At any stage of a company's life, there is the task of accounting, analysis and cost management. Unlike, for example, the issue of enterprise management, where new trends arise from year to year (today - innovation, yesterday - mergers and acquisitions), in cost accounting the same questions remain relevant from year to year: how to correctly determine costs of producing certain types of products, as well as how to effectively use the information received. The familiarity and everydayness of the topic of cost often leads to a formal, without reflection, approach to calculations and incomplete use of the information received.

Determining the cost of manufactured products is a classic problem that is solved in almost every enterprise (organization, company). In the vast majority of enterprises, cost calculations are carried out using the same methodology, which is often called classical. One of the provisions of this methodology is the division of fixed (overhead) costs in proportion to wages. Experience shows that wages are not always an objective criterion for allocating costs to individual types of products. Thus, one of the tasks of calculating costs is the selection of objective bases for the distribution of overhead costs for individual types of products.

The task of calculating the cost of products (works, services) is to determine the costs of manufacturing certain types of products, in other words, to “link” costs to a specific product. This formulation is necessary not to repeat the basics, but to understand what errors can arise when using the “classical” (most common) method, when and what corrections in the calculations are necessary.

The classic calculation of unit cost involves two steps.

• Step 1 - determination of variable costs per unit of production - costs that vary in proportion to the volume of production of a particular type of product. The calculation is performed by multiplying the consumption rates of individual cost elements by the cost of their acquisition. Classic representatives of variable costs are raw materials, materials, components, technological energy, piecework wages.
• The 2nd step is the summation of fixed costs for the period and their division into specific types of products (it would be more accurate to say, the summation of overhead costs of the period attributable to products sold). Classic representatives of fixed costs are the costs of maintaining and repairing equipment, buildings, structures, salaries of administrative and management personnel, depreciation charges, and administrative expenses. Often the listed “other” expenses are reflected in special documents - statements (estimates) of general shop, general economic, and general production expenses. Often, the division of total costs into individual types of products is carried out in proportion to the wages of the main production workers accrued for these types of products.

The sequence of calculations is indisputable; controversial issues arise “within” the steps.

Our company produces three types of products. In this case, product 2 is produced on an automatic line purchased under leasing terms; the line is located in additionally rented premises (other workshops are owned by the enterprise). The enterprise has data on variable costs for each type of product, as well as on the amount of overhead (fixed) costs for the reporting period. Task: determine the cost and profitability of each type of product.

Using the cost calculation method “variable costs + fixed costs distributed in proportion to wages”, the picture shown in Table 18 was obtained.

Table 18 - Data on volumes and prices of product sales at Elekom LLP

Table 19 - Data on variable costs for production of products at Elekom LLP

Table 20 - Data on fixed costs for production of products at Elekom LLP

Based on the obtained values, you can rank products by profitability level: product 2 is the most profitable, product 1 has an average level of profitability, product 3 is unprofitable. The conclusion that seems obvious is that the sales volumes and prices of product 2 can be considered ideal, product 1 acceptable, and product 3 insufficient. When forming a production program for the future, you can maintain sales volumes and prices for products 1 and 2; for product 3, it is necessary to increase sales volumes or prices, otherwise the production of product 3 does not justify itself.

Table 21 - Initial cost calculation: distribution of overhead costs in proportion to the wages of the main production workers.

Product 1	Product 2	Product 3
Variable costs per unit of production, thousand tenge.
Salary share (base for distribution of overhead costs)
Fixed costs distributed over the entire production volume, thousand tenge.	800 x 30 / 54 = 444	800 x 8 / 54 = 119	800x16/ 54 = 237
Production volume, units/month.
Fixed costs per unit of production, thousand tenge.	444/15 units = = 30	119/10 units = = 12
Sales profitability: (Price - Cost) / Price	(100-90)/ 100=10%	(50 - 40) / 50 = 20%	(120-123)/ 120 = (-)3%

Among the problems of calculating costs, we can conditionally distinguish “technical” and methodological (semantic).

The “technical” problem includes the lack of correct and constantly updated regulatory frameworks. Often, the actual consumption of raw materials, materials, energy per unit of production, and sometimes the range of consumables, differs from the standards and range reflected in the regulatory base of the enterprise (a base that has not been updated for years). This problem usually arises when calculating variable costs. Its consequence is difficulties in adequate “plan-factual” comparison of costs.

A methodological (semantic) problem arises at the stage of dividing fixed costs (general business, general shop expenses) by type of product. As mentioned above, the task of calculating costs is to “link” costs to a specific product. The distribution of fixed costs in proportion to wages suggests that wages most objectively show what amount of fixed costs is associated with the production of a particular product. In practice, the “degree of involvement” of production assets in the manufacture of certain types of products (hence, the costs of maintaining equipment, buildings, structures, depreciation charges for equipment, buildings and structures), as well as the “degree of involvement” of management personnel in the manufacture of certain types of products ( Consequently, the costs of paying the AUP, administrative, and representation expenses) do not always have a direct connection with the amount of wages.

There are several examples in which the incorrect distribution of overhead costs in proportion to wages is obvious. In particular, the manufacture of products with varying degrees of automation of the production process. Automated production requires fewer production personnel than non-automated production (of course, there are exceptions). Consequently, the total wages of production workers engaged in the production of products in conditions of automation will be lower than for other products (again, there are exceptions related to the different qualifications of workers). Spreading by salary will result in a smaller share of overhead costs being allocated to the automated product.

In reality, automated production requires maintenance and repair costs, which increases the fixed costs of the enterprise. The acquisition of equipment under leasing terms leads to the appearance of leasing payments as part of general business expenses. If automated production is located on rented premises, rental payments will be included in general operating expenses. All of these costs are a “consequence” of a product produced automatically. It is not entirely fair to transfer (redistribute) them to other products.

Another example is products in the production of which workers of various qualifications are employed. Suppose one product requires more equipment and more labor time than the others, but is produced by lower-wage (less skilled) workers. The accrued wages of production workers for this product may be lower than for other products. Consequently, the share (and amount) of fixed costs written off for this product will be lower. According to common sense, the more time the machine was used to manufacture a product, the more costs for maintaining and repairing the equipment should be “paid back” by this product. Wages calculated on a time-based basis (monthly salaries) will not allow us to correctly take this situation into account.

In economic terms, costs should be attributed to a particular type of product in accordance with the extent to which these costs are associated with the production of a particular type of product. An analogue of an enterprise in this case can be an ordinary communal apartment, where certain types of products correspond to the neighboring tenants.

If a telephone is installed in a communal apartment, then the subscription fee should be divided equally among all residents. If one of the neighbors regularly negotiates with Australian relatives, then the bills for negotiations should be paid directly by him; dividing this bill equally will be unfair.

If one of the neighbors spent the entire month on vacation, leaving the apartment and prudently turning off the refrigerator, then the neighbors will have to pay the incoming electricity bill without his participation. An attempt to “redistribute” part of the payment for electricity to a neighbor will cause a fair protest on his part.

Thus, for an objective distribution of overhead costs, it is necessary to clarify to what extent the cost elements are associated with the production of a specific type of product.

In the example discussed in table. 18 - 20 it was clarified that the organization acquired a line under leasing terms for the production of exclusively product 2. The line is located on additionally rented premises. Thus, leasing and rental payments included in general production costs are a “consequence” of the production of product 2 exclusively. Consequently, the listed cost elements must be attributed specifically to product 2, but not redistributed to other products in any way. Taking into account only these two adjustments, the calculation of the cost of production of the enterprise will be transformed (Table 19).

Let's compare the last rows of the table. 20 (a version of the “classical” calculation) and Table 21: as you can see, the picture has changed radically. Given the current sales volumes and prices, product 1 brought the largest income to the company. Production of product 3 is not unprofitable. Product 2, given the current sales volumes and prices, does not justify the costs of its production (not product 3, as the initial calculation showed).

The picture obtained in the initial calculation arose only due to the artificial redistribution of costs to other products in proportion to wages. The automated line required less labor than other products and, accordingly, lower labor costs. When redistributing costs in proportion to wages, the lion's share of costs fell on products 1 and 3, the production of which is not as automated as products 2.

In reality, it is in connection with the production of product 2 that the enterprise faces two significant cost elements: leasing and rental payments. It is product 2 that must recoup these costs with sales revenue.

In the example considered, product 2 does not provide income (prices and sales volumes) sufficient to cover the costs of its production. The fact that product 2 is currently unprofitable at full cost does not at all negate its potential profitability.

Unprofitability at full cost means that the current volumes and sales prices of a given product are not enough to cover the costs of its production and from a management point of view it is necessary to strive to increase them (prices, sales volumes).

