development of new types of products and new technological processes and the preparation of industrial production of these products. The actual costs for these purposes are first taken into account as deferred expenses, and then written off gradually to the cost of production, based on the planned period for their full reimbursement (no more than two years) and the planned volume of output during this period.

The most common production losses are scrap losses. The elimination of these losses is a significant reserve for reducing the cost of production. To determine the losses from marriage, attributable to the cost of production, the cost of finally rejected products is added to the cost of correcting the marriage and subtracted from the amount received the cost of the marriage at the price of their possible use, the amount of retention from the perpetrators of the marriage and the amount of compensation for losses actually recovered from suppliers for the supply substandard materials or semi-finished products. At the same time, not only the absolute change in the amount of losses from marriage is determined in comparison with the previous reporting period, but also the change in their share in the cost of production.

The costs associated with the sale of products are non-manufacturing expenses. They include the cost of packaging, product packaging, its delivery to the destination station, as well as loading into railway cars and other vehicles. As part of the cost, they are shown in total amounts without breakdown, on the basis of which the total deviation of actual non-production costs from planned ones is determined. It should be borne in mind that these costs depend on the volume of shipped products and are variable.

Complex items include other operating expenses, which in different industries include various types of expenses, for example, deductions for research and development work, for warranty service and repair of products, as well as expenses that cannot be attributed to cost as part of other items.

Ways to reduce production costs

The decisive condition for cost reduction is continuous technical progress. The introduction of new technology, comprehensive mechanization and automation of production processes, the improvement of technology, the introduction of progressive types of materials can significantly reduce the cost of production.

A serious reserve for reducing the cost of production is the expansion of specialization and cooperation. At specialized enterprises with mass-flow production, the cost of production is much lower than at enterprises that produce the same products in small quantities. The development of specialization also requires the establishment of the most rational cooperative ties between enterprises.

Reducing the cost of production is ensured primarily by increasing labor productivity. With the growth of labor productivity, labor costs per unit of output are reduced, and, consequently, the share of wages in the cost structure also decreases.

The success of the struggle to reduce costs is determined primarily by the growth of labor productivity of workers, which, under certain conditions, ensures savings on wages. Let us consider under what conditions, with the growth of labor productivity at enterprises, the costs of wages of workers are reduced. An increase in the output per worker can be achieved through the implementation of organizational and technical measures, due to which, as a rule, the norms of output change and, accordingly, the prices for the work performed. An increase in output can also occur due to overfulfillment of the established norms of output without organizational and technical measures. Norms of production and prices in these conditions, as a rule, do not change.

In the first case, when production rates and prices change, the enterprise receives savings on the wages of workers. This is explained by the fact that in connection with the reduction in prices, the share of wages in the unit cost of production decreases. However, this does not lead to a decrease in the average wages of workers, since the given organizational and technical measures enable workers to work out more products with the same labor costs. Thus, the implementation of organizational and technical measures with a corresponding revision of production standards makes it possible to reduce the cost of production by reducing the share of wages in a unit of output simultaneously with an increase in the average wages of workers.

In the second case, when the established production rates and prices do not change, the cost of workers' wages in the unit cost of production does not decrease. But with the growth of labor productivity, the volume of production increases, which leads to savings in other items of expenditure, in particular, the costs of servicing production and management are reduced. This happens because a significant part of the costs in the shop floor (and almost completely in the general factory costs) are conditionally fixed costs (equipment depreciation, maintenance of buildings, maintenance of the shop and general factory apparatus, and other costs) that do not depend on the degree of implementation of the production plan. This means that their total amount does not change or almost does not change depending on the implementation of the production plan. It follows that the greater the output, the smaller the share of workshop and general factory costs in its cost.

With an increase in the volume of output, the profit of the enterprise increases not only due to a decrease in cost, but also due to an increase in the number of products produced. Thus, the greater the volume of production, the greater the amount of profit received by the enterprise, ceteris paribus.

Of paramount importance in the struggle to reduce the cost of production is the observance of the strictest regime of economy in all areas of the production and economic activity of the enterprise. Consistent implementation of the regime of economy at enterprises is manifested primarily in reducing the cost of material resources per unit of output, reducing the costs of servicing production and management, and eliminating losses from marriage and other unproductive expenses.

Material costs, as you know, in most industries occupy a large share in the structure of production costs, therefore, even a slight saving of raw materials, materials, fuel and energy in the production of each unit of production in the whole enterprise has a major effect.

