What types of costs are conditionally fixed. Notional variable and notional fixed costs

This division is based on the economic sense of the costs that the entrepreneur incurs in the course of his activities. Some costs - fixed costs do not depend on the volume of production and sales, others - variable costs directly depend on the volume of production and sales of products, goods, services. However, in real life fixed and variable costs are not immutable, they are constantly changing in the process entrepreneurial activity... Therefore, in economics, they are usually considered as conditionally fixed and conditionally variable costs... In this article, we try to give examples and explain why they are counted.

Conditional fixed and conditionally variable costs: definition.

Conditional fixed costs - these are costs that are not related to the volume of production and sales of products, goods, services, in the process of entrepreneurial activity, changing both in quantitative and qualitative state. Fixed costs can turn into variable costs. We wrote about this in.

Nominally variable costs - these are costs that are directly related to the volume of production and sales of products, which change during the life of an entrepreneur, both in quantity and in its quality and composition.

Nominally fixed and nominally variable costs: examples of nominally fixed costs.

In the article, we gave examples of such costs in detail, now we will show examples of changes in fixed and variable costs and explain why they are in fact conditionally fixed and conditionally variable costs.

1. Fixed costs in the form of rent when renting an office may vary over the course of an entrepreneur's business. They can increase or decrease quantitatively - the rental price rises or decreases, or the rented area changes. They can also change structurally: an entrepreneur bought out a rented office or bought his premises elsewhere. Quantitatively, they may decrease, because now the entrepreneur is charged amortization, and it is lower than the lease payments. They can also change structurally: to acquire his premises, the entrepreneur took out a loan, and now the total amount of fixed costs for maintaining the premises may remain the same, and the structure - part of the depreciation deductions, and part of the interest on the loan.
2. The salary of the accounting department is a fixed cost. Over time, the volume of wage costs may increase (expansion of staff due to an increase in operations, types of activities), and may decrease - transfer of management accounting specialized organization on.
3. Tax payments. There are taxes that also relate to fixed costs: property tax, UST on the salaries of administrative personnel, UTII. The amounts of these taxes may also change in the course of business. The amount of property tax may increase due to an increase in the value of property (acquisition of new property, revaluation of value), due to an increase in tax rates. It may also decrease (sale of property, revaluation). Other taxes related to fixed costs may also change. The transition to outsourcing accounting services does not imply payroll, therefore, the UST will also not be charged.
4. Fixed costs can be changed by translating them into variables. For example, when a company manufactures products and produces some of the components at its own place. With a decrease in the volume of orders, it is more profitable to find a third-party manufacturer and receive components from him, thereby removing part of the fixed costs in the form of equipment depreciation, maintenance, depreciation of premises, selling it or renting it out. In this case, the cost of the supplied components will be considered entirely variable costs.

Nominally fixed and nominally variable costs: examples of nominally variable costs.

1. Variable costs in the form of material costs in the production of products (raw materials, materials, components) are considered conditionally variable costs. They also change over the course of an operation. Changes can occur:
   - due to price changes (an increase in the supplier's price as a result of inflation, a decrease in prices as a result of a change in a supplier with more loyal conditions),
   - due to changes in technology (use of less expensive types of raw materials and materials, use of cheap substitutes),
   - due to a change in production itself (previously purchased components on the side, the company can start to produce independently. In this case, part of the variable costs will go into constant ones in the form of depreciation of equipment, salaries of foremen and salaries of workers, part of the costs will remain variable in the form of costs for raw materials and materials.
2. Variable costs in the form of piecework wages. Such costs change in quantity, as well as in connection with a change in the terms of payments: an increase or decrease in norms, the use of new payments stimulating labor productivity. Increase or reduction of personnel, etc. That is, the size of variable costs changes throughout the life of the enterprise.
3. Variable costs in the form of interest payments to sales managers. Such costs are also constantly in a mode of change, since the amount of remuneration changes depending on the volume of sales. Changes may also apply to the very terms of payment of remuneration (interest). When a certain volume of sales is reached, the percentages can rise or fall, as a result of which the variable costs will change both quantitatively and qualitatively.