From a management point of view, we must strive to fulfill the economic rule of the enterprise's functioning - ensuring break-even production of each product. However, we can compensate for the profit lost on product 2 by selling other products.

Table 22 - Management approach: distribution of costs by sources of their occurrence.

Name of items
Product 1	Product 2	Product 3
(no changes)
Production volume (units/month)
Leasing payments, thousand tenge/month.
Rent of additional production premises, thousand tenge/month.
(Leasing payments + Rent of additional production premises) per unit of production, thousand tenge.		(90 + 90) / 10 units = 18
Unallocated overhead costs
Other general production costs (excluding taxes included in the cost price, leasing and rental payments) for the entire production volume per month, thousand tenge (for simplicity, we will distribute the same as before, in proportion to the wages of production workers)	620 x 30 / 54 = 344	620 x 8 / 54 = 92	620 x16 / 54 = 184
Other general business costs per unit of production, thousand tenge.	344/ 15 units = 23		184/ 5 units = 37
Total costs per unit of production, thousand tenge.		28 + 18 + + 9,2 =
Sales profitability (Price - Cost) / Price	(100-83)/ 100 = 17%	(50-55,2)/ 50 = (-)10%	(120-113) /120 = 6%

Calculation of the cost of individual products showed that the range of products sold includes a product that is unprofitable at full cost. This is product 2. The company is considering the advisability of discontinuing product 2 in order to maximize its profits. If we analyze what expenses the organization will incur after removing product 2 from sale, we get the picture shown in Table 23.

As the calculation shows, as a result of abandoning the production of an unprofitable product, the enterprise’s profit did not increase, but, on the contrary, decreased. Analysis of changes in enterprise costs due to the refusal to produce product 2 allows us to discover the reason for this situation. Due to the refusal to sell product 2, the enterprise will no longer incur variable costs: raw materials, technological energy, wages of workers (which will be true if the workers involved in the production of product 2 are laid off). If the reduction does not occur, wages will remain part of the company's expenses. The company will also not bear part of the fixed costs, in particular the costs associated with renting premises and leasing production equipment (which is not a fact, since there is a leasing agreement). Other overhead costs will basically remain at the same level: lighting, heating, repairs of workshops involved in the production of products 1 and 3 will remain the same as before.

In other words, if the enterprise refuses to produce product 2, it will cease to bear only part of the costs that were included in the cost of this product. As a result, the “loss” of revenue from the sale of product 2 turned out to be greater than the “gain” from the reduction of direct costs associated with its production. It is possible that some elements of general business expenses or elements of shop expenses for products 1 and 3 will nevertheless be reduced due to the refusal to produce product 2. In order for the decision to remove product 2 to be objective and have an effect, this reduction must exceed the value of 40 The value is obtained from the analysis of the condition: 10 units. * 50 t./unit< (10 ед. * 28 т./ед. + 90 + 90 + X),

where X is a reduction in other elements of fixed costs.

Table 23 - Calculation of the effect of discontinuing a product that is unprofitable at full cost

Name of items
Product 1	Product 2	Product 3
The company's existing profit (taking into account the production of product 2, which is unprofitable at full cost), thousand tenge.	2600-1560-800 = 240
Product 2 discontinued
Production volume (units/month)
Price per unit of production, thousand tenge/unit.
Variable costs per unit of production, thousand tenge.
Leasing payments, thousand tenge/month.
Rent of additional production premises, thousand tenge / month.
General production costs, thousand tenge.
The company's existing profit (taking into account the production of unprofitable product 2)	(15*100 + 5*120) -- (15*60 + +5*76) - 620 = 200

There may be doubt that the reason for the drop in profitability is that product 2 is incorrectly called unprofitable and the real unprofitable product, as the initial calculation showed, is product 3. Carrying out a similar calculation if we refuse to produce product 3, we will get an even greater drop enterprise profits.

In the case of the exchange of products and services between individual departments, it is necessary to record and distribute the cost of these products (services). This is necessary for accurate costing and differentiated reflection of the organization’s performance results. The cost of products (services) for own consumption represents secondary costs for each cost center. Three methods are most commonly used to allocate costs.

Simple distribution method. Applies if departments do not provide services to each other. Expenses for each auxiliary division are allocated to production divisions directly in proportion to the selected distribution base. This base remains unchanged for a long period.

Step distribution method. Applies if departments provide services to each other unilaterally. The division that serves the largest number of other divisions is selected, then they move from one division to another. A distribution base is selected for each division. This method is more accurate than the simple distribution method.

Bilateral or reciprocal distribution method. It is used if there are bilateral mutual connections between departments. This method is the most accurate, but also the most difficult. The method is based on solving a system of linear equations.

Example. Accounting and distribution of costs by places of formation and responsibility centers

The structure of the enterprise is represented by two production divisions (workshop No. 1, workshop No. 2) and three non-production departments (administration, repair shop, auxiliary shop). Cost centers coincide with responsibility centers.

Costs of responsibility centers for the response period (thousand rubles)

Cost distribution using the simple method

distribution

The share of revenue was chosen as the distribution base.

Distribution of costs using the step-by-step distribution method

Step 1. Allocation of administrative department costs. Distribution base – number of employees.

Number of staff

The resulting ratio is 10:5:5:20:30 or 2:1:1:4:6. We distribute administration costs among other centers 1: 1: 4: 6 (12 parts) 900: 12 = 75

Step 2. Allocation of repair shop costs.

Cost distribution base - services provided to other departments

Services provided: auxiliary workshop - 20 people/hour, workshop No. 1 - 60 people/hour, workshop No. 2 - 40 people/hour. Ratio 20:60:40 or 1:3:2, 300:6 = 50

Step 3. Distribution of costs of the auxiliary workshop.

Distribution base - manufactured semi-finished products for main production workshops: for workshop No. 1 - 100, workshop No. 2 - 200. Ratio 100:200 or 1:2, 600: 3 = 200

Cost distribution using a two-way method.

Calculation of the ratio between departments

We will combine the repair and auxiliary workshops into auxiliary production. Total costs will be 225 + 475 = 700

Allocation base for direct costs.

Let's calculate the costs of non-production departments, adjusted taking into account two-way consumption of services

Administration K = 900 + 0.29 A

K = 900 + 0.29 (700 + 0.242K)

Auxiliary production A = 700 + 0.242 K

K = 900 + 203 + 0.07 K

0.93 K = 1103; K = 1186

A = 700 + 0.242 * 1186 = 987

We distribute adjusted costs between responsibility centers

Throughout the cost chain, an organization faces choices. The first step is to decide on the granularity of cost centers. Often a single (plant-wide) rate and a different rate for each structural unit are used.

The exchange of products and services between cost centers is accounted for using internal transfer prices. Transfer price is a conditional, calculated price for the products of one responsibility center transferred to another responsibility center of the same enterprise. In practice, transfer prices can be set:

Based on full costs;

Based on marginal cost;

Based on market price;

Based on negotiated price.

Transfer pricing must meet the requirements:

Contribute to the achievement of the organization's intended goals and ensure a harmonious combination of the goals of the unit with the overall goals of the organization;

Be flexible and equal for managers at different management levels. The transfer price should provide sufficient credit to the selling unit when it transfers products to the buying unit, while considering whether the transfer price will adversely affect the operating efficiency of the selling unit;

Promote the preservation of autonomy, allowing managers of both selling and buying units to manage them on a decentralized basis;

Respond quickly to changes in the business situation in the domestic and foreign markets;

Use profits more efficiently. Direct high profits to low tax areas.

Comply with legal requirements;

Promote cooperation between structural and regional types of production.

The article contains various approaches to calculating costs, formulas, and methods of classifying costs used in calculation. In addition, we gave an example of calculating the cost of production in production.

In this article you will learn:

Before calculating product costs, the financial director needs to answer the following questions:

• the cost of which accounting object needs to be determined (manufactured products, technological process, separate order);
• what costs will be included (calculation of full or truncated cost (direct costing);
• on the basis of what data the calculation will be made (normative or actual);
• how to distribute indirect costs and take them into account.

Cost classification

The classification depends on what management problem needs to be solved, for example, to calculate the cost or profit from its implementation, to evaluate the results of the activity of the responsibility center.

By way of inclusion are divided into direct and indirect. Direct ones can be accurately and in a unique way attributed to the cost of a manufactured product or other costing object. As a rule, these include the costs of raw materials and materials used for the production of products, as well as the costs of remunerating the main production personnel, which are recorded on account 20 “Main production”.

It cannot be economically justified to be associated with a specific accounting object. These include general production, general business and commercial costs. They are assigned to the calculation object by distribution in accordance with the methodology and distribution base adopted at the enterprise.

Relative to production volume expenses can be .