The enterprise has the ability to influence the value of the cost of material resources, starting with their procurement. Raw materials and materials are included in the cost price at their purchase price, taking into account transportation costs, so the correct choice of material suppliers affects the cost of production. It is important to ensure that materials are received from such suppliers, which are located at a short distance from the enterprise, as well as to transport goods by the cheapest mode of transport. When concluding contracts for the supply of material resources, it is necessary to order materials that, in terms of size and quality, exactly correspond to the planned specification for materials, strive to use cheaper materials without reducing product quality at the same time.

The main condition for reducing the cost of raw materials and materials for the production of a unit of output is the improvement of product designs and the improvement of production technology, the use of progressive types of materials, the introduction of technically sound norms for the consumption of material assets.

Reducing the cost of production maintenance and management also reduces the cost of production. The size of these costs per unit of output depends not only on the volume of output, but also on their absolute amount. The smaller the amount of shop and general factory expenses for the whole enterprise, the lower the cost of each product, all other things being equal.

Reserves for reducing shop and general factory expenses lie primarily in the simplification and cheapening of the administrative apparatus, in savings on administrative expenses. The wages of auxiliary and ancillary workers are also included in the composition of shop and general factory expenses to a large extent. Carrying out measures to mechanize auxiliary and ancillary work leads to a reduction in the number of workers employed in these works, and, consequently, to saving shop and general factory costs. The automation and mechanization of production processes and the reduction in the proportion of manual labor costs in production are of paramount importance. Automation and mechanization of production processes make it possible to reduce the number of auxiliary and auxiliary workers in industrial production.

The reduction of workshop and general factory costs is also facilitated by the economical use of auxiliary materials used in the operation of equipment and for other household needs.

Significant reserves of cost reduction are concluded in the reduction of losses from marriage and other unproductive expenses. Studying the causes of marriage, identifying its culprit make it possible to carry out measures to eliminate losses from marriage, reduce and most rationally use production waste.

The scale of identifying and using reserves to reduce the cost of production largely depends on how the work is set up to study and implement the experience available at other enterprises.

Table: Classification of costs by economic elements and cost items

Grouping costs for Production by economic elements	Grouping production costs by cost items
1. Raw materials and basic materials (excluding returnable waste)	1. Raw materials
2. Purchased components and materials	2. Purchased components, semi-finished products and services of cooperative enterprises
3. Auxiliary materials	3. Returnable waste (deductible)
4. Fuel side	4. Fuel for technological purposes
5. Electricity from outside	5. Energy for technological purposes
6. Salary basic and additional	6. Basic wages of production workers
7. Social security contributions	7. Additional wages for production workers
8. Depreciation of fixed assets	8. Social security contributions
9. Other cash expenses	9. Costs for preparation and development of production
	10. Expenses for the maintenance and operation of equipment
	11. Shop expenses
	12. Factory overhead
	13. Losses from marriage (only productions where losses are allowed within the established norms)
	14. Other operating expenses
	15. Total production cost
	16. Non-manufacturing expenses
	17. Total full cost

According to the degree of homogeneity, all costs are divided into simple (single-element) and complex. Simple costs have a homogeneous content: raw materials, fuel, energy, depreciation, wages. Complex expenses include heterogeneous elements. These include, for example, the costs of maintaining and operating equipment, general shop expenses, etc.

On the basis of dependence on changes in the volume of production, costs are divided into variable and conditionally fixed. Variables (proportional) include costs, the size of which changes in proportion to changes in the volume of production. These costs include: the cost of basic materials, cutting tools, basic wages, fuel and energy for technological purposes, etc. Conditionally fixed (disproportionate) are costs, the amount of which does not depend on changes in production volume. These include: salaries of administrative and managerial personnel, expenses for heating, lighting, depreciation, etc.

The cost of production is characterized by indicators expressing: a) the total cost of all manufactured products and work performed by the enterprise for the planned (reporting) period - the cost of marketable products, comparable marketable products, sold products; b) costs per unit of volume of work performed - the cost of a unit of certain types of marketable products, semi-finished products and production services (products of auxiliary workshops), costs per 1 rub. marketable products, the cost of 1 rub. normative net production.