Examples given conditionally fixed and conditionally variable costs clearly show why costs are considered contingent. In the process of entrepreneurial activity, an entrepreneur tries to influence profits: to reduce costs and increase income, at the same time, the market and external environment also influences the entrepreneur. As a result of such activities, costs are constantly changing under the influence of various factors, therefore they are considered to be conditionally fixed and conditionally variable costs.

The costs of the enterprise are divided into fixed and variable. Fixed costs are not affected by the scale of production and sales, but variables are affected. However, in practice, there are no fixed and constant costs. All these expenses are constantly changing. That is why they distinguish between conditionally fixed and conditionally variable costs.

Definition

Conditionally fixed costs are expenses that do not depend on the scale of production and sales, the sale of services. But it must be borne in mind that fixed costs can turn into variables. Fixed costs are contrasted with variable costs. In the aggregate, common expenses are formed.

Simply put, these are expenses that do not change throughout the entire budget period. At the same time, the volume of sales does not matter. But it must be borne in mind that these are conditionally fixed costs. That is, they are not permanent in the full sense of the word. The size of these costs changes under the influence of changes in the scale of the enterprise. For example, there are these factors that affect the conditionally fixed costs:

• Introduction to the sale of new products.
• The emergence of new branches.

The scale of the enterprise's activities is changing extremely slowly. And therefore, the costs are called just conditionally constant, and not just constant.

Examples of conditionally fixed spending

The enterprise usually incurs these nominally fixed costs:

• Rental fees. Most companies and businesses lease commercial premises. This can be an office rental, premises for trade, a workshop, a warehouse, a lecture hall. A fixed rent is set. It does not depend on the scale of sales, income of the enterprise. Even if the company did not earn anything at all, it still has to pay for the rented space. That is, this consumption is stable and does not depend on production. Therefore, this is a conditionally constant waste.
• Salary of administration. The administrative staff includes an accountant, a manager. As a rule, the management team receives a fixed salary, depending on the hours worked. Its size usually does not depend on the scale of production, the amount sold. Consequently, wages form a conditionally constant expense. The RFP can consist of constant and variable parts. The nominally variable costs include, for example, interest and piecework wages.
• Depreciation. Depreciation is charged on vehicles, various equipment, vehicles... This is a constant cost, as any equipment is subject to wear and tear and obsolescence. It does not matter how many products are produced.
• Payment for services necessary to ensure the activities of the entity. For example, a company can work only if housing and communal services are supplied to the premises: heating, water supply. This category also includes the Internet, banking services, services of security companies. That is, these are services that are not directly related to the activities of the company, but are necessary to ensure its work.
• Tax payments. Any company pays taxes. The basis for their calculation can be land, social payments, salaries, property rights.

These are the conditionally fixed costs incurred by almost every company.

Advantages and disadvantages of nominally fixed costs

Conditional-permanent spending is distinguished by these advantages:

• The costs do not change, and therefore it is easy to plan the budget of the enterprise.
• Ease of drawing up a balance.
• Ease of cost forecasting.
• Expenses do not appear out of the blue.

FOR YOUR INFORMATION! There are drawbacks to these costs. The main disadvantage is that the costs will have to be borne even if the company does not have a commensurate income. Fixed costs must be borne. For example, a company rents premises for commercial activities... This month she did not receive any profit, but she still has to pay the rent.

Features of accounting for conditionally fixed costs

Companies have the right to write off conditionally fixed costs in the debit of account 90. But this is theory. In practice, things are somewhat different. For the current accounting of expenses, account 26 is used. This account serves to summarize information about expenses not directly related to production. It is used to reflect these directions:

• Expenditure on the maintenance of employees, whose activities are not related to manufacturing.
• Depreciation and repair costs.
• Rent payments.
• Payment for consultations, audit.