Variables depend on the volume of production or sales, and in terms of a unit of output remain unchanged (raw materials, piecework wages of production workers, electricity).

Constants do not change with an increase in production volumes (rent of premises, equipment for the production of one type of product, administration wages), but calculated per unit of production, they are adjusted with changes in the level of business activity. It should be noted that fixed and variable costs should not be confused with direct and indirect costs (see Table 1).

By significance for a specific decision all expenses can be divided into relevant and irrelevant. Irrelevant costs are costs that do not depend on the decision made. For example, a company has a building. Two options for its use are being considered: to create a sewing workshop or to use it as a warehouse. In this case, the costs of maintaining the building and utilities will be irrelevant, since they do not depend on the decision made. The costs associated with creating a workshop or retrofitting premises for use as a warehouse, on the contrary, are relevant.

It should be noted that such a classification is quite rare. Most enterprises recognize all main types of production costs as relevant and take them into account when analyzing the cost of finished products.

Excel model for cost calculation

If you need to calculate the direct production cost of products, use a ready-made calculation model in Excel. See how to adapt the model to the specifics of the company: create directories, adjust the methodology for attributing direct costs to cost.

Table 1. Example of fixed, variable, direct and indirect costs

Expenses	Permanent	Variables
	Salaries of engineering and technical workers, depreciation of equipment in production departments	Salaries of key production workers, raw materials and supplies, sales commission, electricity consumption in production
Indirect	Salaries of management and managers, salaries of sales representatives, heating, depreciation of equipment in auxiliary departments	Electricity for auxiliary departments, fuel costs for vehicles of the sales department

Calculation methods

In practice, various approaches to cost formation are used (for the classification of methods, see the figure). The use of one or another approach is determined by the characteristics of the production process, the nature of the products produced or services provided and other factors.

Drawing.

Completeness of cost inclusion. You can determine both the full and truncated cost of production. Full (absorption costing) is calculated taking into account all expenses incurred by the company.

Full cost

Truncated (direct costing) assumes that only variable costs are included in the unit cost of production. The constant part of general production, as well as commercial and general expenses are written off to reduce revenue at the end of the reporting period without distribution to manufactured products.

The cost calculation formula will look like this:

Cost of goods sold = Variable costs per unit. × Sales volume

Calculation using the direct costing method is justified in cases where it is necessary to make a decision on the release or discontinuation of production of a particular product.

Truncated

When using the absorption costing method, the unit cost of production includes both variable and fixed costs. The method is justified when it is necessary to analyze, form an optimal product range or develop a pricing policy based on the cost-plus principle. In other words, the price is defined as the full cost increased by the required profitability.

The formulas will look like this:

Unit cost = Variable cost per unit. + Constant / Production volume

Cost of goods sold = Unit cost. × Sales volume

Excel model that will help you control cost changes

Download the Excel model, plug in your data and find out why the cost has changed compared to the plan or the previous period.

Comparing two approaches

A company's financial results calculated using the direct costing method may differ from those obtained using the full cost method.

Let's give an example.

The company produced 1,500 units of products during the reporting period. Variable costs for producing a unit of output are 50 rubles. The total amount of fixed expenses is 30,000 rubles. Sales volume – 1000 units of products at a price of 100 rubles. for a unit. There were no inventories of work in progress or finished goods at the beginning of the period. Calculation using the full and truncated cost method is presented in table. 2.

As can be seen from the example, the result of financial activities in the case of using different calculation methods will be different due to the fact that at the end of the reporting period the company had a stock of finished products in the amount of 500 units. In other words, if the level of inventory at the end of the year increases, then the financial result determined on the basis of full cost will be higher than if it were calculated using direct costing. If the inventory level decreases, the picture will be the opposite: when using truncated cost, the profit will be higher.

Table 2. Comparison of costing approaches

Indicators	Direct costing method (truncated)		Absorption costing method
	Calculation formula	Value, rub.	Calculation formula	Value, rub.
			100 rub. × 1000 units (Price × Sales volume)
Unit cost			50 rub. + 30,000 rub. / 1500 units (Variable costs per unit + Fixed / Production volume)
Cost of goods sold	50 rub. × 1000 units (Variable costs per unit × Sales volume)		70 rub. × 1000 units (Unit cost × Sales volume)
	100,000 rub. – 50,000 rub. (Sales revenue – Cost of goods sold)
Fixed expenses
Operating profit	50,000 rub. – 30,000 rub. (Marginal profit – Fixed expenses)		100,000 rub. – 70,000 rub. (Sales revenue – Cost of goods sold)

Actual and standard cost

The calculation can be made based on the expenses actually incurred by the enterprise or on the basis of established standards for the consumption of raw materials and materials, as well as standard labor costs.

The use of standard cost allows you to control the efficiency of resource expenditure and promptly respond to emerging deviations.

The actual cost can only be determined after all expenses have been accounted for. The main disadvantage of this method is considered to be rather low efficiency (data can only be obtained after completing the order, manufacturing the product, etc.). In practice, as a rule, both approaches are used.

Cost Accounting Objects

Depending on the object of calculation, one can distinguish

• transverse,
• process-by-process
• calculation of the cost of individual functions (Activity based costing, ABC).

The choice of one or another costing object is influenced by the specifics of the business (in-line production, small-scale production, accounting for individual orders).

Custom method are used in the manufacture, for example, of unique equipment, when fulfilling individual orders. Transverse more typical for enterprises with serial and continuous production, when the product goes through several stages of processing. In this case, the object of calculation becomes the product of each processing stage (stage of production). Process-by-process is typical for mining industry facilities, but is also used in industries with a simple technological cycle (for example, in the production of asphalt).

At ABC method cost accounting organized by individual functions and operations performed by company divisions. For example, the management of a car dealership intends to control the cost by function - selling cars in the sales department or their maintenance in the service center. This may be necessary when deciding to outsource certain business functions. In addition, ABC allows you to more accurately distribute indirect costs when calculating the total cost.

Quite often, calculation methods are used in combination. For example, a variant of the order-by-order method of calculation with incomplete accounting of costs or incremental calculation using consumption rates for raw materials and materials or taking into account their actual consumption is possible.

One of the main problems associated with calculating the full cost of a unit of production is the need to allocate indirect costs. The simplest method is the direct distribution of costs of service departments in proportion to a single base (wages of main production workers, costs of raw materials and materials, man-hours). However, such an approach, as a rule, does not allow reliably and economically justifiable distribution of indirect costs, and therefore can cause incorrect management decisions.

More accurate is the multi-level distribution method, performed in several stages.

Step 1. All costs for the period are grouped by department. For example, the following expenses will be grouped under the “canteen” division: wages of canteen staff, food costs, cost of electricity consumed, etc.

Step 2. The costs of auxiliary departments are redistributed among production departments and workshops. For example, the cost of maintaining a canteen must be distributed across two production workshops. To do this, you need to choose a base: in the case of a canteen, it would be advisable to distribute its expenses in proportion to the number of workers in each workshop.

Step 3. Costs allocated to production units are allocated to manufactured products. For example, after the costs of maintaining a canteen were redistributed to two workshops, the cost of maintaining each workshop (Costs of the workshop + Distributed costs of the auxiliary department) is attributed to the manufactured products. The number of man-hours spent on the production of each type of product, the cost of raw materials, etc. can be used as the basis for distribution.

Calculation of product costs in a manufacturing enterprise: example

Let us consider, using the example of a large machine-building plant - OJSC SSM-Tyazhmash, how cost accounting can be organized and the cost of production can be calculated.

OJSC SSM-Tyazhmash is a subsidiary of OJSC Severstal, which specializes in the manufacture and repair of metallurgical equipment. Several years ago, the company began a project to implement the Axapta system. At the same time, principles of management accounting and the formation of production costs were developed. Prior to this, the cost of finished products was calculated for accounting and tax purposes, but there was no management analysis, with the analytics necessary for the financial director. The automated system "1C: Accounting" did not provide the required level of data detail.

Cost grouping

When forming the structure of production costs, direct costs include material costs and the cost of production services from third-party companies. All costs that will need to be distributed to costing objects are combined into groups depending on the source of their occurrence (see Table 3).

The company calculates the full production cost, while the amount of indirect costs in its structure can reach 40–60%.

The cost carrier (object of calculation) is the production order; in foundry production, accounting is also carried out by redistribution.

