Margin accounting. Margin costs. The concept of marginal cost

Margin costs are the limiting costs, the costs of the enterprise for the manufacture of each additional unit of products. Marginal costs show how the cumulative volume of the cost of the entrepreneur will change when the additional unit is released.

The growth of production increases variable costs - the cost of purchasing raw materials, labor, electricity is growing. But the size of permanent costs remains unchanged - the company pays the same amount for renting the premises, leasing machines. Obviously, the increase in production facilities is beneficial: the cumulative costs are reduced, net income is growing. In practice, this situation does not always happen - the entrepreneur needs to calculate marginal costs to determine the feasibility of increasing volumes.

Payment

Marginal costs are calculated as the ratio of changes in total costs to change the number of products:

MS \u003d (TC2 - TS1) / (Q2 - Q1)

TC2 - cumulative costs with an increase in production output;
TC1 - aggregate costs with the existing volume of production;
Q2 - the number of products produced after an increase;
Q1 - the number of products produced currently.

When calculating marginal costs, the size of the constant costs of production, which are included in the aggregate costs are part of them.

Use of calculations in practice

Extension of production volumes leads to an increase in the supply of goods in the market and is subject to the law of decreasing limit performance. It determines that the incidence of the company of individual factors of production, temporarily bringing additional income, ultimately entails a decline in profitability from each new unit of products. Entrepreneurs are calculated margin costs for several purposes:

determination of the maximum production volume in which you can achieve maximum profit;
identifying the need to reduce variable costs if margin costs increase;
the establishment of the optimal cost of products allowing you to compensate for the increased aggregate costs.

In fact, if an entrepreneur, for example, releases 200 units of products per month, it will benefit to increase production capacity to 250 units, until margin costs decrease. If it starts to produce over 250 units, and marginal costs will begin to grow with each additional unit, the growth of the production volume should be suspended. As in the law of utmost utility, there is a maximum amount of goods in production, in which the profit is maximum.

2.3 Method of Margin Costs

The method of margin costs allows you to create an effective system of operational market pricing based on the application of the principles of modern cost accounting - developed direct-cob. When using the method, the categories of margin and margin costs are used. Margin or the difference between the market price and variable costs should reimburse the constant costs and make a profit.

Table 3.

	Articles calculation
	Predicted annual sales, pieces
	Variable cost per unit product, rub.
	The total amount of constant costs, million rubles.
	Predicted profit, million rubles.
	The result from the implementation for reimbursement and profit and profit, million rubles. (p.3 + p.4)
	The result from the implementation after the reimbursement of constant cost per unit of product (gross profit on units. Products), rub.		7,2*1000000/19000
	price, rub.
	Sales price (18% VAT), rub.
	Retail price (trade markup 25%), rub.

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Formation of price-based enterprises

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Pricing

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One of the ways to plan and calculate the cost corresponding to the requirements of management accounting and allowing to make economically informed decisions is the margin method of cost accounting. In economic literature, this method is sometimes identified with the system of simple direct-cob.

The method of margin costs is based on the division of costs for the production and sale of products to a constant and variable part.

Marginal costs recognize direct variable costs of an enterprise that are directly dependent on the volume of production and sales of products (works, services). In this regard, the cost of production is taken into account and is planned only in terms of variable costs. The main advantage of this system is that the calculation of "limited" cost allows you to simplify accounting and cost control, make it more transparent by reducing the number of expenditure elementary articles.

Margin costs are intended to determine marginal profits, which is an important indicator in the system of analyzing sales and production reserves. An approach based on marginal profit gives managers with useful information for planning and decision-making.

The most relevant application of this method in enterprises for the formation of an optimal production plan is to optimize the product range, determining the degree of profitability of the nomenclature position and the cessation of the production of a non-profit segment. With full loading of equipment in the conditions of multi-generic production, the calculation of the production program should be carried out taking into account the maximization of the operating profit, which is influenced by the number of units implemented and marginal income per unit of products. Margin income is the excess of revenue over variable costs.

Margin income corresponds to the cost intended for covering constant costs and profit.

With a stable balanced business, there are always production and sales reserves, the implementation of the potential of which requires an assessment of the possible obtained economic effect. In the boundaries of the unchanged level of conditionally constant indirect costs with sufficiently notable fluctuations in the issue of the nomenclature position, the change in marginal profit is determined by easy and reliably, using the cost calculated on the basis of variables of marginal costs.

The calculation of the growth of marginal profits on a nomenclature position is calculated according to mathematical equality:

Formula of the growth of marginal profits on the nomenclature position

The margin value is calculated as the value that the cost of products will change when changing the level of activity in the event of cost calculation based on the use of the method of variable costs.

The use of this method can be illustrated by the example of the production and sale of the product A, the price of which is 150 thousand rubles., Variable costs (materials and wages) - 110 thousand rubles. We accept that with changes in demand, the constant costs for the entire volume are 1000 thousand rubles.

