Allows you to calculate the minimum price of goods/services, determine the optimal volume of sales and calculate the value of the company's expenses. There are various methods of calculating by type of costs, the main ones are given below.

Production costs - calculation formulas

Calculation of production costs is easily carried out on the basis of estimate documentation. If such forms are not drawn up in the organization, data from the reporting period of accounting will be required. It should be taken into account that all costs are divided into fixed (the value remains unchanged over the period) and variable (the value changes depending on production volumes).

Total production costs - formula:

Total costs = Fixed costs + Variable costs.

This calculation method allows you to find out the total costs for the entire production. Detailing is carried out by departments of the enterprise, workshops, product groups, types of products, etc. Analysis of indicators over time will help predict the volume of production or sales, expected profit/loss, the need to increase capacity, and the inevitability of reducing expenditures.

Average production costs - formula:

Average costs = Total costs / Volume of manufactured products/performed services.

This indicator is also called the total cost of the product/service. Allows you to determine the minimum price level, calculate the efficiency of investing resources for each unit of production, and compare mandatory costs with prices.

Marginal cost of production - formula:

Marginal costs = Change in total costs / Change in production volume.

The indicator of so-called additional costs makes it possible to determine the increase in costs for the production of additional volume of GP in the most profitable way. At the same time, the amount of fixed costs remains unchanged, while variable costs increase.

Note! In accounting, an enterprise's expenses are reflected in cost accounts - 20, 23, 26, 25, 29, 21, 28. To determine costs for the required period, you should sum up the debit turnover on the accounts involved. Internal turnover and balances at refineries are subject to exclusion.

How to calculate production costs - example

From the above example it is clear that the organization incurs fixed costs in the amount of 1200 rubles. in any case - in the presence or absence of production of goods. Variable costs per 1 piece. initially amount to 150 rubles, but costs are reduced as production increases. This can be seen from the analysis of the second indicator - Average costs, which decreased from 1350 rubles. up to 117 rub. per 1 unit of finished product. Calculation of marginal costs can be determined by dividing the increase in variable costs by 1 unit of product or by 5, 50, 100, etc.

Certain costs, which do not depend at all on changes in production volume. They can only depend on time. At the same time, variables and permanent costs in sum determine the size of the total costs.

You can also have fixed costs if you derive this indicator from the formula that determines: Revenue = Fixed costs - Variable (total) costs. That is, based on this formula, we get: Fixed costs = Revenue + Variable (total) costs.

Sources:

• Average variable costs

Costs play a big role in business development, because they directly affect profits. In modern economics, there are two types: fixed and variable costs. Their optimization allows you to increase the efficiency of the enterprise.

To begin with, it is necessary to define the short-term and long-term periods. This will allow you to better understand the essence of the issue. In the short run, factors of production can be constant or variable. In the long run, they will only be variables. Let's say the building is . In the short term, it will not change in any way: the company will use it to, for example, place machines. However, in the long term, the company can buy a more suitable building.

Fixed costs

Fixed costs are those that do not change in the short run even if production increases or decreases. Let's say the same building. No matter how many goods are produced, the rent will always be the same. You can work even the whole day, the monthly payment will still remain unchanged.

To optimize fixed costs, a comprehensive analysis is required. Depending on the specific unit, solutions may vary significantly. If we are talking about rent for a building, then you can try to reduce the price for accommodation, occupy only part of the building so as not to pay for everything, etc.

Variable costs

It is not difficult to guess that variables are costs that can change depending on the decrease or increase in production volumes in any period. For example, to make one chair you need to spend half a tree. Accordingly, to make 100 chairs, you need to spend 50 trees.

It is much easier to optimize variable costs than fixed ones. Most often, it is simply necessary to reduce the cost of production. This can be achieved, for example, by using cheaper materials, upgrading technology or optimizing the location of workplaces. Let’s say that instead of oak, which costs 10 rubles, we use poplar, which costs 5 rubles. Now, to produce 100 chairs you need to spend not 50 rubles, but 25.

Other indicators

There are also a number of secondary indicators. Total costs are a combination of variable and fixed costs. Let’s say that for one day of renting a building, an entrepreneur pays 100 rubles and produces 200 chairs, the cost of which is 5 rubles. Total costs will be equal to 100+(200*5)=1100 rubles per day.