Table 3. Structure of production costs of JSC SSM-Tyazhmash

Group	Accounting Analytics	Cost Source	Primary accounting documents
Direct
Materials	Nomenclature Cost center Cost type Order	Consumption of raw materials and materials, semi-finished products specified in the specifications for finished products and semi-finished products	Acts of writing off materials for production
	Provider Order Cost center Cost type	Provision of production services by third party suppliers with direct inclusion of the amounts of these costs in the corresponding production orders	Invoices received from suppliers; certificates of completed work
Indirect
General production expenses	Staff Provider Cost center Cost type	All general production expenses collected on account 25 “General production expenses”, both depending on the enterprise (depreciation of fixed assets, payroll of workers) and due to external factors (services of water, heat suppliers, etc.)	Consolidated salary statements, acts on services provided by third-party organizations, etc.
Auxiliary materials	Nomenclature Cost center Cost type	All expenses caused by write-off for technological needs according to the nomenclature related to auxiliary materials (also taken into account in account 25 “General production expenses”)	Write-off acts, for example, for repair funds, for labor protection, for the maintenance of fixed assets
Intershop cooperation	Cost center Cost type	Costs due to the fact that workshop areas provide services to each other. Distributed between customer departments in proportion to the time actually worked to fulfill their orders	Delivery notes, order cards, etc.

Attribution to cost of direct costs

The initial step in costing is to assign direct costs to production orders. As a rule, this is not difficult: in accordance with the specifications for the types of finished products and semi-finished products, raw materials and supplies are written off to specific orders in the cost element and cost center analytics.

Distribution of indirect costs

The method of distributing overhead costs and assigning them to the cost of production includes several stages, which we will consider in more detail.

Collection of overhead costs. Their amounts are taken into account in account 25 in the analytics of cost elements and cost centers (production areas of workshops and non-production divisions of the enterprise). On the same account, all expenses for auxiliary materials are collected and grouped by cost type and cost center. An example of accounting for business transactions indicating the code is presented in table. 4.

Table 4. Grouping of collected costs by types and places of their occurrence

date		Name	Amount, rub.	Area code (cost center)
		Other auxiliary materials
		Labor protection materials
		Other fuels and lubricants
		Energy for technology

Code structure. The code consists of seven characters. Let's consider code 008-02-05 “Other fuels and lubricants”. The first three digits (008) are the code of the cost group “Maintenance of fixed assets”, the next two (02) are the code of the subgroup “Fuel and fuels and lubricants”, the last (05) are the serial number within the subgroup. Thus, based on the code, one can unambiguously draw a conclusion about which group and subgroup this type of expense belongs to.

Cost center codes are formed according to the following principle. The first three digits are the workshop code. For example, 020 01-03, where the shop code 020 “Shaped foundry shop - FLC” 01 indicates that these are the main production areas of the shop, 03 is the serial number of the section within the shop (in this case, the iron smelting section).

Distribution of collected costs across production orders. The basis for distributing collected general production costs, including those associated with the use of auxiliary materials, to orders can be man-hours, standard hours, machine hours, conventional tons, tons of surfacing, etc., that is, natural indicators.

To link the activities being performed to cost centers and cost elements, you must assume the following:

• Any technological operation performed within the framework of an order is associated with a list of expenses, the amounts of which must be attributed to the order;
• any technological operation must be associated with a specific area of ​​the production workshop. For example, a machine tool processing operation can be performed in the machine tool section of a mechanical repair shop or in the production preparation section of an assembly shop. The cost of these operations will vary.

Collection of total costs for inter-shop cooperation. All expenses (both direct and indirect distributed) are collected on the basis of primary documents for production orders completed within the framework of inter-shop cooperation. In this case, the total work time of each performing unit for the customer unit in the period under review is summed up. Expenses for intershop cooperation are grouped according to the places of their occurrence and one type - “Total costs for intershop cooperation.”

Distribution of costs for intershop cooperation on production orders. Within the framework of individual orders, work is performed (services are provided) to ensure the production of the final finished product. However, all costs incurred as part of such “related orders” must be included in the cost of the finished product. In other words, they are redistributed between production orders, and not workshop areas.

Final costing of production orders. All costs collected within production orders are summed up, and the final cost is calculated.

Let's consider an example of costing at the production site of OJSC SSM-Tyazhmash. In the reporting period, three orders were completed - order 1, order 2, order 3. Direct costs for them amounted to 100, 200, 150 rubles, respectively. and were immediately written off for completed orders.

Orders were fulfilled by two production sites (site 1 and site 2). In addition, a maintenance section was involved, which provided equipment repair services to the main sections this month. To simplify calculations for inter-shop cooperation, we assume that the main sections did not provide services to each other, as well as to the servicing section.

Collection of costs of the 1st and 2nd production sites. Section 1 worked 50 standard hours, its costs amounted to 500 rubles, so the cost of a standard hour is 10 rubles.

Section 2 worked 20 machine shifts, the total cost was 800 rubles, the cost of a machine shift was 40 rubles.

Collection of service area costs. For the service area, the production volume was 30 man-hours, the total cost for the current period was 150 rubles, the actual cost of a man-hour was 5 rubles.

Distribution of costs of the service area to production areas 1 and 2. For section 1, the maintenance section worked 10 man-hours, for section 2 - 20 man-hours. Operating hours for production shops will be used as a basis for allocating costs for the service area in the amount of 150 rubles.

Thus, an additional 50 rubles are allocated to plot 1. (10 man-hours ×150 rubles / 30 man-hours), for section 2 – 100 rubles. (20 man-hours ×150 rubles / 30 man-hours). As a result, the costs of section 1 will consist of the own costs of this section in the amount of 500 rubles. and redistributed from the service area in the amount of 50 rubles. For section 2 it’s the same: 800 and 100 rubles.

Redistribution of production site costs to completed orders. Section 1 worked 30 standard hours. to complete order 2; 20 standard hour. for order 3. This means that costs in the amount of 300 rubles will be charged to the second order. (500 ×30/50), for the third order - 200 rubles. (500 ×20/50).

Section 2 worked 10 machine shifts to fulfill order 1 and order 3. Accordingly, for each of these orders its costs in the amount of 400 rubles will be attributed. (800 × 10/20).

Redistribution of costs for inter-shop cooperation to orders. As a result of allocating the costs of the service area to area 1, we received 50 rubles. With the production volume of section 1 in 50 standard hours. The cost of one standard hour will be 1 rub. By analogy, in section 2 it will be 5 rubles. (100/20).

Accordingly, 50 rubles will be added to the cost of order 1. from site 2 (5 rubles ×10 machine shifts), order 2 – 30 rubles. (1 rub. × 30 standard hours) from site 1, order 3 – 20 rub. from site 1 (1 rub. × 20 standard hours) and 50 rub. from site 2 (5 rubles × 10 machine shifts). Let's present the results of cost distribution in table. 5.

Table 5. Final calculation of completed orders, rub.

Completed orders	Expenses					Total cost
	Direct	Plot 1	Plot 2	Distributed costs of the service area
				plot 1	section 2

The problem of distribution of fixed costs in production

At any stage of a company's life, there are always challenges to accounting and cost management. To determine how much needs to be sold and at what price for a given product to bring profit to the company, it is necessary to calculate how much it costs to produce a particular type of product.

The fact that all costs must be divided by type of product is an indisputable issue. The only catch is the principle by which costs should be divided. After all, the costs of an enterprise in the process of production and marketing of goods and services are taken into account in different ways. Conventionally, they can be divided into fixed and variable costs. Variable expenses directly depend on the volume of production at the enterprise. The basis of variable expenses is the use of working capital (working capital). These are raw materials, materials, fuel, electricity, direct labor of workers, as well as services of third-party organizations related to the production of specific products, etc. Fixed expenses associated with compensation for related production factors. Their sizes do not directly depend on the volume of products produced. Fixed expenses include rent for production premises and warehouses, depreciation of capital equipment, security, general business expenses associated with the maintenance of employees of the administrative apparatus, accounting department and warehouse, etc.

If production stops in any month, variable costs will drop to almost zero. At the same time, fixed costs will remain at approximately the same level: it will still be necessary to pay the salaries of some of the administrative employees conditionally assigned to this production, pay rent for this premises, pay security, and also charge depreciation of equipment.

By comparing variable and fixed production costs at a particular enterprise, managers can influence the economic policy of the company, because the cost of goods sold is, in essence, the total sum of all the costs of the enterprise. At the same time, variable costs are almost always subject to accurate accounting at the enterprise, but there are known difficulties with regard to the distribution of fixed costs by type of product. Therefore, in practice, when taking into account fixed costs, the question often arises: is it worth distributing fixed overhead costs across types of products or can this be done without? Accordingly, there are two approaches. In the first approach, these costs are established per product group or per production unit - this is the so-called mixed (combined) approach to the analysis of fixed costs. The second approach requires localization of fixed overhead costs by product type.

Depending on the approach used or the method of accounting for fixed costs, sometimes even directly opposite results can be obtained. This article compares these methods and evaluates both the positive and negative aspects of their use.