The cost of production is a qualitative indicator that characterizes the production and economic activities of a production association, enterprise. The cost of production is the cost of the enterprise in monetary terms for its production and marketing. The cost price as a generalizing economic indicator reflects all aspects of the enterprise's activities: the degree of technological equipment of production and the development of technological processes; the level of organization of production and labor, the degree of use of production capacities; profitability of the use of material and labor resources and other conditions and factors that characterize production and economic activity.

Depending on the volume of included costs, there are shop, production and full costs. The shop cost includes the costs of individual shops for the manufacture of products. It is the initial basis for determining intermediate intra-factory planned and estimated prices when organizing intra-factory economic accounting. The production cost covers the costs of the enterprise for the production of products. In addition to the shop cost, it includes overhead costs. The total cost of production includes all costs associated with its production and sale. It differs from the production cost by the amount of non-production costs and is calculated only for marketable products.

Cost reduction is planned according to two indicators: for comparable marketable products; at the cost of 1 rub. marketable products, if the share of products comparable with the previous year in the total volume of output is small. Comparable marketable products include all its types produced at a given enterprise in the previous period in mass or serial order.

The planned amount of cost reduction is determined on the basis of the following calculations.

In terms of comparable commercial products. First, the absolute amount of savings is determined by the formula:

Having determined the amount of absolute savings in the planning period, calculate the desired percentage of cost reduction in the planning period ( Sav.t.p):

Where Eabs.av.t.p.- absolute savings from reducing the cost of comparable marketable products, thousand rubles; NniCbi- planned release of comparable marketable products at the cost of the reporting period; NniCni- the same, at the cost of the planned period; n- the number of types of comparable commercial products.

In terms of costs per 1 rub. commodity products. The absolute savings from reducing the cost of commercial products in the planning period is calculated by the formula:

Based on the same data, the percentage of cost reduction per 1 ruble is determined. marketable products in the planning period compared with the reporting period (S’ tp):

Where Ztpb- the cost of 1 rub. marketable products in the reporting period, kopecks; Ztpp- the same, in the planned period; TP- the cost of marketable products in the planned period, thousand rubles.

It should be borne in mind that the level of costs is influenced by a number of factors, including changes in consumption rates and prices for materials, growth in labor productivity, changes in production volume, etc. In this regard, when calculating, it is necessary to determine the impact of each of them in general effect.

LIST OF USED SOURCES

1. Enterprise economics: textbook / edited by prof. Safronova.- M.: "Jurist", 1998, p. 146

2. Economics of the enterprise: Textbook for universities / V. Ya. Gorfinkel, E. M. Kupriakov, V. P. Prasolova and others; Ed. prof. V. Ya. Gorfinkel, prof. E. M. Kupryakova. - M.: Banks and stock exchanges, UNITI, 1996. - 367p.

3. Zaitsev NL Economics of an industrial enterprise: Textbook; 2nd ed., revised. and additional – M.: INFRA-M, 1998. – 336p.

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The cost price reflects the cost of manufactured products to the enterprise. Systematic cost reduction frees up funds for the further development of production and for improving the well-being of workers.

That is, the cost and its reduction is an important source of profit growth. The correct calculation of the cost plays an important role, because the better the accounting at the enterprise is organized, the more perfect the calculation methods used, the easier it will be to evaluate ways to reduce costs through analysis.

The cost is dependent on a number of factors. They can be classified into in-production and non-industrial.

Intra-production factors are those factors that can be influenced by the enterprise. To reduce costs, you can:

Introduce advanced techniques and technologies into production;

improve the organization of labor and production;

· choose the best suppliers supplying the necessary resources at reduced prices.

The company cannot influence non-productive factors. These include tariffs for electricity, fuel resources, prices for raw materials, tax rates, environmental conditions, etc.

Significant reserves for cost reduction are available in unproductive expenses and losses. This includes forfeits, penalties, fines that the organization pays in case of non-compliance with the terms of the contracts.

At present, when analyzing the cost of manufactured products, the main sources of reserves to reduce the cost of production are:

Increasing production volume

Reducing the cost of its production by increasing the level of labor productivity.