Beyond that, there are plenty of averages. For example, average fixed costs (how much you need to pay for one unit of production).

Fixed costs (TFC), variable costs (TVC) and their schedules. Determining total costs

In the short run, some of the resources remain unchanged, and some change to increase or decrease total output.

In accordance with this, short-term economic costs are divided into fixed and variable costs. In the long run, this division becomes meaningless, since all costs can change (that is, they are variable).

Fixed costs (FC)- these are costs that do not depend in the short term on how much the firm produces. They represent the costs of its constant factors of production.

Fixed costs include:

• - payment of interest on bank loans;
• - depreciation deductions;
• - payment of interest on bonds;
• - salary of management personnel;
• - rent;
• - insurance payments;

Variable costs(VC) These are costs that depend on the firm's output. They represent the costs of the firm's variable factors of production.

Variable costs include:

• - wage;
• - fare;
• - electricity costs;
• - costs of raw materials and materials.

From the graph we see that the wavy line depicting variable costs rises with increasing production volume.

This means that as production increases, variable costs increase:

initially they grow in proportion to the change in production volume (until point A is reached)

then savings in variable costs are achieved in mass production, and their growth rate decreases (until point B is reached)

the third period, reflecting changes in variable costs (movement to the right from point B), is characterized by an increase in variable costs due to a violation of the optimal size of the enterprise. This is possible with an increase in transportation costs due to the increased volumes of imported raw materials and the volumes of finished products that need to be sent to the warehouse.

Total (gross) costs (TC)- these are all the costs at a given time necessary for the production of a particular product. TC = FC + VC

Formation of the long-term average cost curve, its graph

Economies of scale are a long-term phenomenon when all resources are variable. This phenomenon should not be confused with the well-known law of diminishing returns. The latter is a phenomenon of an exclusively short-term period, when constant and variable resources interact.

At constant prices for resources, economies of scale determine the dynamics of costs in the long term. After all, it is he who shows whether increasing production capacity leads to decreasing or increasing returns.

It is convenient to analyze the efficiency of resource use in a given period using the LATC long-term average cost function. What is this function? Let's assume that the Moscow government is deciding on the expansion of the city-owned AZLK plant. With the available production capacity, cost minimization is achieved with a production volume of 100 thousand cars per year. This state of affairs is reflected by the short-term average cost curve ATC1, corresponding to a given scale of production (Fig. 6.15). Let the introduction of new models, which are planned to be released jointly with Renault, increase the demand for cars. The local design institute proposed two plant expansion projects, corresponding to two possible production scales. Curves ATC2 and ATC3 are the short-run average cost curves for this large scale of production. When deciding on the option to expand production, the plant management, in addition to taking into account the financial possibilities of investment, will take into account two main factors: the magnitude of demand and the value of the costs with which the required volume of production can be produced. It is necessary to select a production scale that will ensure that demand is met at minimum cost per unit of production.

ILong-run average cost curve for a specific project

Here, the points of intersection of adjacent short-term average cost curves (points A and B in Fig. 6.15) are of fundamental importance. By comparing the production volumes corresponding to these points and the magnitude of demand, the need to increase the scale of production is determined. In our example, if the demand does not exceed 120 thousand cars per year, it is advisable to carry out production at the scale described by the ATC1 curve, i.e. at existing capacities. In this case, the achievable unit costs are minimal. If demand increases to 280 thousand cars per year, then the most suitable plant would be with the production scale described by the ATC2 curve. This means that it is advisable to carry out the first investment project. If demand exceeds 280 thousand cars per year, it will be necessary to implement a second investment project, that is, expand the scale of production to the size described by the ATC3 curve.

In the long term, there will be enough time to implement any possible investment project. Therefore, in our example, the long-term average cost curve will consist of successive sections of short-term average cost curves up to the points of their intersection with the next such curve (thick wavy line in Fig. 6.15).

Thus, each point on the LATC long-run cost curve determines the minimum achievable unit cost for a given production volume, taking into account the possibility of changes in production scale.

In the limiting case, when a plant of the appropriate scale is built for any amount of demand, i.e. there are infinitely many short-term average cost curves, the long-term average cost curve changes from a wave-like one to a smooth line that goes around all the short-term average cost curves. Each point on the LATC curve is a point of tangency with a specific ATCn curve (Figure 6.16).