Combined fixed cost analysis

Some experts quite reasonably believe that the use of this method is appropriate when assessing the efficiency of production of products for the entire enterprise. In practice, especially with a small range of production and sales and a simple structure of overhead costs, they usually do not resort to separate accounting of fixed costs . Basic assumptions when considering this method are as follows:

variable costs are localized by product;

fixed costs are considered as a total for the enterprise as a whole;

marginal profit is estimated for each product;

profitability, as well as other financial indicators (for example, safety margins) are assessed for the entire enterprise as a whole.

This approach has obvious advantages: ease of calculation and no need to collect a large amount of data. The disadvantage of this approach is the impossibility of comparative assessment of profitability for individual types of products.

Example 1

The manufacturing company produces chemicals for automobile use. The production range is presented in table. 1. For simplicity of calculations, we will limit ourselves to three product names.

Having orders for three products in their portfolio, the company's managers decided to analyze the profitability of each type of product. At first, they used the first approach, that is, they did not divide indirect costs by elements of the product portfolio. Having identified the main variable costs, they obtained the following results for a comparative analysis of product profitability (see Table 1; in the table, all calculations are shown in a monthly breakdown of the company’s activities).

Judging by the data in Table. 1, a feature of the order portfolio is its lack of balance. Indeed, glass cleaner ranks second in terms of profitability (in %) among all products. And at the same time, this type of product ranks last in terms of sales volume (revenue). As a result, the profitability of the sales portfolio as a whole (10%) leaves much to be desired. Therefore, to increase the efficiency of production and sales, company managers should focus their efforts on “promoting” this product.

Next, we will evaluate the company’s financial stability to changes in external economic conditions. In this sense, an important condition for the successful operation of an enterprise is the safety margin. The margin of safety, or financial strength, shows how much sales (production) of products can be reduced without incurring losses. The excess of real production over the profitability threshold is the margin of financial strength of the enterprise. This indicator is defined as the difference between the planned sales volume and the break-even point of the business (in relative terms). The higher this indicator, the safer the entrepreneur feels in the face of the threat of negative changes (for example, in the event of a drop in revenue or an increase in costs). The break-even point is usually presented in physical (units of production) or monetary terms. It can be stated with certainty that the lower the break-even point, the more efficiently the enterprise operates in terms of generating operating profit. Let's calculate the break-even point for the entire production and sales portfolio. The break-even point of a business is easy to find if the financial result from product sales is equal to zero. To do this, the marginal profit (MP) from sales is equated to fixed costs (3 post):

MP = W post.

In this case, the company will have neither profit nor loss. Then the critical sales volume or critical revenue (In kr), at which there is neither profit nor loss, can be found from the following ratio:

(MP / V pr) × V cr = W constant.

The meaning of this formula is that when current sales revenue (V pr) drops to its critical level (V cr), their values ​​will decrease. In this case, there will be no profit (MP = Z post). Next, we write this formula in the following form:

MP / V pr = Z post / V cr.

In this formula, the first part of the equality is an expression for determining the profitability of the enterprise’s products as a whole in terms of marginal profit. Let's denote it by the indicator:

Hence, the critical revenue (or break-even point) (in kr) in monetary terms is equal to: 800 thousand rubles. / 0.42 = 1905 thousand rubles.

The safety margin factor (K zb) will be: [(2500 - 1905) / 2500] × 100% = (595 / 2500) × 100% = 23.8%.

In its meaning, K zb characterizes the break-even point in monetary terms. This is the minimum income at which all costs are fully recouped, while the profit is zero. It is believed that for the normal operation of an enterprise it is quite enough if the current sales volume (V pr) exceeds its critical level (V cr) by at least 20%. In this case, this figure exceeds the recommended value, but is almost on the verge.

It would seem that everything is clear: on the one hand, in the general case we have an unbalanced structure of production and sales of the order portfolio for total products, on the other hand, there are relatively low profitability indicators and safety margins for the company’s products as a whole. In addition, it appears that we have rather meager information about the behavior of fixed costs in relation to each type of product. However, the presented picture may change radically if we take into account the distribution of fixed costs by type of product.

Table 1. Impact of product structure on profitability and break-even point
Index	Revenue, thousand rubles	Variable costs, thousand rubles.	Marginal profit, thousand rubles.	Marginal profit, %	Fixed costs, thousand rubles.	Break-even point thousand rubles	Safety margin, %	Operating profit, thousand rub.	Profitability, %
Brake fluid
Glass cleaner
Solvent for laminar film removal
Total

Baseline method

If the company’s management requires more complete information to make management decisions, then you can use m using the basic indicators method. In this case, it is necessary to localize fixed costs by type of product. Basic Assumptions this approach are as follows:

variable costs are distributed across products;

fixed costs are also localized by product;

contribution margin is estimated for each product;

Safety margin and profitability are assessed for each product.

Using the basic indicators method, the company has the opportunity to make a complete comparative assessment of the profitability of individual types of products - an undoubted advantage of this approach. In this case, an indicator is selected as the basis for the distribution of fixed costs, the value of which is closely related to the type of costs under consideration. Typically in the economic literature the following values ​​are taken as such an indicator:

the volume of work produced or sales for each type of product;

production areas for each type of product;

the complexity of manufacturing certain types of products;

wages of production workers attributable to each type of product;

other indicators.

The procedure for selecting a base indicator requires the fulfillment of at least two conditions:

1) preliminary analysis of the relationship between the localized type of costs and one of the selected basic indicators;

2) organization of accurate measurement and accounting of the influence of the base indicator on the localized type of overhead costs.

The better the indirect costs are attributed to a specific product as they appear in production, the more accurately its total cost of production can be calculated.

Example 2

We use the data from the previous example, but expand it somewhat - now there is much more information for analysis (Table 2).

Suppose the company's management decided to redistribute fixed costs to each type of product in proportion to the wages of production workers. To justify their decision, managers referred to the large share of labor costs in the cost of manufacturing each product. Taking into account the choice of this basic indicator, the calculation of the cost of the mentioned products is as follows (see Table 2).

Table 2. Allocation of fixed costs using the base indicator
No.	Index	Brake fluid	Means for washing glasses
	Variable costs, rub.
	Quantity of products, pcs.
	Distribution of fixed costs, rub.
	Fixed costs per unit of production, rub./piece. (clause 5 / clause 2)
	Cost per unit of production, rub./pc. (item 3 + item 6)
	Sales price, rub./pcs.
	Revenue, rub. (item 2 × item 8)
	Product profitability, %
	Break-even point, rub.
	Safety margin, %

In table 2 data in natural units (pieces) is the number of bottles or canisters filled with the appropriate liquid for car maintenance. As we see, glass cleaner- leader in profitability. With the current distribution of fixed costs (proportional to salary), the profitability value for it is 10 times higher than the same indicator for solvent for removing laminar film (16% / 1.6%) and more than 1.3 times higher compared to the same indicator for brake film. liquids (16% / 11.9%). Product profitability(^(P pr)) was determined as the difference between sales prices (P pr) and the total cost of a unit of production (C full) according to the formula:

^(P pr) = (C pr - C full) / C pr × 100%.

The indicator ^(P pr) is often called price coefficient. The higher the value of this coefficient, the higher the potential profitability of a given product, which means the greater the reserve for covering overhead costs and making a profit. In other words, it is most profitable to sell products with the highest price coefficient.

To calculate the break-even point of a business by type of product, we will use a different approach - we will use a simple ratio based on the balance of revenue and costs of the enterprise. Let's do this consistently for all types of products. For brake fluid in the absence of profit, we obtain the following equation:

90X = 50X + 440 000 + 0.

In this equation X is the required number of units of production (brake fluid). At this unit value there is no profit or loss. Zero in this formula means no profit. Having solved this equation, we obtain the required number of units of production:

X= 440,000 / 40 = 11,000 pcs.

Hence the critical sales volume in value terms (revenue) will be:

11,000 pcs. × 90 rub./pcs. = 990,000 rub.

[(1,350,000 - 990,000) / 1,350,000] × 100% = (360,000 / 1,350,000) × 100% = 26.7%.

For glass cleaners We will find the break-even point from a similar equation:

50X = 30X + 120 000.

Hence the critical volume of production in natural units will be:

X= 120,000 / 20 = 6000 pcs.

Critical revenue will be:

6,000 pcs. x 50 RUR/pcs. = 300,000 rub.

Then the safety margin will be:

[(500,000 - 300,000) / 500,000] × 100% = (200,000 / 500,000) × 100% = 40.0%.

Let's create a similar equation for solvent for removing laminar film:

130X = 80X + 240 000.

X= 240,000 / 50 = 4800 pcs.

