Calculation of profitability based on the methodology of the marginal method of cost sharing

In the conditions of the administratively regulated economy, one of the main tasks of accountants was to summarize information on the costs of production and to identify the cost of products as a basis for determining their prices. In the planning of costs, the principle of accounting for the full cost was used, which was reflected in the compilation of planned calculations in the context of cost items. At present, demand, supply and price are the main factors in regulating market relations. This fact can not be ignored, because it is on it that the profitability of business entities and their further economic development depends. In this regard, it seems appropriate to use the calculation of the profitability of products, which is used in countries with developed markets.

In the structure of costs of modern industrial enterprises, the increasing share becomes overhead - from 30 to 40% of all material and labor costs. With the growth of the technical equipment of enterprises, the automation of the production and management process, the introduction of advanced technologies, as well as the development of international relations, overheads have undergone significant structural changes. New analytical articles of costs have appeared, their cost potential has increased, and has a tendency to further increase. All this significantly changes the methods that regulate the calculation of profitability in accounting.

In accordance with the Methodological Recommendations in industrial organizations, it is recommended to attribute general economic expenses to the prime cost of certain types of products in direct proportion:

• Expenses for wages;
• Marginal income;
• Direct costs;
• The sum of the basic salary and general production expenses;
• The volume of planned production in actual prices;
• Estimated rates.

Enterprises can apply other methods, taking into account the specifics of their production and differences in the structure, with their indication in the accounting policy of the organization. Currently, most industrial organizations use this calculation of return on assets in which one of the two most economically viable distribution methods is used to allocate variable (overhead) costs:

• In proportion to the amount of the basic salary and general production expenses;
• In proportion to salary costs.

Recently, the method of distributing them has been used in proportion to direct costs. Normative (estimated) rates are widely used in the normative method. All these methods, which are used to calculate the profitability, depend on the type of expenditure and distribution objectives. For example, general production costs (ODA) are distributed according to one methodology, general economic (OXF) - for others.

The distribution of costs helps to solve at least three tasks:

• To stimulate the need to recover indirect costs;
• To intensify the use of financial and economic reserves and savings;
• To encourage managers of profit centers to strengthen control over the costs of services.

The criterion of solutions is the achieved profitability result; justice; profitability.

In each individual case, for example, where it is necessary to calculate the profitability of a project of a specific economic undertaking, it is expedient to allocate the following stages of distribution x costs:

• The choice of objects to which costs include;
• Definition and summation of the costs attributed to the objects.
• Determine the distribution base for the ratio of all collected costs to accounting objects.
• Determine the coefficients of overhead by dividing the dependent variable by an independent variable.
• Attribution of costs to a particular facility.

At the same time, it should be borne in mind that the imperfection of the cost distribution coefficients is manifested in the following:

1. The monthly cost ratios may be distorted in separate months;
2. Individual indirect costs change monthly;
3. The volume of production is subject to monthly fluctuations.

Therefore, at the present time in the accounting of many organizations in the forecasted calculations, where the main in the content are the calculation of profitability and the calculation of the cost of production, a new (market) indicator - marginal revenue. In the conditions of developing a market economy, when economists should clearly control the profitability of each product, the most economically efficient method of allocating costs is precisely this: marginal.

In foreign accounting such a methodology is recommended by the standards and widely used in practice. In particular, when using marginal costing in the organization of cost accounting, the classification of expenses for variables and constants is applied. The actual production cost and profitability are determined only by variable expenses, and therefore they are presented in a truncated form, and fixed costs are included in the total amount into sales accounts and participate in determining the cost of sales. The difference between revenue for variable costs and cost is marginal revenue. The deduction from fixed income from fixed costs determines profit from sales and profitability.