Indirect costs of the enterprise

Each enterprise carries indirect costs in the course of its activities. These include costs, the direct attribution of which to a certain position of the nomenclature of products is impossible.

Indirect (overhead) costs accompany the main activity of any organization, but are not directly related to it. They are not included in the cost of materials and labor. Indirect costs are associated with the operation and maintenance of fixed assets, the organization and management of production, its maintenance, travel expenses, vocational training of enterprise employees and non-production losses (from damage to raw materials and materials, losses from idle time).

Indirect costs also include costs for telephone communications, Internet, rent for office space. They are complex in nature and are costs, which, when calculating the total costs for the production of certain products, are conditionally allocated to individual types and units of output. Calculation and distribution of indirect costs is the basis for the adoption of certain production decisions, setting prices for products, calculating the profitability of all types of products.

Some indirect costs change, others remain stable for some time, while the reduction in the volume of individual types of products does not reduce them.

At each enterprise, the procedure for allocating this type of expenditure is developed. In order to include direct and indirect costs in the production costs of certain products , an entire system of relevant standards is being developed. For the allocation of overhead (indirect) costs, the corresponding estimates, called budgets, are developed. They fix all the costs associated with the production of various types of marketable products. These estimates are in the context of economic articles and are tied to different reporting periods.

Indirect costs during the calculation of the full cost of certain types of products are included in it by means of a proportional conditional distribution of costs according to the distribution bases accepted at the enterprise. For them, the following indicators are most often chosen:

- the basic salary of employees (without additional payments and bonuses);

- normative (estimated) rates of equipment and works;

- spent man-hours;

- output volume;

- some direct costs.

The main principle of choosing the method of distribution of these costs is the maximum correspondence of the result of their distribution to the actual costs for the production of a particular item of the nomenclature of the output. The vast majority of enterprises for the base takes the basic salary of production workers.

According to the existing practice and the norms of the current legislation, each enterprise allocates its indirect costs primarily in the areas (types) of activity, and the second - within a certain type of activity or by types of products. Thus, the rational distribution of these costs determines the accuracy of calculating the cost of production for each production line and all types of products.

In management accounting, there is often a mixture of such concepts as indirect and periodic (conditionally-constant) costs. These categories of costs must be clearly distinguished among themselves. Indirect costs are a variable indicator, since they are always directly related to the volume of output. In other words, the entire production process determines this type of expenditure. They are accounted for on the collective-distributive account 25 "General production expenses". At the end of each month, the amounts of indirect costs are written off from this account as follows:

- c.ch. 20 "Basic production";

- c.ch. 23 "Auxiliary production".