The savings that cause the actual cost reduction occur due to the use of the following factors

1. Raising the technical level of production.

2. Improving the organization of production and labor.

3. Better use of natural resources

4. Industry factors

An important condition for cost reduction is continuous technical progress. Integrated automation of the production process, the introduction of the latest technology, the introduction of advanced materials, the improvement of the technologies used are effective ways to reduce costs. Another serious reserve for reducing costs is the expansion of cooperation and specialization. In a specialized enterprise with mass-flow production, the cost per unit of production will be significantly lower compared to the costs in enterprises that produce the same products, but in small batches. The development of specialization will require the organization of more rational cooperative ties.

Also, ways to reduce costs include increasing labor productivity. By increasing productivity, the share of wages in the cost structure is reduced. Of great importance in the struggle to reduce costs is the observance of the economy regime at all stages of production. This allows you to reduce the cost of material resources, reduce the cost of maintenance of management and production, eliminate losses from defects and other non-production costs. As you know, material costs have a significant share in the cost structure, therefore, even a small reduction in the cost of raw materials and materials in the production of products gives the company a significant effect as a whole.

Here you need to start with the choice of material suppliers. If materials are delivered by the cheapest mode of transport, this will also reduce their cost to the enterprise. Preference should be given to cheaper materials, but not to the detriment of the quality of the final product. You should also pay attention to the possibility of improving the design of the product and production technology, the introduction of a reasonable rate of expenditure of material assets. These ways to reduce costs are not the only ones. You can also try to reduce the cost of management maintenance, simplify the management apparatus. Carrying out effective measures to mechanize auxiliary and auxiliary work will reduce the number of employees of the enterprise and, accordingly, general plant costs.

Significant reserves for reducing costs are contained in reducing losses from marriage. The study of the causes of marriage, the identification of the perpetrators will allow for the implementation of measures to eliminate losses from marriage, reduce and most rationally use production waste. In general, the scale of using ways to reduce costs depends on the characteristics and capabilities of each particular enterprise.

Cost price - the minimum value of the offer price. In life, a situation may arise when several firms operate on the market for a certain product. A new company producing the same product as its competitors may end up seeing that its cost is equal to or even higher than the competitor's price. It is unlikely that it will be possible to attract consumers with such a product (the exception is products of higher quality and differing in some parameters - design, packaging, etc.). In this case, it is necessary to carry out measures to reduce the cost of production.

Reducing the cost will not only reduce the price of products and increase the competitiveness of the manufacturer, but also increase the amount of profit remaining at the disposal of the company; increase material incentives for staff; significantly improve the financial position of the company; increase dividend payments to shareholders.

Thus, in modern market conditions, the role and importance of reducing the cost of production, work and services of commercial enterprises is sharply increasing. The most important ways to reduce costs are saving by the enterprise of all available resources, including labor and material. They need to be used rationally.

The cost is sum of costs spent on the manufacture of any product, product, service. Depending on the volume, there is a workshop, full, specific and production cost, which includes different types of costs.

By reducing the cost, you can also reduce the price of products, becoming a more competitive and attractive enterprise in the market without reducing your profits, raise the salary of key personnel, and also significantly improve the financial stability of the company.

The cost price includes the following elements:

1. Labor costs (wages of workers).
2. (expenses for the purchase of materials, raw materials, tools, third-party services and everything that is used during the creation of the product).
3. Contributions to off-budget funds.
4. Depreciation costs (depreciation of fixed assets).
5. Others.

The “other” element includes: payment for the use of housing and communal services, payments on loans, payments for rent, repairs, and so on.

Naturally, the management of each enterprise thinks about how to reduce the cost of production and get the most profit in order to increase its profitability.

To reduce product costs, look for ways to reduce them.

In the cost structure, the largest share is traditionally occupied by material and labor resources, therefore, the reduction of these costs will be the preferred direction for minimizing costs.

Ways to minimize costs:

1. Increase in output. Fixed costs, such as rent, are spread over more products.
2. Search for analogues of materials.
3. Growth in the efficiency of equipment use, development of low-budget industries.
4. Decreased use of services by third parties. If the firm uses outside services to a minimum, and vice versa, performs all functions on its own, then costs can be reduced. For example, reduced shipping or assembly costs.
5. Reduction of staff, combination of positions. Not the most pleasant, but one of the most effective methods of reducing costs.
6. Inventory reduction.
7. Contacts with suppliers. By providing, for example, a discount on the purchase of their goods to suppliers, it is possible to establish commercial relations with them and buy materials and components at a lower price. Also, you should choose those suppliers that provide free shipping and free repairs under warranty.
8. cost intensification. The introduction of new technologies into production and an increase in its volume has a positive effect on revenue, production activities are carried out faster, therefore, more products are produced per unit of time. For downtime and defects in production, it is allowed to introduce a system of fines, but this, in turn, can cause negative feedback from the staff.
9. Saving energy and fuel.
10. Reducing the cost of telecommunications.
11. Sale or lease of unused premises, equipment, as well as the sale of goods with an expiring shelf life.
12. Reducing tax costs (concluding agreements with individual entrepreneurs and legal entities, etc.).
13. Control over accounts receivable and accounts payable.
14. Procurement optimization, tendering.