General economic expenses are accounted for by DT account 26. It correlates with the CT account. The expenses placed on account 26 are debited to the DT account 20, 23, 29. If these are conditionally fixed expenses, then they will be debited to the DT account 90.

On account 25, these expenses are taken into account:

• Maintenance of the transport fleet.
• Depreciation of objects used in production.
• Property insurance.
• Payment for heating and lighting services.
• Payment for the maintenance of the premises.
• Rental fees.
• Payment of salaries to employees who are engaged in production services.

The account is applied by industrial entities. Sub-accounts can be opened to it:

1. Maintenance of technical objects.
2. General shop expenses.

Conditionally permanent expenses recorded on subaccount 25/2 are debited to DT account 90.

Why is the amount of conditionally constant spending determined?

The company is recommended to calculate the amount of conditionally fixed costs. This is necessary to establish a break-even point. Reaching the break-even point is the equality of the company's revenue and expenses, which include conditionally fixed expenses.

BY THE WAY! The established amount of conditionally fixed expenses is also needed to optimize the business model. Optimization reduces those costs that can be reduced.

Determination of conditionally fixed costs

The conditionally constant spending includes costs that do not depend on the scale of production and sales. The list of these costs will be different for each enterprise. You just need to define the required cost definitions and add them up. Usually these are the following costs:

• Depreciation.
• Security costs.
• Property tax.
• Advertising spending.
• Rent payment.

The formula for calculating the aggregate of conditionally fixed costs is elementary. You just need to add up all the fixed costs.

Additional Information

Does interest on a loan and salary paid in the form of premiums relate to conditionally fixed costs? This is usually the case. Percentages and premiums are factors that are usually independent of the scale of production and sales. However, they may well change under the influence of other factors. Consequently, interest and premiums may well be attributed to conditionally fixed costs.

The problem with including salaries and interest in the category of fixed spending is that these areas lack an important feature - a stable size. Loan interest usually changes during the loan repayment process. As a rule, their size decreases. The amount of remuneration is also changing. It may depend on production success, plan execution.

That is, the question of including premiums and interest in fixed costs is not so straightforward. It is recommended to solve it on an individual basis. It all depends on the state of affairs in a particular company.

It is practically impossible to make a clear division of costs into variables and constants in accounting, since some of them are conditionally constant (semi-permanent) and conditionally variable (semi-variable). Conditional-variables (conditional-constants) costs contain both variable and fixed components. As an example, you can pay for using the telephone, which consists of a fixed subscription fee (constant part) and payment for long-distance calls (variable term).

Any costs in general view can be represented by the formula:

Y = a + bX, (1.4.)

where Y - total costs, rubles;

a - their constant part, not depending on the volume of production, rubles;

b - variable costs per unit of output (cost response ratio), rubles;

X is an indicator characterizing the business activity of the organization (the volume of production of products, services rendered, turnover, etc.) in natural units.

If in this formula the constant part of the costs is absent, i.e. a = O, then these are variable costs. If the cost response ratio (b) is zero, then the analyzed costs are constant.

For management purposes - assessing the efficiency of the enterprise, analyzing its break-even, flexible financial planning, making short-term management decisions and solving other issues - it is necessary to describe the cost behavior with the above formula, i.e. divide them into constant and variable parts.

General characteristics of costs in relation to the volume of production and sales of products are presented in table 2.

Table 2. Classification of costs in relation to the volume of production

Variable costs- these are costs, the value of which depends on the volume of production. Variable costs are contrasted with fixed costs, which add up to total costs. The main feature by which it is possible to determine whether the costs are variable is their disappearance during a production stop.

Note that variable costs are the most important indicator of an enterprise in management accounting, and are used to create plans to find ways to reduce their weight in total costs.

What is variable cost

Variable costs have the main distinguishing feature - they change depending on the actual production volumes.

Variable costs include costs that are unchanged per unit of production, but their total amount is proportional to the volume of production.

Variable costs include:

raw material costs;

Consumables;

energy resources involved in the main production;

salary of the main production personnel (together with accruals);

the cost of transport services.