In turn, critical revenue will be equal to:

4800 pcs. × 130 RUR/pcs. = 624,000 rub.,

and the safety margin will be:

[(650,000 - 624,000) / 650,000] × 100% = (26,000 / 650,000) × 100% = 4.0%.

It follows that according to the safety margin for the second product ( glass cleaner) we got an excellent result: the current sales volume is 40% higher than its critical level (break-even point). For the first product ( brake fluid) also obtained a good result, although its break-even point is 26.7% lower. The worst result of the safety margin is for the third product (): in this case, the break-even point differs from the current sales level by only 4%. This means that if sales volume drops by at least 200 pcs. (26,000 rubles / 130 rubles), there will be no profit on this product. And with a further drop in sales volumes there will be continuous losses. It turns out that from all points of view the worst results are achieved by the release of the third product ( laminar film removal solvent). Given current sales volumes and prices, this product practically does not justify the costs of its production. To increase the efficiency of its production, it is necessary to increase production volumes or selling prices.

Or maybe everything is not so bad with the release of solvent for removing laminar film? After all, from the data in Table. 1 it follows that the marginal profit for it (38.5%) is not much worse than for the second product (40%). Probably, managers incorrectly chose the base indicator for the distribution of fixed costs: it was necessary to take into account not one, but two base indicators or more. That is, for different components of indirect costs it was necessary to choose their own basic indicators depending on the sources of the corresponding costs (see example 3).

ABC-method

In economic terms, indirect costs should be attributed to one or another type of product in accordance with the extent to which these costs are related to the production of a particular product. In other words, in the process of allocating general production costs, it is necessary to clarify to what extent the cost elements are associated with the production of a particular type of product. During the analysis process, it may turn out that some indirect costs are directly related only to a specific product, so it is unfair to redistribute them to all products. In these cases, indirect costs are correctly attributed to the product according to the place or sources of their occurrence. To allocate such costs in a similar manner, a method called Activity Based Costing (ABC method) can be used. This phrase is translated from English in different ways: cost analysis by type of activity, operational cost analysis, and even functional cost analysis (FCA). Regardless of the translation into the basis of this method, the task is to find a different (not related to the volume of sales) basis for allocating overhead costs.

In connection with the above, let’s return to the company’s product portfolio (examples 1, 2).

Example 3

The manager is not confident in the results obtained regarding the comparative profitability of products, so he demanded to present a full line of indirect cost elements. Managers localized fixed indirect costs by type of product (the results are summarized in Table 3). It turned out that at first they did not take into account that for the production of the second product ( glass cleaner) an automatic line was purchased on a long-term lease basis. To accommodate this equipment, it was necessary to rent additional premises, while other workshops are owned by the company. As a result, in the previous calculation, fixed costs were artificially redistributed to other products in proportion to wages. After all, an automated line requires less labor than other products. This will result in lower labor costs. Therefore, when distributing costs in proportion to the salaries of the main workers, the lion's share of the costs fell on the neighbors of this product, that is, on the first and third products, the production of which is not as automated. In reality, it is precisely in connection with the production of the second product ( glass cleaner) the company incurred two significant cost elements - leasing and rental payments. Therefore, it is this product that must recoup these costs with income from its sales. And if so, then these costs should be fully allocated to the production of the second product.

Let's assume that in this case they total 150 thousand rubles. per month. To do this, they must first be separated from the total amount of fixed costs (800 thousand rubles): 800 - 150 = 650 rubles. But the remaining amount of costs (650 thousand rubles) can be distributed in proportion to the salaries of production workers. The results of the redistribution of fixed costs are presented in table. 3.

Table 3. Distribution of fixed costs by place of their origin (ABC-method)
No.	Index	Brake fluid	Means for washing glasses	Solvent for laminar film removal
	Variable costs, rub.
	Quantity of products, pcs.
	Variable costs per unit of production, rub./piece. (item 1 / item 2)
	Salaries of production workers, %
	Leasing payments and rental of additional production premises, rub.
	Distribution of other fixed costs, rub.
	Total fixed costs, rub. (item 5 + item 6)
	Fixed costs per unit of production, rub./piece. (clause 7 / clause 2)
	Cost per unit of production, rub./pc. (item 3 + item 8)
	Sales price, rub./pcs.
	Revenue, rub. (item 2 × item 10)
	Product profitability, %
	Break-even point, rub.
	Safety margin, %

As we can see, the picture has changed a lot. Now the fixed costs per unit of production for the second product are the highest (24.75 rubles/piece). As a result, its total cost increased sharply, and the sale became unprofitable - at 4.75 rubles. for each piece of product. The leader in profitability was the first product - at 21.9%. The production of the third product can also be rehabilitated. Compared to the previous calculation, its profitability increased more than 5 times (8.5% / 1.6%). And why all? Yes, because the structure of fixed costs has changed. For clarity, let us present these results in graphical form (Fig. 1). This figure shows the distribution of fixed costs for Example 2 (baseline method); the designation of products 1, 2 and 3 corresponds to their sequence in the table. 2. Similarly, we show the distribution of fixed costs using the ABC method in Fig. 2.

Rice. 1. Diagram of distribution of fixed costs using the base indicator method

Rice. 2. Diagram of distribution of fixed costsABC-method

As we can see, when moving to a more objective evaluation method (ABC method), the share of fixed costs for the second product ( glass cleaner) increased more than 2 times - from 15 to 30.94%. Accordingly, the share of costs for the first and third products decreased. This explains the significant deterioration in overall profitability for product 2.

Next, as in previous examples, we will calculate the break-even point and safety margin for all types of products, using the data presented in table. 3. For the first product ( brake fluid) let's create the following equation:

90X = 50X + 357 500.

From here we get the following number of units of production:

X= 357,500 / 40 = 8938 pcs.

The critical sales volume (revenue) will be:

8038 pcs. × 90 rub./pcs. = 804,420 rub.

Now let's determine the safety margin:

[(1,350,000 - 804,420) / 1,350,000] × 100% = (545,580 / 1,350,000) × 100% = 40.4%.

For the second product ( glass cleaner) we find the break-even point from a similar equation:

50X = 30X + 247 500,

from where we determine the critical volume of production in natural units:

X= 247,500 / 20 = 12,375 pcs.

Critical revenue will be:

12,375 pcs. × 50 RUR/pcs. = 618,750 rub.

The safety margin will be equal to:

[(500,000 - 618,750) / 500,000] × 100% = (-118,750 / 500,000) × 100% = -27.8%.

For the third product ( laminar film removal solvent) let's also create a similar equation:

130X = 80X + 195 000.

Let us determine the critical volume of production in natural units:

X= 195,000 / 50 = 3900 pcs.

In turn, critical revenue will be:

3900 pcs. × 130 RUR/pcs. = 507,000 rub.,

where does the safety margin come from:

[(650,000 - 507,000) / 650,000 . ] × 100% = (143,000 / 650,000) × 100% = 22.0%.

As one would expect, the first product has the largest safety margin (40.4%). This indicator is followed by the third product (22.0%). And for the second product, the current sales level is even below the breakeven point - by 27.8%. This explains the negative result for the safety margin of this product (-27.8%). Everything fell into place. Glass cleaner turned out to be the “weak link” in the company’s product portfolio. This product generates a loss and drags down the entire portfolio of the plant's commercial products.

However, the fact that this product is unprofitable at full cost does not negate its potential capabilities, because in terms of marginal profitability it is in second place. Unprofitability at full cost indicates that the current volumes and sales prices are not enough to cover the costs of its production. In this case, the company made an error in planning prices or volume of production and, as a result, did not receive the revenue required to fully cover its costs. If the sales volume is increased, then, in the end, it will be possible to overcome this negative impact of the costs of the second product. Then the second product may turn out to be even more profitable than the third.

Thus, example 3 shows that the use of the ABC method allows for a more reasonable allocation of fixed costs by type of product. You just need to correctly select for each product the determining factors that influence the composition of fixed costs. Summarizing what has been said, we can recommend the use of a system for localizing fixed costs according to basic indicators for such cases:

simple and similar types of products or services;

low level and simple structure of overhead costs;

low sales and administrative costs;

high sales profitability.

The use of the ABC method is advisable if the business is characterized by the following features:

multi-item order portfolio;

high share of indirect costs;

significant differences in production volumes of certain types of products;

Enterprise managers strive to deeply understand the cost structure.

Note that the ABC system, which is so actively supported in principle, at the same time has not yet found wide distribution, including in Western enterprises. The main reason is the complexity and unfamiliarity of the transition from the traditional system existing at enterprises (localization of costs according to basic indicators).

Conclusion

Generalization of experience allows us to argue that the basis for managing indirect costs should be the principle of reasonable necessity, which assumes that the potential benefits of a more detailed consideration and distribution of indirect costs should outweigh the efforts associated with such deepening. Based on this principle, we examined different methods for assessing efficiency for multi-item production.

