Production costs in the short term, their essence and relevance.

Date:

2020-07-03 01:22:05

Views:

458

Rating:

1Like 0Dislike

Share:

Table of contents:

Costs, or other costs, this is a budget that all business entities are actively trying to minimize. The balance sheet for the reporting period can contain many expensive items, as long as their value was normal and allowed us to have a stable income, and thereby to develop. The magnitude of the costs in relation to production activities is quite frequently related to the concept of the cost of production. In this respect, between different economic schools often inflame the debate over whether to include the cost of sales in its total cost. On the one hand, this cost is closely related to the product itself, since without a properly structured marketing policy it is impossible to provide sales volume that covers all costs. In this case, it is clear that the enterprise is doomed to liquidation.

From the point of view of some economic experts, the costs associated with the promotion of products on the market and their advertising reaches its maximum value in the period of the production and distribution of innovative products, after which the curve of such costs on the chart tends to the bottom. From this it follows that the manufacturer, increasing production and sales over time to minimize these costs and their share of the real cost (the real cost is to understand all the costs associated with the production and sale of products). Thus, in this situation, the yield curve has the vector, looking up.

Recommended

Staff evaluation: system and methods

Staff evaluation: system and methods

Personnel Assessment allows you to identify how competent the employees involved in the enterprise, and it is the performance of their work – the most significant factor affecting the efficiency of the company. To clarify the impact of performa...

How to start your own business: important aspects.

How to start your own business: important aspects.

Many people, tired of working for someone else, are increasingly thinking about how to start your own business. Someone wants to open a salon, someone store, and someone enough and vegetable stalls. Before you throw in the pool with his head, it is i...

business activities. its essence and basic functions

Business activities. its essence and basic functions

The Entrepreneurial activity of the citizen – is undertaken at your own risk and independent activity, which aims to systematically profit through the sale of works, goods, services, use of the property. The citizen engaged in such activities, ...

In this regard, it argued that it is necessary to delineate the production costs for the production costs and the costs of implementation. Production costs in the short term can testify how profitable is the company in the long term. Such costs include costs of labor and material resources per unit of output, which, as a rule, must remain the same size. But this smooth course of events is characteristic only of a static and stable economy, which now seems unreal idyll. The costs of production and sale of products is subject to change from both external and internal factors, which can be attributed to seasonal demand, market changes, innovations and many others, including various force-majeure circumstances. Production costs in the short term, it is customary to optimize to constant value, so most manufacturers find it much easier to set the threshold of profitability for each product.

In today's economic science is considered relevant to classify the costs of transformation and transaction. If the first cost associated with processing materials in the final product implementation, the second applies to such expenses as protecting the trading position of the brand. These costs are not associated with creating value finished products. Production costs in the short term for the most part relate to the transformation costs.

Very often uneven changes in total costs lead to the fact that with the increase of the production volumes change, costs in relation to unit of output. Such costs are also called average. The average cost of production is calculated as the ratio of total costs and produced quantity. Initially, this cost is large, but in the process of growth of volume of production there is a tendency to its decrease. For small batch production it is essential to minimize production costs in the short term, because this fact will allow to fix on a certain level of fixed costs and not to lower the threshold of profitability.


Article in other languages:

ZH: https://tostpost.com/zh/business/45459-production-costs-in-the-short-term-their-essence-and-relevance.html






Alin Trodden - author of the article, editor
"Hi, I'm Alin Trodden. I write texts, read books, and look for impressions. And I'm not bad at telling you about it. I am always happy to participate in interesting projects."

Comments (0)

This article has no comment, be the first!

Add comment

Related News

The work in process and its types

The work in process and its types

work in progress (NP) includes the results of the production process that were not completed by the end of the reporting period, and the final product in the form of goods not received. As a rule, work in process includes: - raw m...

Rules of rendering of postal communication services.

Rules of rendering of postal communication services.

the Rules for the provision of postal services were developed and adopted in 2000, they described in detail all the services rendered by the postal workers, the rules and the receiving of mail that can and cannot be sent by post t...

Non-tax revenues and their structure

Non-tax revenues and their structure

According to the form of government and tax legislation, non-tax budget revenues in the Russian Federation for all of their levels are generated from tax and non-tax revenues. In addition, they include the trust funds. Size and st...

Analysis of the production and sale of products and its components

Analysis of the production and sale of products and its components

Enterprises and companies, as a rule, independently implement their development plans; the reasons that allow this activity are the contracts concluded with the consumers of these products, and suppliers necessary for the producti...

The overall capitalization rate and its calculation

The overall capitalization rate and its calculation

In various sources is quite a lot of attention is paid to what is capitalization rate and how is it calculated. However, the category of “the overall capitalization rate" needs some additional explanation. It is calcula...

Tomato

Tomato "balcony miracle": characteristics and description, reviews

In recent years the achievements of Russian and Western agricultural science more delight gardeners with new varieties of fruit bushes. Of particular interest are the so-called pygmy culture, which enable them to grow even in the ...