The use of one or more of these methods will help the management of the enterprise to reduce costs and reduce the cost of production. But, in addition to the ways to reduce costs, it is also necessary to know the factors influencing this reduction. Let's consider them in more detail.

The probability of a fall in the cost of products can be detected in 2 directions - sources and factors.

Under the sources are assumed, due to the savings of which the initial cost of the product is reduced. These are the costs of living and materialized labor, administrative and management costs. Let's look at the factors below.

Technological

This type of factors is associated with production technology, operation and quality of equipment and includes:

• use of new, energy-saving and high-performance equipment;
• improvement of the quality of manufactured products and labor;
• modification of the nature and technology of manufacture;
• the use of quality materials, due to which you can increase the price of products.

Economic

• raising the level of work of production and management structures;
• improvement of work of personnel and economic services;
• improvement of the organizational structure;
• compression of the costs of unjustified investments.

Organizational

This type of factors involves the organization of labor and production, namely:

• reduction in the number of downtime and product defects;
• improving the use of funds, material and technical base;
• reduction of transportation costs;
• incentives for employees to be more productive;
• elimination of obsolete and unnecessary stocks;
• an increase in the turnover of funds, as well as a reduction in the production cycle;
• ensuring the rhythm of production;
• professional development of workers.

In addition, factors influencing cost reduction can also be divided into production (within production) and non-production (external environment, for example, utility tariffs, rent).

Now we will analyze in detail what measures exist to reduce the cost of a product, product or service.

The main, most real reserve for reducing the cost of production is considered to be a change in two main parameters that characterize products - this is depreciation and material consumption.

S / N = M / N + A / N, where

M/N- material consumption, A/N- depreciation.

Savings from a decrease in depreciation of products can be determined in accordance with the data of the article "Depreciation of fixed assets" according to formula:

Savings = ((If * Ia) / In - 1) * da * 100, where

If— index of growth in the cost of fixed assets, Ia— growth index of the average depreciation rate, In— growth index of marketable output for comparable purposes, da- the share of depreciation in the cost of production.

It must be remembered that cost reduction should be based on a systematic and pre-planned approach.

The systematic approach includes a number of activities that can be divided by timeframe:

1. Compliance with financial discipline. The head of the organization must draw up a financial plan and implement measures to reduce costs only strictly following this plan. Also, it is required to create a financial accounting system that provides for accounting not only income, but also expenses.
2. Drawing up a cost reduction plan. By analyzing the activities of the enterprise, you can identify weaknesses in it and reduce costs where required. Systematic cost reduction in general should be associated with improved management in three areas: investment, procurement, production processes (improvements due to organizational and technological changes).
3. Controlling. To reduce costs, it is also effective to control marriage, downtime, damage to property, and low productivity of employees. In many modern enterprises there is a controlling department that deals with these studies.

So, key measures to reduce costs are:

• raising the technical level of production (using electronic computers, improving existing equipment, using waste, etc.);
• growth of production management efficiency;
• expansion of specialization and cooperation;
• reduction of operating costs (improvement of maintenance of the main production)
• reducing the cost of living labor (reducing the loss of working time, reducing the number of workers who do not fulfill production standards);
• reduction of management costs and savings in wages and accruals due to the release of management personnel
• elimination of losses, incl. from marriage and downtime.
• the growth of labor productivity must outstrip the growth of wages, thus ensuring a reduction in the cost of production.
• reduction of workshop and general factory costs.
• increase in output or change in its structure, assortment and nomenclature
• improved use of natural resources
• development of new types of products.

Thus, the cost price is the most important factor in making a profit of the enterprise. Using a systematic approach, clearly planning directions for reducing costs and controlling this process, you can raise the enterprise to a new level of profitability and competitiveness in the market.

Cost reduction in 1C is lower.