Analysis of the cost of production in the enterprise

Evaluating the activity of a modern enterprise, one should not lose sight of the analysis of the cost of production and the sale of its products, since it is the cost that reflects all the costs incurred by the enterprise for the production of this product, that determines the formation of a competitive selling price of the product, Share of the profit of the enterprise.

The prime cost is the aggregate of all resources, including raw materials, materials, energy, machinery, equipment, buildings, training and remuneration of personnel, patents, technologies and other costs spent for the production and sale of the product, expressed in monetary terms. It is the large number of components of resources, and the constantly changing purchase prices for them, as well as the daily improvement of technology and the emergence of new competitors in the market, forcing the leaders to seek new ways of development. The analysis of the cost price of products, works, services makes it possible to identify how efficiently the resources are used in the production, storage and sale process, and also to give a correct assessment of the enterprise's profitability and its stability in a competitive environment.

Cost parameters

The following economic indicators are included in the analysis of the cost of production of an enterprise:

• Full cost - the sum of all costs of the enterprise for production;
• Costs for the ruble of products sold - characterizes the level and dynamics of cost reduction. It clearly shows the relationship between cost and profit;
• Cost of an individual product, work or service (calculation) - allows you to analyze the cost structure, dynamics, level and impact on the profit of a single unit of production.

Analysis of the cost structure of an enterprise

The study of the composition of production costs makes it possible to identify the main directions of material and cash flows in the enterprise, which need to be given special attention. And the construction of tables and schedules of the cost structure for several years will characterize the dynamics of movement of certain items of expenditure. Performing an analysis of the cost of production on the example of industrial production, include the following items of costs:

• Material costs ;
• Fuel and energy;
• Costs for staff salaries and deductions;
• Costs for maintenance and operation of equipment;
• Production (workshop) costs;
• General production costs ;
• manufacturing defect;
• Other costs.

Depending on the specifics of the enterprise, the cost structure may vary and include additional categories of basic expenses.

Analysis of dynamics

To study the change in indicators of prime cost over time, tables are drawn up and graphs are constructed in which the accounting data for several years are used, as well as planned indicators of the cost of production. First of all, the indicator of the full cost price and its structure, as well as the cost index for the cost of a ruble of output, is analyzed. They give an idea of the general state of efficiency and intensity of the use of the material, financial and labor resources of the enterprise and the priorities for further research on production costs.

For a deeper study of changes in the dynamics of costs and the creation of production costs, the indicators of the cost of a single product are used. Here we also consider the structure of costs, their level, the impact on the profit generation of a single product and the enterprise as a whole.

Further, the deviations of the actual cost values from the planned values are calculated, the reasons for the overruns for individual items are explained, the causes of marriage and other non-production losses are identified, and a plan is developed to reduce the cost of production.

In the age of computer technology, one should not forget about the use of mathematical models of studying the enterprise's economy. Correlation analysis will reveal the cause-and-effect relationship of the change in cost with various factors that directly or indirectly affect the production of products. Here you can take into account such indicators as the labor costs of the staff as a whole, or by category, power-to-weight ratio, capital ratio, costs for new technologies and others.

In conclusion, I want to say that the cost analysis will be so much more accurate as the truthful will be the cost accounting data in the enterprise's reporting. And, if reporting is conducted with errors, or deliberately concealed any facts, then the analysis will leave much to be desired.