The method of comparative evaluation of individual types of products based on marginal profit is very simple to use. However, it allows for an assessment of profitability only with a combined analysis of fixed indirect or indirect costs. The basic indicator method allows the enterprise to make a complete comparative assessment of the profitability of individual products among themselves, but does not allow either to trace overhead costs or to manage them in a reasonable manner. The use of the ABC method allows for a more reasonable allocation of fixed costs by type of product. Redistribution of cost elements between individual products allows you to significantly change your view of the real share of profit that a particular type of product brings. This is especially significant in the case of analyzing types of products that, due to the indirect costs associated with them, turn out to be unprofitable for the business. True, the complexity of using this method is greater than the simpler assessment methods listed above.

V. I. Semenov,
Chief Accountant of Lika-Design LLC, Ph.D. tech. sciences

A state autonomous institution (sports complex) contacted the editors of the magazine with a question about the distribution of general expenses between types of activities (types of financial support) and types of services provided. The main activity of the institution is to carry out work related to physical culture and sports in the interests of society, in particular, conducting educational, training and sports events included in a single calendar plan (training camps, competitions). In addition, the institution provides paid services to citizens and organizations (providing sports facilities for use, organizing corporate physical education and sports events), and also carries out other income-generating activities that do not contradict the statutory activities (providing property for rent, rental of sports equipment, hotels and other accompanying services).

The article uses examples to discuss ways of distributing the total costs of an institution (overhead and general business expenses) in accordance with Instruction No. 157n 1.

All costs of an autonomous institution arising in its activities are divided into direct and overhead (clause 134 of Instruction No. 157n). Direct costs are directly related to the production of products, performance of work, provision of services; they are immediately included in the cost of these products, works, and services.

The cost of products, works, services is a valuation of the material, labor and other resources used in the process of providing them. Cost planning is understood as a system of technical and economic calculations that reflect the amount of costs included in its composition.

The definition of overhead costs is not given in Instruction No. 157n. According to generally accepted rules, such expenses mean the production costs of an institution that cannot be directly attributed to a specific type of product, work, or service. These are costs for the maintenance and operation of fixed assets, for management, organization, maintenance of production, for business trips, training of employees, etc. Overhead expenses of an institution are subject to distribution between types of activities (types of financial support), between types of services provided, in tax accounting. It is necessary to distribute such expenses even during their planning (that is, at the stage of drawing up a plan for the financial activities of the institution), in particular when calculating the standard costs for fulfilling a government task, for maintaining property, and when calculating the cost of paid services. Paragraph 134 of Instruction No. 157n states that the distribution of overhead costs is carried out in proportion to indicators characterizing the results of the institution’s activities (direct labor costs, material costs, revenue volume, etc.).

According to paragraph 138 of Instruction No. 157, the costs of an institution, in addition to direct and overhead costs, also include general business expenses and distribution costs. In order to figure out which expenses are subject to distribution, we will build a detailed diagram (given below).

In the above diagram, direct and overhead production costs are combined into a group, which is conventionally called “production costs”. In turn, overhead costs included in this group are subject to distribution to the cost of manufactured products, works, services (by type).

According to paragraph 135 of Instruction No. 157n, the general economic expenses of the institution incurred during the reporting period (month), in accordance with the accounting policy approved by the institution, are also distributed to the cost of products, works, services, and in terms of non-distributable expenses - to increase the expenses of the current financial year. These include non-production expenses.

In accordance with paragraph 136 of Instruction No. 157n, the amount of costs incurred by an institution as a result of the sale of goods, works, services, including in the process of their promotion, is distribution costs, which are also included in the increase in expenses of the current financial year.

Thus, overhead costs associated with the production of products, provision of services, performance of work, and general distributed expenses are subject to distribution. In accordance with paragraph 134 of Instruction No. 157n, the procedure for distributing such expenses is developed by the institution, taking into account industry specifics, independently (in agreement with the founder) or by the founder and is an element of the accounting policy. We'll talk about this further.

Distribution of total expenses between types of activities (financial support)

When distributing overhead and general business expenses between types of activities, one should not forget that the main activities of an autonomous institution are carried out within the framework of a state (municipal) assignment, which is communicated to the establishment by its founder. Financial support for such activities is carried out in the form of subsidies, which are allocated taking into account the costs of maintaining real estate and especially valuable movable property assigned to an autonomous institution by the founder or acquired using funds allocated to it by the founder for the acquisition of such property (with the exception of property leased with the consent of the founder), as well as expenses for paying taxes, the object of taxation for which is the relevant property, including land plots 2 (clauses 3, 4, article 4 of Federal Law No. 174-FZ 2).

The amount of subsidies is determined by the founder based on the calculation of standard costs for performing work (providing services) and standard costs for maintaining the relevant real estate and especially valuable movable property, as well as for paying taxes. The procedure for calculating the specified standard costs for subordinate autonomous institutions is established by the founder. (For example, in accordance with Decree of the Government of the Udmurt Republic dated December 13, 2010 No. 379, this procedure was approved by Order of the Ministry of Finance of the Udmurt Republic, Ministry of Economy of the Udmurt Republic dated February 15, 2011 No. 22/29.)

When calculating standard costs, the industry characteristics of the institution are taken into account. Thus, with regard to the holding of physical education and sports events included in the unified calendar plan of interregional, all-Russian and international physical education and sports events, the norms for spending funds on these events have been approved in accordance with Order of the Ministry of Sports and Tourism of the Russian Federation dated April 16, 2010 No. 365. Thus, The founder approves for the autonomous institution subordinate to him the state (municipal) task and the amount of funds (subsidies) necessary for its implementation, based on the calculation of standard costs (taking into account the costs directly related to the performance of work (provision of services) and the cost of maintaining property). The institution, based on the information provided by the founder about the amount of financing, draws up a plan for financial and economic activities for the next financial year (plans expenses for certain items). All this is preceded by an analysis and corresponding calculations of the institution’s costs for fulfilling the founder’s task. If calculations of standard costs were made by the founder in interaction with the institution, the directions for spending subsidies in the institution will be determined. However, in practice, in most institutions, the founder calculates the volume of financial support for the state (municipal) task independently, according to established methods for calculating standard costs, and communicates it to the institutions after the fact. In this case, the institution must independently plan (distribute) funds by type of expense.

Note that in accordance with the Standard Form of Agreement on the procedure and conditions for providing subsidies for reimbursement of regulatory costs associated with the provision of public services in accordance with the state assignment (performance of work 4), the institution has the right to spend subsidies independently in order to provide state (municipal) services, perform works in accordance with the requirements for their quality and (or) volume (content) defined in the state (municipal) assignment. At the same time, the institution does not have the right to cover part of the regulatory costs through subsidies if it carries out activities related to the provision of services (performance of work) for a fee.

Let's look at the example of the distribution of total costs between activities at the planning stage.

When drawing up a plan for financial and economic activities for the next financial year, an autonomous institution must distribute planned general business expenses by type of activity. Income from subsidies for the implementation of government tasks is planned on the basis of data received from the founder on the volume of subsidies allocated to him. In addition, it is planned to generate income from the provision of paid services (by type of service), as well as from the provision of property for rent. Generalized planned indicators for funds receipts are presented in the table.

To be distributed:

According to the methodology established in the institution for the distribution of general expenses when planning financial and economic activities, general expenses are distributed in proportion to income by type of activity (in the total amount of income and without taking into account the amount of subsidies allocated for the payment of taxes on property and land, for which real estate is recognized as an object of taxation and especially valuable movable property assigned to the institution), as follows:

1) the total amount of subsidies received for the implementation of the state task (excluding funds for paying these taxes) is equal to 30,000,000 rubles. (31,300,000 - 1,300,000);

2) the total amount of receipts from all types of activities (excluding funds for paying these taxes) is equal to 80,000,000 rubles. (81,300,000 - 1,300,000);

3) the share of income from subsidies is equal to 37.5% ((30,000,000 rubles / 80,000,000 rubles) x 100%);

4) the share of income from income-generating activities is 62.5%

((50,000,000 / 80,000,000 rub.) x 100%).

The distribution of expenses is presented in the table:

Type of expenses	KOSGU code	Subsidies for the implementation of government assignments (37.5% of total expenses), rub.	Funds from income-generating activities (62.5% of total expenses), rub.
Communication services
Utilities, total
including:
For electricity
For heat energy
For water consumption and wastewater disposal
Transport tax

Subsequently, the actual total expenses incurred are distributed between types of activities based on the approved indicators of the financial and economic activity plan. To evenly distribute these expenses by type of activity, you can develop additional (auxiliary) tables for the financial and economic activity plan with a breakdown of planned indicators by income and expenses on a quarterly (monthly) basis.

