Variables and constants
Depending on the volume of production or the service provided, fixed and variable costs of the company are distinguished. For example, taxes, insurance premiums and rent are considered fixed costs, as they remain stable from month to month. Changes in such costs usually occur when new regulations are introduced, and rarely occur more than once a year.
Short-term costs of a company that are related to email lists uk he volume of production of goods are called variable costs. As the volume of production increases, expenses usually increase. For example, this concept includes the costs of electricity and materials, as well as the wages of employees, which depend on the volume of work performed.
Generally, a firm's variable costs can be divided into three categories:
Proportional . A type of cost that increases proportionally to the number of goods produced. For example, packaging costs will correspond to the number of products produced.
Degressive costs, where costs increase more slowly than production volume increases. For example, if material suppliers reduce their price as the volume of purchases increases, this results in a reduction in the cost of the final product.
Progressive . When production volumes expand, costs also increase along with them, which is typical for growing wage systems. For example, an employee is awarded a bonus for each additional item of production after reaching a certain threshold: a cook makes pies and gets 30 rubles for each, and after the 50th he is paid more than for the previous items produced.
Direct and indirect costs
Direct costs are those that are directly related to the production of a product and are included in its cost price. For example, when creating beaded bracelets, the beads themselves, fittings and threads will be considered direct costs.
Direct and indirect costs
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It is necessary to take into account those costs that cannot be precisely determined for each individual product. For example, the cost of electricity for an 8-hour workday will remain the same for a seamstress, even if she sews low-value products one day and more expensive products the next. These are indirect costs.
Costs that determine the production process
Production costs are directly related to the production of a product and include all necessary costs for materials, equipment, labor, and other direct costs such as electricity.
Non-production costs are expenses that, although not directly related to production, are necessary for the successful sale of products. For example, advertising costs, rental of premises, furniture for employees, etc.