These variable costs are directly attributed to the product.

In value terms, variable costs change when the price of goods or services changes.

How to find variable unit costs

In order to calculate the variable costs per piece (or other unit of measure) of the product produced by the company, the total amount of the variable costs incurred should be divided by the total quantity finished products expressed in natural units.

Variable cost classification

In practice, variable costs can be classified according to the following principles:

By the nature of the dependence on the volume of production:

proportional. That is, variable costs increase in direct proportion to the growth in production. For example, production increased by 30% and costs also increased by 30%;

degressive. With an increase in production growth, the variable costs of the enterprise decrease. For example, the volume of production increased by 30%, while the size of variable costs increased by only 15%;

progressive. That is, variable costs increase relatively more from the volume of production. For example, production increased by 30% and costs increased by 50%.

Statistically:

are common. That is, variable costs include the aggregate of all variable costs of the enterprise across the entire range of products;

average - the average variable costs per unit of production or group of goods.

By the method of attribution to the cost of production:

variable direct costs - costs that can be attributed to the cost of production;

variable indirect costs - costs that depend on the volume of production and it is difficult to assess their contribution to the cost of production.

In relation to the production process:

production;

non-production.

Direct and indirect variable costs

Variable costs are direct and indirect.

Production variable direct costs are costs that can be attributed directly to the cost of specific products on the basis of primary accounting data.

Production variable indirect costs are costs that are directly dependent or almost directly dependent on changes in the volume of activity, however, due to the technological features of production, they cannot or economically inexpediently be directly attributed to manufactured products.

The concept of direct and indirect costs is disclosed in paragraph 1 of Article 318 of the Tax Code of the Russian Federation. So, according to tax legislation, direct costs, in particular, include:

expenses for the purchase of raw materials, materials, components, semi-finished products;

remuneration of production personnel;

depreciation for fixed assets.

Note that enterprises may include in direct costs and other types of costs directly related to the production of products.

At the same time, direct costs are taken into account when determining the tax base for income tax as the products, works, services are sold, and are written off to the tax cost as they are implemented.

Note that the concept of direct and indirect costs is conditional.

For example, if the main business is transportation services, then drivers and car depreciation will be direct costs, while for other types of businesses, maintaining vehicles and paying drivers will be indirect costs.

If the cost object is a warehouse, then the storekeeper's salary will be included in direct costs, and if the cost object is the cost of manufactured and sold products, then these costs (storekeeper's salary) will be indirect costs due to the impossibility of unambiguously and uniquely attributing it to the object costs - cost.

Examples of direct variable costs and indirect variable costs

Examples of direct variable costs are costs:

for the remuneration of workers involved in the production process, including charges on their wages;

basic materials, raw materials and components;

electricity and fuel used in the work of production mechanisms.

Examples of indirect variable costs:

raw materials used in complex industries;

costs for scientific developments, transportation, travel, etc.

conclusions

Due to the fact that variable costs change in direct proportion to the production volume, and the same costs per unit of finished product usually remain unchanged, when analyzing this type of cost, the value per unit of product is initially taken into account. In connection with this property, variable costs are the basis for solving many production problems associated with planning.

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Variable costs: details for the accountant

• Operating leverage in the main and paid activities of the BU

  They are useful. Management of fixed and variable costs, as well as the accompanying operational costs ... in the cost structure of fixed and variable costs. The operating leverage effect arises ... variable and conditionally constant. The conditionally variable costs change in proportion to the change in the volume of rendered ... constant. Nominally fixed costs Nominally variable costs Maintenance and maintenance of buildings and ... the price of the service falls below variable costs, it remains only to curtail production, ...

Example 2. In the reporting period, the variable costs for the production of finished goods, reflected .... The cost of production includes variable costs in the amount of 5 million rubles ... Debit Credit Amount, rubles. Reflected variable costs 20 10, 69, 70, ... Part of general plant costs added to variable costs that form the cost 20 25 1 ... Debit Credit Amount, rub. Reflected variable costs 20 10, 69, 70, ... Part of the general plant costs added to the variable costs that form the cost 20 25 1 ...