Distribution of total expenses between types of paid services

The institution organizes cost accounting by economic elements and by costing items, depending on industry characteristics. Industry regulations on the procedure for calculating the cost of physical education and sports services are currently not contained in the information and legal base. In institutions such as a sports complex, the share of overhead and general expenses is usually large and amounts to at least 60% of the total costs.

According to clause 134 of Instruction No. 157n, the choice of method for calculating the cost of a unit of production (volume of work, service) and the base for distributing overhead costs between objects of calculation is carried out by the institution independently or by the founder in such a way as to optimize the degree of usefulness of accounting data for management purposes with an acceptable level of labor intensity of accounting procedures . These methods are fixed either in the accounting policy of the institution or in a separate regulatory act.

Let's look at an example of the procedure for distributing overhead and general business expenses into the cost of certain types of services. At the same time, we note that the base for the distribution of such expenses in an institution can be chosen in proportion to another indicator besides the one given in the example (payroll fund for key personnel).

The autonomous institution provides the following paid services:

Provision of sports facilities for use (service 1);

Sports equipment rental (service 2);

Hotel services (service 3);

Bath complex services (service 4).

According to the accounting policy of the institution, overhead and general business (distributed) expenses incurred during the reporting period (month) are distributed to the cost of services provided in proportion to the wage fund of key personnel directly involved in the provision of services.

In order to disclose information on the costs of providing services (including by type of service), the following accounts 5 are used as part of the institution’s working chart of accounts:

In December 2011, the following general expenses were incurred as part of income-generating activities:

Type of expenses	Amount, rub.
Overheads
Communication services
Thermal energy
Water supply
Equipment depreciation
General running costs
Insurance premiums

Determination of the share of labor costs and accruals for wage payments of key personnel for services 1 - 4 in the total amount of labor costs and accruals for wages of key personnel was made as follows (the figures are conditional in order to simplify the example):

According to the method established in the accounting policy for the distribution of overhead and general business expenses in December, in the cost of services, these expenses are distributed as follows:

Type of expenses	Total total expenses, rub.	Service 1 (24.5% of total expenses)	Service 2 (25.5% of total expenses)	Service 3 (42.5% of total expenses)	Service 4 (7.5% of total expenses)
Overheads
Communication services
Thermal energy
Water supply
Equipment depreciation
General running costs
Management salaries
Insurance premiums

The following entries were made in the accounting records as of December 31, 2011:

	Debit	Credit	Amount, rub.
Expenses for communication services are distributed:
for the cost of service 1
for the cost of service 2
for the cost of service 3
for the cost of service 4
Distributed costs for thermal energy:
for the cost of service 1
for the cost of service 2
for the cost of service 3
for the cost of service 4
Distributed costs for water supply:
for the cost of service 1
for the cost of service 2
for the cost of service 3
for the cost of service 4
Expenses are distributed in the form of accrued depreciation:
for the cost of service 1
for the cost of service 2
for the cost of service 3
for the cost of service 4
AUP salary expenses are distributed:
for the cost of service 1
for the cost of service 2
for the cost of service 3
for the cost of service 4
Costs are distributed according to accruals for wages of the AUP
for the cost of service 1
for the cost of service 2
for the cost of service 3
for the cost of service 4

In accordance with paragraph 137 of Instruction No. 157n, work in progress is reflected in accounting at the actual cost of direct costs. The amount of general business expenses of the institution is not included in the actual cost of work in progress.

Sample list of common expenses

If an autonomous institution provides diverse services (as indicated in the example), the composition of costs when forming their cost will differ significantly. When an institution is developing its own procedure for calculating the cost of services provided (by type of service) and distributing overhead and general business expenses, it is advisable to indicate in it the lists of costs related to direct expenses and expenses subject to distribution.

Thus, the list of overhead and general business expenses may include:

1) overhead costs (costs associated with the production of products (provision of services):

Depreciation charges for the complete restoration of fixed assets and intangible assets according to standards approved in the prescribed manner;

Costs for the acquisition of special forms and documents (tickets, travel forms, accounting and reporting forms), price lists, memos, etc., stationery, periodicals and relevant literature necessary for production and management purposes, as well as for the payment of printing and binding work ;

Costs of business trips associated with production activities, including costs of obtaining foreign passports and other travel documents;

Costs for occupational health and safety, including costs associated with the purchase of first aid kits and medicines, means of visual propaganda, for the prevention of accidents and diseases, costs for improving working conditions, ensuring sanitary, hygienic and living conditions;

Other costs, including payment for third-party services;

2) general business expenses (costs associated with organizing production (rendering services)):

Costs of remuneration for employees of the management apparatus and business workers, including employees performing work on the basis of civil contracts;

Accruals for wages of management staff and business workers;

Costs for the maintenance and operation of buildings and premises for administrative and economic purposes, utility structures, mechanisms, equipment, low-value and wearable items, including utility costs

services, repairs and maintenance;

Payment for communication services, including telephone, local, teletype, dispatch, fax, paging, mobile, telegraph, postal, etc., as well as the costs of maintaining and operating communication facilities, including the costs of repairs and maintenance;

Costs for fire protection of buildings and premises;

Costs for guard protection of buildings, equipment and other property of the institution;

Costs associated with the rental of buildings, premises and other property used by the institution for administrative, managerial and economic purposes;

Costs of transport services, including costs of maintaining and operating company vehicles, including costs of repair and maintenance of vehicles, maintenance of garages, costs associated with renting vehicles, garages and parking lots, costs of using personal vehicles for business purposes, other operating costs, as well as costs of hiring vehicles for official purposes from third parties (including taxis - if there are documents confirming the costs);

Costs for the maintenance and operation of computer and office equipment, alarm systems, as well as other technical controls, including repair and maintenance costs;

Payment for bank services for servicing institution accounts, electronic payments using plastic cards (credit and debit);

Costs of payment for information, audit, and advisory services, including on legal issues related to the activities of the institution, accounting, taxation, and business management;

Costs associated with training and retraining of personnel:

a) fees for training and advanced training based on agreements with professional educational institutions of the Russian Federation (having the appropriate license), as well as foreign educational institutions and educational institutions;

b) legally established payments to employees at their main place of work during their off-the-job training, including payment for vacations with pay and travel to and from the place of study for persons studying in evening and part-time higher and secondary specialized educational institutions, in correspondence graduate school ;

Costs of organized recruitment of employees, including costs associated with payment for the services of third-party recruitment organizations;

Costs for the maintenance and operation of premises provided free of charge to public catering establishments (both those on the establishment’s balance sheet and not) serving the establishment’s employees (including depreciation charges, all types of repairs to the premises, costs for lighting, heating, water supply, electricity, and also for cooking fuel);

Representation expenses associated with the production activities of the institution for receiving (including outside the location of the institution) and servicing representatives of other organizations, including foreign ones, who arrived for negotiations with the aim of establishing and maintaining mutually beneficial cooperation. Representative expenses include expenses associated with an official reception (breakfast, lunch or other similar event) of representatives (participants), their transportation (including taxi), visiting cultural and entertainment events, buffet service during negotiations and cultural program events, payment for the services of translators who are not on the staff of the institution;

Taxes, fees, payments and other mandatory deductions, which, in accordance with the procedure established by law, are subject to inclusion in the cost price;

Other costs, including payment for third party services.

Please note that the above list of overhead and general business expenses is approximate. Certain costs may relate to a certain type of expense, depending on the composition of the costs of a particular type of service.

Read more about the distribution of total costs in tax accounting by non-profit organizations in the article by D. Kalabura, No. 7, 2011.

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1. Order of the Ministry of Finance of the Russian Federation dated December 1, 2010 No. 157n “On approval of the Unified Chart of Accounts for public authorities (state bodies), local governments, management bodies of state extra-budgetary funds, state academies of sciences, state (municipal) institutions and Instructions for its application."
   
2. The amount of subsidies for individual institutions may be zero, for example, if the institution provides state (municipal) services for a fee in accordance with the law and the income received from activities within the framework of the state (municipal) task covers the costs of their provision and the maintenance of property , including paying taxes.
   
3. Federal Law of November 3, 2006 No. 174-FZ “On Autonomous Institutions”.
   
4. Approved by Order of the Ministry of Economic Development of the Russian Federation dated December 3, 2008 No. 423.
   
5. In accordance with clause 138 of Instruction No. 157n, as part of the formation of an accounting policy, an institution has the right, taking into account the requirements of the legislation of the Russian Federation, bodies exercising the functions and powers of the founder to disclose information on the costs of manufacturing finished products, performing work, and services, to establish analytical ones as part of the working chart of accounts codes of types of synthetic account of an accounting object.