Types of tasks:

· Tasks on deriving formulas for all types of costs used in economic theory;

· Problems on the relationship between total, average, marginal costs;

· Tasks for calculating sales revenue;

· Tasks for calculating depreciation charges.

· Tasks to determine the effect of scale of production.

4.1 . Let's say the total costs of a firm to produce Q units of output are: TC = 2Q² + 10Q + 162.

A) Derive functions of all types of costs used in economic theory to describe the behavior of a company;

B) At what values ​​of Q does average total cost reach its minimum?

Solution:

· FC=162, fixed costs;

· VC = 2Q² + 10Q, variable costs;

· A.F.C.=FC/Q= 162/Q, average fixed costs;

· AVC=VC/Q= 2Q+10, average variable costs;

· ATC= TC / Q = (FC / Q + VC / Q) = ( 2Q + 10) + 162/Q, average total costs;

· M.C.=dTC/dQ= 4Q+10, marginal costs.

B) The minimum average total cost occurs at the intersection of the ATC and MC schedules, therefore, we equate these functions:

2Q + 10 + 162 / Q = 4Q + 10;

2Q² + 10Q + 162 = 4Q² + 10Q;

Min ATC achieved upon release (Q) = 9; At a given production volume, the production optimum has been reached.

4.2. The total cost function is:

TC = 36 + 12Q + Q². Determine what the average fixed costs are for a production volume of 10.

Solution:

AFC = FC / Q where FC = 36, because fixed costs do not depend on the volume of products produced.

Therefore: AFC = 36/10 = 3.6.

Answer: 3,6.

4.3. Determine the maximum revenue if demand up to the intersection with the axes is described by a linear function: Q(D) = b – aР, where P is the price of the goods produced by the entrepreneur; b and a are the coefficients of the demand function.

Solution:

First option:

a) According to economic theory, an entrepreneur achieves maximum revenue (income) when selling a product:

· at a price equal to half the prohibitive price (A/2);

· with a sales volume equal to half the saturation mass (B/2) (see Fig. 4.5).

The formula for maximum revenue is as follows:

TR max = A/2 × B/2.

b) Find the values ​​of the prohibitive price and saturation mass:

· at Q(D) = 0, the price value P = A = b/a (the value of the prohibitive price);

· at P = 0 the value of Q(D) = B = b (saturation mass value).

Rice. 4.5. Graph of linear demand function Q(D) = b – a Р.

· A/2 = (b/a):2 = b/2a;

d) Hence the value of the maximum revenue will be:

TR = b/2a × b/2 = b²/4a.

Second option:

According to the conditions of the problem, the quantity of demand is: Q(D) = b – aP. Let us determine the price at which the entrepreneur receives maximum revenue: TR = P × Q = P × (b – aP).

a) To do this, we equate the price derivative of the revenue function to zero: (P × (b – aP))’ = 0. We get the price: P = b / 2a.

b) Let us determine the volume of production at which the entrepreneur will receive maximum revenue. Let's substitute the price value into the demand function: Q(D) = b – a × b / 2a = b / 2; ==> Q(D) = b / 2.

c) Therefore, the maximum revenue of the entrepreneur will be: TRmax = Q × P = b / 2 × b / 2a = b² / 4a.

Answer: b²/4a.

4.4. The firm's output volume under conditions of perfect competition is 1000 units. products, product price - 80 USD, total average costs (ATC) for the production of 1000 units. goods - 30. Determine the amount of accounting profit.

Solution:

a) we calculate accounting profit using the formula: PR = TR – TC. Then company revenue will be TR= 80 × 1000 = 80 000 .

b) Using the average total cost formula:

· calculate the value of total costs using the formula: AC = TC / Q and

· let's express total costs: 30 = TC / 1000; TC = 30,000.

c) Then profit PR = 80 000 – 30 000 = 50 000

Answer: 50 000.

4.5 . A truck worth 100 thousand rubles. It will take 250 thousand km before it is written off. What is the amount of depreciation?

Solution:

Depreciation- this is a reduction in the accounting value of capital resources and a gradual transfer of their value to the cost of the manufactured product as it wears out.