The increase in marginal profit on the nomenclature position

The increase in marginal profit is calculated: with an increase in volume by 5 tons: (55-50) * (150-110) \u003d 200 thousand rubles. With a decrease in the volume by 10t: (40-50) * (150-110) \u003d - 400 thousand rubles.

For industrial enterprises using semi-finished products in the production, it is necessary to consider that the cost of materials consumed and the work of its own manufacture in the cost of the target product is determined by direct variable costs. All conditionally constant, both indirect and direct costs, are recognized as the costs of the period and remain outside the magnitude of margin costs.

It should always be taken into account the specialty and limited scope of application of this method to avoid errors in planning. The validity of solutions aimed at increasing the production of products, which brings maximum margin income per unit, and reducing unprofitable, should be based not only on the basis of a marginal approach. The development plans of the company's products portfolio in the future, the possibilities of building capacity to meet the demand of buyers, the improvement of the cost management system is key business assessment factors.

TO BE CONTINUED...

The first stage of the introduction of KISA was completed: Budgeting in OJSC " Norilsk-Taimyr Energy Company" Open Joint-Stock Company Norilsk-Taimyr Energy Company was created on the basis of the merger of the Energy Assets of Taimarenergo and Norphite in the Norilsk Industrial District. The society provides electricity, heat and water vital activity of the population of five cities, two villages, as well as all enterprises of the Norilsk industrial area. The power system is geographically and technologically isolated from the Unified Energy System of Russia, which makes it an increased demand for reliability and survivability. Geographical position strengthens these requirements.

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In Surgut, a training seminar on PMK Kisa: budgeting was held for employees of OAO TEK: budgeting. During the seminar, the financiers of the energy-sales company got acquainted with the new program for budget planning. "The new program will fully automate the budget process in the company and reduce the labor costs of employees of the budget planning department, as well as increase the financial transparency of the enterprise," notes Viktor Chulkstan, head of the implementation and maintenance of information systems of Tyumen Energy Surghtov Company.

The total amount of costs (permanent and variables) add a certain amount corresponding to the rate of profit. If the production cost is taken as the basis, the allowance should be covered by the cost of implementation and ensure profit. In any case, the delivered taxes and customs duties are included in the allowance. It is used in enterprises with a clearly pronounced inventory differentiation for calculating prices for traditional goods, as well as to establish prices for completely new products that have no price precedents. This method is most effective when calculating prices for reduced competitiveness.

2. Production cost method

The total amount of costs for the purchase of raw materials, materials, semi-finished products increase percentage, corresponding to the enterprise's own contribution to the cost of goods. The method is not applicable for price decisions for a long term; Does not replace, but complements the method of complete costs. It is applied in specific conditions and cases of decision-making:

about increasing the mass of profits by increasing production volume;

on refusal or continuation of the competitive struggle;

about changing assortment policies in determining the most and least cost-effective products;

on disposable (individual, non-mas) orders.

3. Method of margin costs

it involves an increase in variable costs per unit of production percentage, covering costs and providing a sufficient rate of profit. Wider pricing capabilities are provided: full coverage of constant costs and profit maximization.

4. Investment profitability method

It is based on the fact that the project should ensure profitability not lower than the cost of borrowed funds. The total cost of a loan is added to the total costs per unit. The only method that takes into account the payability of the financial resources necessary for the production and sale of goods.

Suitable for enterprises with a wide range of products, each of which requires its variable costs. It is suitable for both traditionally produced goods with a well-established market price and new products. It is successful when making decisions about the amount of production of the new product for the enterprise.

5. Methods of marketing ratings

The company tries to find out the price on which the buyer definitely takes the goods. Prices are focused on improving the competitiveness of goods, and not to meet the needs of the enterprise in financial resources to cover costs.

43. The concept of investments and their types

Investments (Eng. Investments) - Capital Placement in order to profit. Investments are an integral part of the modern economy. Investment loans are distinguished by the degree of risk for the investor (creditor) - a loan and interest should be returned to the agreed period, regardless of the profitability of the project, investments (invested capital) are returned and bring revenue only in profitable projects. If the project is unprofitable - investments may be lost in whole or in part.

Investments - Cash, securities, other property, including property rights, other rights that have a monetary assessment invested in the objects of entrepreneurial and (or) other activities in order to profit and (or) achieve a different useful effect.

Investment activities - investment and practical implementation in order to profit and (or) achieve a different useful effect.

From the position of the monetary theory of money, funds can be sent to consumption or savings. A simple savings withdraws from turnover and creates prerequisites for crises. Investing also involves savings in turnover. It can occur directly or indirectly (placement of temporarily free funds on a deposit to the bank, which will already invest).

