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Abstract

Contents

Introduction

In the transition to a market economy, many companies, having lost state support, became independent of economic life. The choice of the type of activity the production process, output and sales of finished products were the prerogative of the enterprises themselves. In terms of self–financing major challenge for companies was the task of making a profit in an amount sufficient for the reproduction process. The basic condition for increasing company profits is to reduce the cost of production and marketing, including the cost of products.

Background expense management has spread among commercial organizations. It costs are the start of the company, as the subject of cost management process will always remain in first place in the study of economic processes. Many academics consider the management costs in their works. For example, in the textbook Karpova TP Managerial Accounting characterized by features cost accounting system for the direct costing. Rayitskyy KA in its publication Business Economics shows cost management as multi–step process. Bulls SV in the article Financial Management Operations shows different optimization methods range of products pidpryyemstva.Meta: explain what is the nature of expenditure and to understand which methods are the best cost management in the enterprise.

Tasks:

1. To characterize costs

2. Bring the classification of costs and explain the nature of their formation

3. Describe the methods of cost management

4. Give recommendations to improving management costs

1. Essence, classification and bases of formation expenses of the enterprise

The cost – a monetary valuation of material, labor, financial, natural, information and other resources for production and sales for the period.

Formation costs is a complex process. The activity of any entity begins with implementation costs. First, the company needs to acquire fixed assets, ie buildings, premises, equipment, vehicles that will ensure its activity for a long period of time. Then you need to buy material resources in the production process will be converted into finished products. In exercising company reimburses bear the cost if it works efficiently profits. The greater the value of costs incurred and their level of impact, the more profit the company receives. The process of cost management is quite complex, it consists of several elements.

Some sources suggest a classification of costs. Among the points are similar, but much different, so the author leads generalized classification of costs:

By way of referring to the production costs are allocated direct and indirect costs. Direct costs directly associated with the production of specific products and established norms related to their cost (raw materials, fuel, energy). Indirect costs due to manufacturing various products and included in the cost of certain products indirectly (relatively) proportional anywhere near feature. These are part of the cost of maintaining and operating the equipment, overhead, general and other expenses. For functional role in shaping the production costs distinguish basic and overheads. The main costs directly related to the process of producing the products. This is the cost of raw materials (basic), fuel and energy, manufacturing, basic wage of production workers. To include overhead costs associated with the creation of the necessary conditions for the production of its organization, management and maintenance. Overhead is overhead and general running costs.

The degree depending on changes in production costs are divided into proportionate and disproportionate. Proportional costs – is the cost, the amount of which depends directly on the change in output (wages of production workers, the cost of raw materials, etc.). Disproportionate costs (conventionally fixed) – is the cost at which the absolute value of the change in output does not change or changes disproportionately (depreciation of buildings and fuel for heating, energy for lighting, salary management).

The degree of homogeneity costs are divided into element and complex. By element (homogeneous) are costs that can not be separated into parts (cost of raw materials, basic materials, depreciation of fixed assets). Comprehensive called items, which consist of several homogeneous costs (cost of maintaining and operating the equipment, overhead, general and other expenses) which may be divided into primary elements.

Depending on the time of assignment and the cost of production costs can be current, deferred and future. Current arise mainly in the period and include the cost of production of the period. Deferred expenses made at this point in time, but are included in the cost of production in certain periods subsequent fate. Future costs – it does not cost incurred, which are reserved funds in order estimate–normalized (payment holidays, seasonal costs, etc.). This type of classification allows even distribution of economically justify the cost of production and marketing.

For the reasonableness of costs distinguish productive and unproductive. Considered productive labor costs of production established as the rational technology and organization of production (planned costs). Unproductive expenditure resulting from shortcomings in technology and organization of production (lack of production losses from downtime, etc.) (not planned expenditures).

To monitor and control costs are classified into regulated and unregulated. On the economic content of all costs of the company are divided into operational, financial, ordinary and extraordinary.

In forming the normal course of business expenses should be provided by their grouping elements, and the only mandatory for organizations of all sectors.

