Classification of production costs (works, services)

The heterogeneity of the costs included in the cost of production, by composition, economic purpose, role in the manufacture and sale of products causes the need for their classification. It is important for improving accounting, planning, identifying ways and reserves to reduce the cost of production.

Grouping of costs by economic elements is made on the basis of the homogeneity of their economic content, regardless of the place of origin and purpose. There are the following economic cost elements:

material costs (net of the cost of returnable waste); labor costs; social contributions; depreciation of property, plant and equipment and intangible assets; other costs.

The complexity of the structure and the variety of processes of cost formation imply their division according to a number of features (Table 8.1).

Table 8.1 Resource requirements by component

Classification of production costs

Features of classification

Types of costs

Based on cost grouping

Economic elementsCalculation articles

By place of origin

Costs of basic, support and maintenance units

By homogeneity of economic content

Simple and complex

By the impact of production volume

Variables and conditionally – constants

By method of attribution to the cost of production

Direct and indirect

In relation to the production process

Main and invoices

The element “Material costs” includes the cost of raw materials and basic materials, purchased components and semi-finished products, fuel, energy of all kinds (electric, thermal, compressed air, cold and other types), works and services of a production nature performed by third-party enterprises or industries and farms of the enterprise that are not related to the main type of activity, as well as entrepreneurs without the formation of a legal entity, payments for the extraction of natural resources, emissions (discharges) of pollutants into the environment, as well as payment for waste disposal, etc.

From the costs of material resources included in the cost of production, the cost of returnable waste is excluded, which includes the residues of raw materials, semi-finished products, coolants and other types of material resources formed in the process of production of products (works, services), which have lost all or part of the consumer qualities of the original resource (chemical or physical properties) and therefore are used with increased costs (reducing product yield) or completely unused for its intended purpose.

The element “Labor costs” includes payments for wages of industrial and production personnel, established depending on the results of labor, its quantity and quality, incentive and compensatory payments, including compensation for wages in connection with price increases and indexation of wages in accordance with the current legislation; systems of bonuses for workers, managers, specialists and other employees for production results, other conditions of remuneration in accordance with the forms and systems of remuneration used at the enterprise.

The element “Deductions for social needs” includes deductions to the social protection fund of the population, the state employment promotion fund from all types of remuneration for employees engaged in the production of relevant products (works, services).

The element “Depreciation of fixed assets and intangible assets” includes the amount of depreciation deductions for fixed assets and intangible assets used in business activities.

The element “Other costs” in the cost of production (works, services) includes: taxes, fees and other payments to the budget and budget funds attributed to the cost of production in accordance with the legislation; interest on received loans, credits and loans to replenish working capital (except for interest on overdue and deferred loans, credits and loans); expenses for communication services, including postal, telephone, telegraph services, facsimile and satellite services, Internet, e-mail; payment for the services of computer centers, banks related to the maintenance of the organization; fees for training and retraining of personnel; advertising costs, payment for work on certification of products, goods, works, services; rent; lease payments; travel and representative expenses, deductions to the repair fund, etc.

The classification of costs by economic elements is the same for enterprises of various forms of ownership and areas of activity. It allows you to make a summary of production costs, determine their structure (the ratio of individual cost elements in the cost of production), exercise control over the formation and dynamics of costs. This is necessary for studying the ratio of living and past (materialized) labor, rationing and analysis of production stocks, calculating particular indicators of the turnover of certain types of normalized working capital, as well as for other calculations. Analysis of the element composition and the structure of production costs makes it possible to outline the main directions for the search for reserves for reducing the material intensity and labor intensity of products.

The classification of costs by economic elements does not allow you to establish the direction of costs. For example, it does not show how labor costs are formed, what is the ratio of wages of workers, managers and specialists in it, does not allow to determine the cost of a particular type of product in multi-nomenclature production. Therefore, they group costs by costing items.

According to the costing items, costs are grouped based on the place of origin and purpose, regardless of the homogeneity of their economic content. The list of costing items, their composition and methods of attribution to the cost of certain types of products (works, services) are determined by industry methodological recommendations on planning, accounting and calculating the cost of production (works, services), taking into account the nature and structure of production.

However, the following standard nomenclature of costing items is mainly used at industrial enterprises:

raw materials and materials (less returnable waste); purchased components, semi-finished products and services of cooperating enterprises; auxiliary materials for technological purposes; fuel and energy for technological purposes; the basic wages of the main production workers; additional wages of the main production workers; social contributions; costs for the preparation and development of the production of new types of products; Compensation for wear of tools and devices for the intended purpose; costs of maintenance and operation of machinery and equipment; general production expenses; general business expenses; other production costs; commercial expenses.

The list of costing items depends on the industry affiliation of the enterprise, its size and type of activity. For example, articles 11 to 14 in individual enterprises are combined into one called “Overhead”, items such as 8 to 10 may be missing, etc.

Classification of costs by costing items allows you to determine the place of occurrence of costs and the directions of their use, the cost of a particular product.

Types of production costs differ in the composition of the included items. The sum of the first eleven items forms the shop cost. Production cost consists of shop and general economic and other production costs (articles
1 – 13). The total cost of production includes production and sales costs (the sum of articles 1 –14).

Depending on the homogeneity of the economic content, costing items are divided into simple and complex. Simple articles include articles consisting of a single economic element. These are articles 1 through 7. Complex articles include several economic elements. Such articles include 8 – 14. For example, the item of expenses for the maintenance and operation of equipment consists of the following economic elements: material costs (spare parts for repairing equipment, lubricants and cleaning materials), depreciation (depreciation of machinery and equipment), labor costs (salaries of auxiliary workers engaged in equipment maintenance), social contributions (from the salaries of auxiliary workers) and others (deductions to the repair fund, etc.).

Depending on the influence of the volume of production, costs are divided into variable and conditionally constant. Variable costs include costs that change as the volume of output increases or decreases (the cost of raw materials and basic materials, the basic wages of the main production workers, etc.). Conditionally constant costs are those that do not depend on the volume of production (Articles 11-14). They are permanent, if the change in the volume of production is not associated with a revision of the mode of operation of the enterprise, its organizational structure, etc.

The division of expenses into fixed and variable is purely conditional. As a rule, the change in the volume of production is reflected in the amount of expenditure. However, this influence is insignificant, without serious organizational changes, which gives the right to consider them conditionally permanent.

According to the method of attribution to the cost of production, all costs can be divided into direct and indirect. Direct costs are those directly related to the production of products that can be directly included in the cost of the product (basic materials, purchased components and semi-finished products, wages of the main workers, etc.). Indirect costs are those that are common to all types of products manufactured in an enterprise. They are not directly related to a particular product and are therefore subject to inclusion in its cost price by calculation, indirect means using the accepted methods (for example, in proportion to the labor intensity of manufacturing, the basic wages of the main workers, etc.).

In relation to the production process, production costs are divided into basic and invoices. The main ones are understood as costs directly related to the production of products. These include articles 1 to 10. Overhead costs related to the management, organization and maintenance of the production process (Articles 11 to 14).

According to the expediency of spending, productive costs are distinguished, which include justified, or expedient for a given production, costs. Accordingly, unproductive costs are those that are formed for reasons indicating shortcomings in technology and organization of production (product defects, losses from downtime, overtime payment, etc.). In the case of an ideal organization of production technology, all costs of the enterprise should be only productive.

The planned are the productive costs for the respective production conditions. In accordance with the norms and standards, they are included in the planned cost of production. In some industries (foundry, glass), the planned ones include losses from marriage within the established norms. Unplanned costs include costs that are reflected only in the actual cost of marketable products (losses from defects).