Types of production costs

The concept and types of production costs are familiar to almost every modern person. They are expenses, which in any case are mandatory to ensure the normal functioning of the organization, the implementation of its marketing and production activities. With the costs associated with economic activity, each firm faces without exception, but at the same time they are very diverse. Types of costs can have the following classification:

On the role in the formation of the cost of services, works, products, the main and overhead costs are allocated. The main costs are attributed directly to the production and technological process. Overhead costs are aimed at creating all the necessary conditions for the normal operation of the enterprise, which is related to the manufacture of products.

The level of homogeneity of expenditure is simple and complex. Simple expenses are made depending on the specialization of the firm. Complex costs are a set of costs for all departments and production units of the organization.

Depending on the time of occurrence, such types of costs as current and future are noted. Current costs are those that arise directly in the process of manufacturing goods. They are the basis for further planning work. Future - this is the costs of the organization, which it will have to incur in the future period.

In order to correctly decide how to organize production, costs, distribution of factors of production and resources, one should take into account any potential opportunity, especially those that seem most acceptable from the point of view of profitability and profit. It is also necessary to take into account the ability of alternative or more economical use of resources. This will help the organization to reduce production costs when planning financial activities.

At the planning stage, the organization notes such types of costs:

- Accounting - determine all expenses of the current period for the acquisition of fixed assets, raw materials and manufacturing factors, the main of which is labor.

- Internal - this is the amount of income that could be obtained with more rational and economical expenditure of factors of production and material resources.

- Economic. They are expressed by the total value of accounting and internal costs.

- Returnable - the costs of the organization, which with time will return back. As an example, the cost of production, which after the implementation will be fully covered.

- Irrevocable - one-time expenditure, for example, such as the creation and registration of an organization, its insurance, etc. It must be said that non-recurrent types of costs are the only ones that can not be found an alternative.

In the case when the basis of the cost analysis of the enterprise is the volume of output, you can identify two types of costs:

- Constant. They are in no way dependent on the production of goods and services. This includes monthly regular costs, for example, rent, electricity and gas, workers' salaries.

- Variables. This type of expenditure directly depends on the number of products produced.

In aggregate, the fixed and variable types of costs are represented by gross, i.e. They still include depreciation.

The average cost of production is due to spending on one unit of manufactured products. Limit the same costs determine the cost of the additional unit produced.

It should be noted that knowing the concept and types of costs is very important, because This will help to avoid unnecessary waste.