• Financing a state order: examples of calculations
• Does it make sense to divide costs into variable and fixed?

  By itself, the difference between revenue and variable costs, shows the level of compensation for fixed ... costs; PeremZ - variable costs for the entire volume of production (sales); permS - variable costs per unit ... increased. Accumulation and distribution of variable costs When choosing a simple direct costing ... semi-finished products of our own production are taken into account at variable costs. Moreover, complex raw materials, with ... Full cost on the basis of distribution of variable costs (for output) will be ...

• Dynamic (time) model of the profitability threshold

  For the first time I mentioned the concepts of "fixed costs", "variable costs", "progressive costs", "degressive costs". ... The intensity of variable costs or variable costs per working day (day) are equal to the product of the value of variable costs per unit ... of total variable costs - by the value of variable costs per unit of time, calculated as the product of variable costs by ... respectively, total costs, fixed costs, variable costs and sales. The above integration technology ...

• Director's questions to which the chief accountant should know the answers

  Equity: Revenue = fixed costs + variable costs + operating income. We are looking for this ... products = fixed costs / (price - variable costs / unit) = fixed costs: marginal ... fixed costs + target profit): (price - variable costs / unit) = (fixed costs + target profit ... equation: price = ((fixed costs + variable costs + target profit) / target sales ... which only considers variable costs. Profit margin - revenue ...

Conditional fixed and conditionally variable costs

In general, all types of costs can be divided into two main categories: fixed (conditionally fixed) and variable (conditionally variable). According to the legislation of the Russian Federation, the concept of fixed and variable costs is present in paragraph 1 of Article 318 of the Tax Code of the Russian Federation.

Conditional fixed costs(eng. total fixed costs) - an element of the break-even point model, representing costs that do not depend on the value of the volume of output, as opposed to variable costs, which add up to total costs.

In simple words- these are expenses that remain relatively constant over the budget period, regardless of changes in sales volumes. Examples are: administrative expenses, expenses for rent and maintenance of buildings, depreciation of fixed assets, expenses for their repair, hourly wages, on-farm deductions, etc. In reality, these expenses are not constant in the literal sense of the word. They grow with the scale economic activity(for example, with the advent of new products, businesses, branches) at a slower pace than the growth in sales volumes, or grow in leaps and bounds. Therefore, they are called conditionally constant.

This type of cost largely overlaps with overhead, or indirect costs associated with the main production, but not directly related to it.

Detailed examples of notional fixed costs:

• Interest for obligations during the normal operation of the enterprise and the preservation of the volume of borrowed funds, a certain amount must be paid for their use, regardless of the volume of production, however, if the volume of production is so low that the enterprise is preparing for bankruptcy , these costs can be neglected and interest payments can be stopped
• Corporate property taxes , since its value is quite stable, they are also mainly fixed costs, however, you can sell property to another company and take it on lease from it (form leasing ), thus reducing the payment of property tax
• Depreciation deductions for a linear method of their accrual (evenly for the entire period of use of the property) in accordance with the chosen accounting policy, which, however, can be changed
• Payment guards, watchmen , despite the fact that it can be reduced with a decrease in the number of workers and a decrease in the load on checkpoints , remains even with a simple enterprise, if it wants to keep its property
• Payment lease depending on the type of production, the duration of the contract and the possibility of concluding a sublease agreement, it can act as a variable cost
• Salary management personnel in the conditions of the normal functioning of the enterprise is independent of the volume of production, however, with the accompanying restructuring of the enterprise layoffs ineffective managers can also be reduced.

