A necessary condition for ensuring the production and economic activities of the enterprise is the use of economic resources, including fixed and working capital, industrial and production personnel. The costs of acquiring resources, expressed in monetary form, are called production costs.
A distinction is made between one-time and ongoing costs. One-time costs in the enterprise arise periodically and are carried out in the form of investments. One-time costs include both capital investments and other one-time costs necessary for the creation and output of products. These include investments in the creation, expansion, technical re-equipment of the enterprise and the associated replenishment of working capital, research and development costs, development of production and refinement of prototypes of products, production of models and mock-ups of fixed assets. One-time costs are cyclical.
Current costs are carried out at the enterprise constantly and directly related to the output of products. They include the costs of raw materials, materials, wages, fuel, energy, marketing research, etc. In addition to the real costs of production and sale of products, current costs also include, in accordance with the current legislation, taxes, fees and deductions to trust and budget funds. These are deductions to the social protection fund, the state employment promotion fund, the chernobyl accident elimination fund, the environmental tax, customs duties, etc. Current costs for the production and sale of products, expressed in monetary form, constitute the cost of production.
Cost price is an independent economic category and represents part of the value of the goods. The cost of production is one of the main generalizing indicators, which reflects the degree of use of material, labor and financial resources, the technical level of production, the quality of products, i.e. the efficiency of the enterprise.
Being an economic category, the cost price performs a number of important functions:
accounting; stimulating; formation of the selling price and financial results of the enterprise; economic substantiation of management decisions.
The normative document regulating the attribution of costs to the cost of production in the Republic of Belarus is the “Basic provisions on the composition of costs included in the cost of products (works, services)”. The main provisions are developed in accordance with the current legislation and are aimed at ensuring a uniform definition of the composition of costs included in the cost of products (works, services) at enterprises, regardless of their type of activity, forms of ownership and departmental subordination.
The Regulation on the composition of costs determines that the cost of production (works, services) is a value assessment of natural resources used in the production process (works, services), raw materials, fuel, energy, fixed assets, intangible assets, labor resources, as well as other costs for its production and sale.
The cost of production includes costs associated with:
production of products due to technology and organization, preparation and development of production, maintenance of the production process; invention and rationalization; ensuring normal working conditions and environmental protection; production management and training; deductions to trust and budget funds.
On the basis of the Regulations, ministries, departments, intersectoral state associations, concerns develop sectoral regulations on the composition of costs and methodological recommendations on planning, accounting and calculating the cost of products (works, services) for subordinate enterprises.
In the economic activity of the enterprise, various types of prime cost are used.
According to the sequence and volume of cost inclusion, technological, production and full cost are distinguished.
The technological cost includes only direct production costs for such items as: raw materials and materials, returnable waste (subtracted), fuel and energy for technological purposes, the basic wages of production workers. The technological cost is often called the precinct, because the costs that make it up are added to the production site.
Shop cost is the sum of the costs of all shops for the production of products. Shop costs include technological and general production costs.
Production cost is the cost of the enterprise for the production of products. The production cost differs from the shop cost by the amount of general economic and other production costs, as well as losses from defects.
The total cost price includes production costs and commercial (non-production costs).
In addition, a distinction is made between regulatory, planned and actual production costs.
Planned cost is the cost price calculated on the basis of technically justified norms for the consumption of raw materials, materials, fuel, energy, rational or possible use of production assets, current tariff rates and labor productivity tasks, as well as standards for production maintenance and management. Thus, the planned cost price is the optimal level of costs, determined in accordance with the objective conditions of a particular enterprise.
Standard cost is the cost price calculated on the basis of the norms of consumption of material resources and the cost of living labor, in force at the beginning of the month and the standards for servicing production and management, in force at the beginning of the quarter.
The actual, or reporting cost price is the cost price determined on the basis of the actual labor costs and material resources that have actually developed in the reporting period.
Enterprises plan and take into account the following cost indicators:
costs per ruble of marketable products; unit cost of production; cost of commodity and sold products; the cost of comparable marketable products (comparable products are those that were produced in the base period).
The indicator of costs per ruble of marketable products characterizes the level of cost of one ruble of impersonal products. It is calculated as quotient from the division of the total cost of all marketable products by its value in the wholesale prices of the enterprise. This is the most generalizing indicator of the cost of production, expressing its direct relationship with profit. The advantages of this indicator can also be attributed to its dynamism and wide comparability.
The unit cost indicator is used to compare the cost level of identical products at different enterprises, which makes it possible to identify cost reduction reserves.