Cost analysis is a key point in assessing the efficiency of a company's operations from a financial and economic perspective.
The main task is to evaluate the effectiveness of their use and develop strategies for their optimization.
The cost analysis process includes the following steps:
development of methods for collecting and analyzing information;
collection and aggregation of data to create reporting documentation;
performing additional calculations and transformations with the original data;
performing the analysis in accordance with the established methodology and set goals.
After the assessment, specialized france phone data reports are generated by expense categories. The main purpose of these documents is to provide up-to-date and complete information on the organization's expenses, which is necessary for forecasting for future periods.
Analysis of firm costs
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The evaluation and analysis of enterprise costs are based on various mathematical equations.
The unified form for costs is:
Total Costs = Variable Costs + Fixed Costs
In generalized form, the equation can be expressed as follows:
Total costs = expense1 + expense2 + ...,
Cost efficiency reflects the profit for every ruble spent on production and sale of products.
The basic rule for determining profitability is to compare the profit received with the expenses that contributed to its formation. For example, to analyze gross profitability, it should be compared with the cost of production, and operating profitability - with the total cost.
Net profit is only applicable when calculating a firm's total costs to determine their profitability.
As an example of profitability analysis, we can use the product profitability indicator, which is defined as follows:
Profitability of production = Pr / (SP + KR + UR) * 100%,
Where:
Pr — profit from sales for the reporting period;
SP — cost price of production;
КР — commercial expenses;
MC - management costs.
If a company's revenues exceed its expenses for a given period of time, it can be said that the company made a profit during that period.
This indicates a good financial condition of the enterprise, which is illustrated by the formula:
Income - Costs = Profit
With constant income, a company can increase profits by reducing costs and production costs.
This approach to increasing profits faces certain limitations, since it is impossible to reduce costs indefinitely - at a certain point, cost reduction becomes unfeasible.
Analysis of firm costs
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When marginal costs to society exceed marginal private costs, a negative externality occurs. Therefore, an increase in a firm's marginal costs may lead to an increase in marginal social costs for third parties.
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