2. Methods of cost management

Unlike the classification method of cost management costs are always the same, but what methods or combinations thereof in practice entrepreneur decides for himself. Each method has its advantages. The following methods of cost management:

Direct kostinh – fixed overhead costs are not included in the cost of production, and are recognized directly in profit or loss in the period in which they occurred.

Abzorpshn–kostinh – in production costs include all costs (including overhead). Standard fare – for each type of costs (material, labor, etc.) are determined based application rate (standards) resources per unit of output. Spending resources norms and deviations from the norm consumption accounted for separately.

Method ABC – activity of the company is regarded as a process or business operations. The cost of the enterprise for a period or costs for certain type of product is calculated based on the costs of the relevant set of processes and operations.

Target–kostinh – based on the selling price of a given product and the desired value is set profit target cost, which is further ensured by all enterprise services. Provides target cost at the planning stage of production. There is a tool of strategic cost management.

Kaizen–kostinh – includes not achieve a certain value costs and constant, continuous and comprehensive. Their target cost in the production mainly in operating costs and control over their level.

CVP–analysis – based on a comparison of three variables: the company's expenses, revenue from sales and the resulting profit ratio to determine which Sales (sales), which is known in terms of fixed costs and variable costs of enterprise product unit ensure the profitability of financial performance or planned.

Benchmarking costs – involves comparing the state of cost management in the enterprise with businesses leaders for future decision–making in the area of cost management.

Costa killing – aimed at maximum reduction of expenses as soon as possible without sacrificing the enterprise and its development prospects. Used in crisis management and management competitiveness.

LCC–analysis – costs are determined on the manufacture and sale of a particular product throughout its life cycle in the future compared with the corresponding income. It is used in strategic management costs.

Method VCC – the availability of accurate and detailed description of the marketing and market positioning of products or services of the company. Precise identification of the product life cycle stages.

Also in Section 1.2 of the thesis the author proposes a method of cost management, called RP–method. The method is designed to achieve full cost value in the enterprise. Provides targeted cost during production.

The essence of the method is that the company takes into account the last five or six years of operation, looking at the year of this period, when it received the maximum profit margin. This draws attention to the amount of costs. Further study each type of expenditure. Then it is necessary to reproduce the whole situation involving the expenditure of money, but you need to take into account inflation and changes in the market that costs have changed in proportion to the period under review.

Considered an integral part of strategic and operational management costs is to analyse factors. It probably can not be regarded as an independent method of cost management, but this analysis can not be neglected either strategically or in operating costs. Analysis factors requires consideration factors of costs in their relationship and interplay. Knowledge factors and the extent of their influence on the value of the company's expenses, as well as relationships between factors allows influencing factors of cost, in the long run provide managerial influence on the value of the full costs.

3. Recommendations that by improving management costs

Looking back at previous chapters, the author's work suggests the following measures to optimize costs on enterprises:

1. Raising the technical level of production. The implementation of new, advanced technology, mechanization and automation of production processes, improving the use and application of new types of raw materials; change design and specifications of products; Other factors that increase the technical level of production.

2. Improvement of production and labor.

3. The evolution of production, which may lead to a relative decrease of conventionally fixed costs relative decrease in depreciation, changes in the nomenclature and product mix, improve its quality.

4. Improving the use of natural resources.

5. Industry and other factors. These include: the introduction and development of new shops, industrial units and industries, training and development of existing production associations and enterprises; other factors.

In conclusion, you can add that in order to form effective tools for optimizing costs necessary to compare target cost optimization of their quality.

Conclusion

The paper reviewed the classification of costs, management costs, reduced cost bases of formation and was given a number of recommendations to improve cost management process.

Cost is an essential element of any commercial organization. It costs influence the formation of future returns a profit. Therefore, the cost management should be perfectly designed for the smooth functioning of each enterprise. What methods and combinations of methods of cost management decides to use an entrepreneur looking at factors such as the type of business, scope of activities, market share, customers and so on.

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