There are various methods of calculating depreciation:

straightforward method

· accelerated method,

· service unit method.

We will use the service unit method because physical standard wear and tear is associated with the provision of services. Consequently, depreciation charges per 1 km will be 0.4 rubles. regardless of service life.

Answer: 0.4 rub. for 1 km.

4.6. Demand functions are given Q(D) = 220 – 4Р and marginal costs MC = 10 + 4Q. The maximum profit is 125 monetary units. Determine the amount of fixed costs.

Solution:

To determine the value of fixed costs, we derive the equation for the total cost function: TC = FC + V.C.. To do this, we find the antiderivative of the marginal cost function MC = 10 + 4Q. The equation for the total cost function will take the form: TC = 10Q + 2Q² + FC.

1. Let us determine the volume of production that maximizes profit by applying the profit maximization rule MC = MR.

2. Let us derive the equation for the marginal revenue function. If we apply the marginal revenue formula: MR = (TR)" = (P × Q)", then we get that MR = ((55 – 0.25Q) × Q)"(where P = 55 – 0.25Q is the inverse function for the demand function Q(D) = 220 – 4P). Hence, the equation of the marginal revenue function will be as follows: MR = 55 – 0.5Q. Therefore, the production volume Qopt, which maximizes profit, will be 10 units.

3. Let's calculate the value of total revenue TR(Qopt 10) = 55Q – 0.25Q² = 525.

4. Let's find the value of total costs using the profit formula:

PR = TR – TC,

PR = 125, and TR = 525. Amount of total costs TC will be 400.

Let us equate the equation of the total cost function with the value of total costs: 400 = 10Q + 2Q²+FC, where Qopt= 10.

Hence, FC= 100.

In the previous paragraph, in search of the optimal combination of factors of production, the firm could change both labor and capital. However, in practice, it is much easier for a company to hire additional workers than to purchase new equipment - capital. The latter requires more time. In this regard, in production theory, a distinction is made between short and long periods.

In the long run, a firm can change all factors of production to increase output. In the short run, some factors of production are variable, while others are constant. Here, to increase output, the firm can measure only variable factors. Prices for factors of production in the short run are assumed to be fixed. It follows that all costs of a company in a short period can be divided into constant and variable.

Fixed costs(FC) are costs whose value does not change together with a change in output volume, i.e. These are the costs of fixed factors of production. Typically, fixed costs include depreciation, rent, interest on loans, salaries of management and office employees, etc. Fixed costs usually include implicit costs.

Variable costs(VC) are costs whose value is changing together with a change in output volume, i.e. These are the costs of variable factors of production. These usually include wages of production workers, costs of raw materials and materials, electricity for technological purposes, etc.

In theoretical microeconomic models, variable costs usually include labor costs, and fixed costs usually include capital costs. From this point of view, the value of variable costs is equal to the product of the price of one man-hour of labor (PL) by the number of man-hours (L):

In turn, the value of fixed costs is equal to the product of the price of one machine-hour of capital (PK) by the number of machine-hours (K):

The sum of fixed and variable costs gives us total costs(TC):

F.C.+ V.C.= TC

In addition to total costs, you also need to know average costs.

Average fixed costs(AFC) are fixed costs per unit of output:

Average Variable Costs(AVC) are variable costs per unit of output:

Average total costs(AC) is the total costs per unit of output or the sum of average fixed and average variable costs:

When analyzing a firm's market behavior, marginal costs play an important role. Marginal Cost(MC) reflect the increase in total costs with an increase in output (q) by one unit:

Since only variable costs increase with output growth, the increment in total costs is equal to the increment in variable costs (DTC=DVC). We can therefore write:

You can put it this way: marginal costs are the costs associated with producing the last unit of output.

Let's give an example of cost calculation. Let there be 10 units upon release. variable costs are 100, and at output 11 units. they reach 105. Fixed costs do not depend on output and are equal to 50. Then:

In our example, output increased by 1 unit. (Dq=1), while variable and total costs increased by 5 (DVC=DTC=5). Therefore, an additional unit of output required an increase in costs by 5. This is the marginal cost of producing the eleventh unit of output (MC = 5).

If the total (variable) cost function is continuous and differentiable, then the marginal costs for a given volume of output can be determined by taking the derivative of this function with respect to output:

or