The effectiveness of any production process depends on the accurate accounting of production costs. The classification of production costs is carried out by groups: by area of origin (workshops and production sites), by the nature of production activities. By their nature, production can be basic; these are those in which the production process itself is implemented and services are provided. The auxiliary industries are those that do not concern the manufacture of products, but are engaged in its maintenance. The classification of production costs by cost elements notes what is specifically expended on the manufacture of products and has individual cost elements in the total mass of costs. According to cost or calculation items , they distinguish: various materials and raw materials, returnable waste, services provided by third-party enterprises that are of a production nature, purchased semi-finished products and other products, fuel and energy components for technological purposes, salaries of production personnel directly, social contributions , costs associated with preparatory production work, general and general production expenses, losses due to marriage. This list can be confidently expanded with such elements as: other expenses of a production orientation, costs associated with the sale, and the cost of production is complete. The classification of production costs associated with the method of inclusion in the cost implies direct costs and overhead costs. Direct costs are understood to mean expenses that, based on the primary documentation, are attributed to the costs of a particular type of product. Under indirect, or otherwise overhead, costs understand the costs associated with most types of work and services. This includes lighting and heating of production facilities, the operation of technological equipment. Depending on the volume of production, variable costs are allocated - those that are subject to the greatest fluctuations and are in direct proportion to the volume of goods produced. Conditionally fixed costs - this type of expense is also dependent on the volume of output. This includes the costs of salary payments to working personnel, as well as deductions to the depreciation fund. The classification of production costs is based on the objects with respect to which these costs are calculated, and includes many types of costs that are divided according to individual characteristics.
Cost classification
A separate place in various cost accounting systems is occupied by their classification. Classification of costs of cost divides costs into indirect and direct, which depends on technological processes, as well as fixed and variable. Direct costs are usually taken into account in the debit of an account better known under No. 20 under the name “Main Production”. Such costs can be attributed to a certain type of product. The size of such costs is independent of the volume of output of goods, and they can be reduced only by increasing the scale of production activities. Indirect costs are linked to the management of the enterprise, the costs of selling products and servicing the main production.
Classification of costs by articles
Among the whole mass of classification signs of costs, a special place is occupied by the classification of costs by articles. For these purposes, the costs of production are divided into overhead and basic. As part of the overhead, it is customary to take into account the costs that go into operating the equipment and its maintenance. This category should also include the costs of managing production sites and the enterprise as a whole. In addition, the costs associated with the sale and production of products, in the calculation and accounting of cost are also divided into separate articles.