Enterprise costs (part 1)

The modern market economy is characterized by a high level of instability and competition, which must be taken into account when developing management strategies in enterprises seeking to improve financial performance, and to ensure the competitiveness of a company, it is necessary to optimize the costs that have the greatest impact on the final result.

Cost management is a key and challenging task for businesses: Inexperienced managers or a lack of cost management skills can lead to a decrease in the market value of a company and even bankruptcy.

A well-organized cost management system allows you to optimize the use of resources and solve the problem of limitless needs with limited resources. An effective cost management system helps to rationalize the organizational structure of the enterprise and solve other problems:

• Rationalization of the organizational structure.
• Organization of an effective accounting system for operations and results.
• Improving the system of planning, monitoring and analysis of activities.
• Ensuring the motivation of staff in improving the efficiency of the company.
• Automation of enterprise management systems.

These tasks are solved with the help of an integrated system, including planning, accounting, organization of work of departments, analysis of performance indicators, organization of work of financial and control services, automation of management processes.

The management system includes planning to achieve a positive financial result by increasing production volumes and reducing unreasonable costs. Planning includes calculating costs at all stages of production and sale of goods.

There are two main types of cost planning:

1. Planning from Achievement: based on past cost information. This method is less labor-intensive, but less efficient.
2. Planning “from production”Each indicator is calculated on the basis of resource costs, production volumes and planned activities. This type of planning requires a production and sales plan, resource standards, calendar standards and data on work in progress.

These types of planning help to develop a schedule that determines all the necessary resources for the production and sale of products.

Cost information requires multimodal interaction to work efficiently, data is constantly growing, and a single mode of display can distort data, and automated systems are used to plan costs rationally:

1. ExcelA program for small firms that does not require large investments, but allows you to systematize management information.
2. Cloud Services (Microsoft Azure, Amazon Web Services)Provide tools for organizing resources, visualizing and analyzing cost data, and accounting for costs by department, project, and product.
3. 1C-based configurationsA comprehensive cost management information system that allows management to see material, labor and financial costs and make informed management decisions.
4. ERP systemsPrograms for integrated automation of large enterprises, systematizing financial, material, labor and production indicators.

In modern conditions, management personnel face important tasks:

1. Prompt decision-making on logistics of production, including planning of resource requirements, procurement, storage of materials and accounting of harvested resources.
2. Formation of pricing policy taking into account the coverage of costs, profit, level of demand and competition.
3. Foresight of the prospects for the development of the enterprise in the current economic situation.

To solve these problems, the enterprise must develop production and management accounting systems, the effectiveness of which directly affects the stability and competitiveness of the enterprise.

The organization of cost accounting is based on the following principles:

1. The invariability of the methodology for accounting for production costs and calculating the cost of production during the year.
2. Reflection of all production processes and documentary evidence of expenses: Costs supported by fictitious documents are not included.
3. Correct attribution of expenses and income to reporting periods.
4. Distinguishing current production costs and capital investments.
5. All production costs should relate to the activities of the enterprise.

Depending on the specifics of production, industry guidelines for cost accounting are applied, detailing federal and industry regulations.

The costing method shall:

• Form complete and reliable information about the cost of products.
• Promote the rational use of resources.
• Ensure compliance with the planned cost level.
• Ensure comparability of calculations for analysis and management decisions.

Cost analysis is an important tool of enterprise management: the main goal of the enterprise is to obtain stable profits, which requires analysis of the profitability of products and the impact of decisions on costs and financial results.

Cost analysis is an important part of a cost management system and is used to process cost information for internal planning and control of production activities, as well as for making economic decisions in the short and long term.

Analysis helps to determine the efficiency of the use of labor, financial and productive resources by comparing actual costs with planned costs. Significant increases in costs may indicate problems in the management system.

The main types of cost analysis include horizontal and vertical analysis. Horizontal analysis allows you to calculate changes in economic elements (raw materials, wages, deductions) over a given period. Vertical analysis determines the share of each element in the total cost. Significant changes in the share of elements require analysis and adjustments.

One step in the analysis is the division of costs by economic elements, which are the primary homogeneous types of costs for production and sale of products that are not subject to further degradation within the enterprise, which is used in the development of production estimates.

Costing allows you to see the cost of production and estimate how much is needed for each type of product. Cost planning and accounting are used to determine factors that affect the current cost level. Costing can identify ways to reduce cost.

Planned costing is based on projected costs, and reported costing is based on actual production and sales costs. Reported costing is used to determine the actual cost of a given period. It is used to compare planned and actual costs and identify discrepancies.

A common method of calculation is the calculation of products, where the object of accounting is a unit of goods, the analysis allows you to identify trends in cost changes, identify factors that affect the increase in costs, and find reserves for reducing them.

Operational and financial performance targets are monitored, with the main objectives of control being to ensure unity of decision and execution, to achieve production and financial objectives, and to prevent errors and discrepancies.

Plants use three types of control: preliminary, current and final. Preliminary control eliminates unnecessary cost overruns before the cost is included in the production process. It provides a cost level that allows you to rationally spend the budget and achieve planned targets. Preliminary control includes control of cost plans, cost conditions and production, financial and labor resources.