Variables and fixed costs of the enterprise

Production is such a person's activity, as a result of which he satisfies his material needs. Since nature can not provide him with all the necessary goods in the right amount, he is forced to produce them. From this we can conclude that production is an objective necessity. The needs of man are divided into spiritual and material, this is only an approximate division, but it very accurately reflects the social and natural needs of man. Satisfaction of man's spiritual principle is no less troublesome than material, yet they are also provided by the industrial power of modern production.

With the development of the standard of living , human needs are also growing noticeably , economic theory represents this trend as the law of exaltation of needs. As a result of the growth of human needs, production must constantly grow to provide the necessary standard of living for the individual. The purpose of production is complete satisfaction of the needs of human society, in part it is achieved because of the interactions of man and nature.

Each enterprise ultimately focuses on obtaining the highest possible profit, at the same time it is clear that no production of goods or services can not do without costs. To purchase raw materials, pay workers and advertise the company carries out specific costs. At the same time, it seeks to launch such a production process, in which the necessary volume of production will be ensured with minimal costs for the organization of this production.

Distinguish between variables and fixed costs. Variables include costs, the amount of which varies depending on the volume of production. Such costs include payment for transportation services, payment for labor, purchase of raw materials, fuel and additional materials. Variables and fixed costs in the aggregate form common costs, which largely determine the profitability of the given production.

In order to ensure the necessary level of output, the firm must implement a number of costs. Depending on the change in the volume of these costs, the volume of output varies. Some of the costs are subject to fairly rapid adjustments, while others require additional time to resolve this issue. Costs, the regulation of which requires a large amount of time, determine the size and parameters of the company's production capacity and are called fixed costs.

Constant costs are the costs of using production factors, while costs determine the consumption of resources in their natural form, while costs represent the cost of the costs incurred. Within a single enterprise or firm, fixed costs include individual production costs, which are the costs of a specific subject, and public costs, which are directed at the production of the volume of a product.

Given the above facts, we can conclude that in a market economy can and should manage costs. Economic thinking goes to a completely new logical level, which means that variables and fixed costs are subject to fundamental change, which will require the creation of new theories, as well as a completely new professional training of employees. All these changes will be required for the progressive innovative management of production, which will inevitably lead to a significant improvement in the well-being of human life.