What is the gross output of the company

Any commercial structure is engaged in making a profit. In any case, such a wording is very often found in statutory documents of legal entities. Profit is calculated as the difference between income received and costs. The system of economic analysis contains different indicators on the basis of which the current activity of the company is monitored. They are natural and calculated. Among these indicators are gross output, labor productivity, profitability of production and many others.

Companies that manufacture goods need to monitor the market on a continuous basis . On the one hand, one must have information about the quality of goods produced by competitors. About what requirements and wishes for the quality of products are expressed by consumers. On the other hand, it is necessary to keep abreast of the technical policy pursued by suppliers of raw materials, materials and components. Replacement of any component in a complex technical product may affect its characteristics and cost. And such an indicator as gross output is always the subject of consideration of managers and technical specialists.

Focusing on market demand, the company's management develops a production program for a certain period. Once, in conditions of planned housekeeping, such programs were compiled for five years. At the same time, the five-year plan was extended to annual assignments. Today, a common approach is not observed, and each enterprise organizes its activities in its own way. It often happens that you want to "throw a test batch of products on the market." These can be TVs or washing machines, or cars. All costs associated with the production of this batch are taken into account separately. And such an indicator as gross output, including.

In the production of technically complex products, a large number of different services and specialists are involved. Starting with the design and ending with the packaging of the finished specimen. In order for the washing machine to make life easier for many hundreds of thousands of people, designers and logisticians show their intellectual abilities and capabilities of modern technologies. Materials and components are delivered to assembly conveyors from different parts of the world. And all this set is subject to strict accounting. After all, gross output is the sum of all finished goods that are transferred to a warehouse, and those that are still in production. At the same time, it is necessary to clarify that the account is maintained in monetary terms.

Experienced economists and managers in evaluating the effectiveness of production, as a rule, are interested in two or three indicators. After all, gross output, the formula of which is very simple, can in general outline the profitability of the company. It also shows the quality of management. With a high quality of management and an appropriate level of technological culture, the gross output must be equal to the commodity output. In other words, if materials and components were prepared for the production of, say, two hundred washing machines, then after their final assembly in the warehouse there should not be any unused detail.

Of course, in real conditions such results are achieved only by leading companies in their production sector. As practice shows, collecting the same washing machines, logistics specialists make excess stock of especially complex knots. For example, for the production of ten machines, they order eleven electric motors. Such a reserve of 10% of the required volume is considered quite normal. However, it is reflected in the reporting documents as a freezing of working capital. Washing machines of this type are not to be produced anymore, and the extra engine will have to be written off for losses.