Since marginal calculation involves the inclusion in the cost of production only variable costs, it may impress that the terms "margin" and "variable" are synonymous, but it is not quite so. Margin costs are the additional costs necessary for the production of an additional unit of products. In the range of relevance (i.e., for conventional production volumes on a certain time section), they may coincide with variable costs per unit of products, but outside this range this identity becomes dubious. Consider, for example, stepwise costs as the production volume increases, this moment will be achieved when the "true" margin costs of the next unit of production will include in addition to the previous specific variables of production costs, more of the growth of the "steps". Although this may seem the problem of terminology, but it has a practical aspect as

Margin costs are usually different with different production volumes, because the efficiency of the production process changes. At the enterprise, margin costs decrease with increasing release. So, it is more profitable for the company to produce 51 refrigerators than only one.

It is important to distinguish between marginal costs and average costs. In this example, the margin costs of the second refrigerator are 1800 thousand rubles. However, the average costs per unit when two refrigerators are produced, are 3800 2 \u003d 1900 thousand rubles. Similarly, the margin costs of the 11th refrigerator -1790 thousand rubles., But the average costs per unit in the production of 11 refrigerators are equal to 1708 thousand rubles. (18 790 11).

Margin costs in the production of refrigerators

So, the margin costs of production are additional costs when another product unit is performed. Average costs

To understand the optimal price for the product or service, economists use the concepts of marginal income and marginal costs.

In fig. 7-2 (b) presents graphs of margin income and marginal costs for each united sold for our example.

The company has fulfilled an agreement on the development of a portable phone. The phone should be charged once a month and can be used within a radius of 1 mile from the subscriber. Initial permanent costs amounted to 4,000. It is assumed that the critical point will be 5,000 per 100 units. The total income will be equal to the total costs also at a point of 25,000 per 900 units. Margin costs will be equal to marginal income when selling 550 units.

In order to characterize the optimal price of goods or services, economists use the concepts of marginal income and marginal costs. (The concept of marginal profits, but in another wording, see section 2.6 of Part I.)

Margin costs show how the total costs of 1 unit changed due to changes in the production of products.

On the graph, for our example, lines reflecting marginal income and marginal costs for each product sold is presented.

The concept of pricing from the positions of microeconomics is studied. Analyzes the use of a critical point method (break-even point). The concepts of marginal income and marginal costs are considered and ways to build curves of marginal income and costs are explained.

Margin costs and income are costs and income, but not on the entire output, but per unit of production. This is the difference between incremental costs and income.

Marginal costs and incomes are additional costs and income per unit of products.

Variables (production) costs are associated with the implementation of technological operations of the production process. Their total amount increases or decreases, respectively, growth or drop in production. In the calculation of the unit produced or realized products, they are as if additional costs incurred when creating this unit. In this case, variable costs are sometimes called marginal cost per unit produced or sold.

One of the alternative traditional domestic approach to calculating the cost on the basis of the total costs and the establishment on the basis of the full cost price is the approach, the beginning of which was laid abroad more than sixty years ago. In accordance with it, the cost of the product includes only direct variable costs, when separate objects are planned and incomplete or limited costs. Other types of costs that in their economic essence are part of the current costs are not included in the calculation, and reimbursement of the total amount of revenue (gross profits). The accounting system of incomplete cost has its name in different countries. Thus, in the USA, it is called direct-cyotic (accounting for direct costs), in the UK - margin-nine-kosting (accounting for marginal or margin costs), in Germany and Austria - accounting of partial (boundary) costs or accounting amount of the coating. Most often in domestic economic literature, the first name Direct-Kosting is used.

The tool is effectively used in theory and practice of economic analysis is the concept of limiting (marginal) costs - the cost of production and the implementation of the last unit of products. This is a relatively new concept for the traditional Russian accounting system and analysis of economic activities, and for many it is associated with the concept of the break-even point of the enterprise.

Margin costs are additional cost per unit of products. Marginal costs are usually different with different production volumes, as the efficiency of the production process changes. They per unit products decrease with increasing release.

In different countries, this system is called differently. In Germany and Austria, the term is used to account for partial costs or amounts of coverage in the UK - accounting for margin costs in France - margin accounting.

This is a classic method used in the foreign market by many Russian exporting enterprises now. Many familiar with the picture when the general director with the leading pricing specialist "loses" on the computer various options for profit behavior, taking into account this or that price of goods and various variants of variable (marginal) costs before the conclusion of the export contract. In fact, they conduct a typical sensitivity analysis. Here, much depends on the proportion between permanent and variable costs, as well as on the specific weight of the marginal profit in the revenue.

Comparison of historical and limiting (marginal) costs

The fact is that solutions of this kind are taken by studying the patterns of changes in medium and limit (marginal) costs of the company. About what costs and why their role for any firm is so great, we will talk.

To understand the nature of the limit (marginal) costs, consider an example.

The limit (marginal) costs are the real amount of the cost in which the manufacture of each additional unit of products costs.

Limit (marginal) costs -

It is equally important to determine what price should be taken into account historical (at the time of the source attract) or a new one (marginal characterizing

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