Variable (conditionally variable) costs(eng. variable costs) - these are expenses that change in direct proportion in accordance with an increase or decrease in total turnover (sales revenue). These costs are associated with the operations of the enterprise for the purchase and delivery of products to consumers. This includes: the cost of purchased goods, raw materials, components, some processing costs (for example, electricity), transportation costs, piecework wages, interest on loans and borrowings, etc. sales volume actually only exists for a certain period. The share of these costs in some period may change (suppliers will raise prices, the inflation rate of selling prices may not coincide with the inflation rate of these costs, etc.).

The main indicator by which it is possible to determine whether the costs are variable is their disappearance when production stops.

Variable cost examples

In accordance with IFRS, there are two groups of variable costs: production variable direct costs and production variable indirect costs.

Production variable direct costs- these are expenses that can be attributed directly to the cost of specific products on the basis of primary accounting data.

Manufacturing variable overhead costs- these are expenses that are directly dependent or almost directly dependent on changes in the volume of activity, however, due to the technological features of production, they cannot or economically inexpediently be directly attributed to the manufactured products.

Examples variable direct costs are:

• Raw materials and basic materials costs;
• Energy, fuel costs;
• Wages of workers engaged in the production of products, with charges for it.

Examples variables indirect costs are the costs of raw materials in complex industries. For example, when processing raw materials - coal - coke, gas, benzene, coal tar, ammonia are produced. By separating milk, skim milk and cream are obtained. It is possible to divide the costs of raw materials by types of products in these examples only indirectly.

Break even (BEP - break-even point) - the minimum volume of production and sales of products, at which the costs will be compensated by income, and with the production and sale of each subsequent unit of production, the enterprise begins to make a profit. The break-even point can be determined in units of production, in monetary terms, or in terms of the expected profit margin.

Break-even point in monetary terms- such a minimum amount of income at which all costs are fully paid off (in this case, the profit is zero).

BEP = * Sales proceeds

Or, which is the same thing BEP = = * P (see below for an explanation of the values)

Revenue and costs must relate to the same time period (month, quarter, half year, year). The break-even point will characterize the minimum allowable sales volume for the same period.

Let's look at the example of a company. A cost analysis will help you to visualize the BEP:

Break-even sales volume - 800 / (2600-1560) * 2600 = 2000 rubles. per month. The actual volume of sales is 2600 rubles / month. exceeds the break-even point, this is a good result for this company.

The breakeven point is almost the only indicator about which one can say: “The lower the better. The less you need to sell to start making a profit, the less likely you are to go bankrupt.

Break-even point in units of production- such a minimum amount of products at which the income from the sale of these products fully covers all the costs of its production.

Those. it is important to know not only the minimum allowable revenue from sales as a whole, but also the necessary contribution that each product should bring to the total profit box - that is, the minimum required number of sales of each type of product. For this, the break-even point is calculated in kind:

BEP = or BEP = =

The formula works flawlessly if the company produces only one type of product. In reality, such enterprises are rare. For companies with a large range of production, the problem arises of posting the total amount of fixed costs to individual types of products.

Fig. 1. Classic CVP Analysis of Cost, Profit and Sales Behavior

Additionally:

BEP (break-even point) - break even,

TFC (total fixed costs) is the value of fixed costs,

VC(unit variable cost) - the value of variable costs per unit of production,

P (unit sale price) - unit cost (sales),

C(unit contribution margin) - profit per unit of production without taking into account the share of fixed costs (the difference between the cost of production (P) and variable costs per unit of production (VC)).

CVP-analysis (from the English costs, volume, profit - costs, volume, profit) - analysis according to the "cost-volume-profit" scheme, control element financial result through the break-even point.

Overhead costs- costs of conducting business activities that cannot be directly correlated with production specific product and therefore are distributed in a certain way between the costs of all manufactured goods

Indirect costs- costs that, unlike direct ones, cannot be directly attributed to the manufacture of products. These include, for example, administrative and management costs, costs of staff training, costs in the production infrastructure, costs in the social sphere; they are distributed among various products in proportion to the justified base: wages production workers, the cost of materials used, the volume of work performed.

Depreciation deductions- an objective economic process of transferring the value of fixed assets as they wear out to the product or services produced with their help.