Enterprise Cost Analysis

The process of economic activity involves some costs, ie, the costs of the enterprise or the economic value of the resources necessary for the full functioning.
The nature of costs and expenses in each company is different. The cost of production can be divided into fixed and variable. Fixed costs do not depend on the amount of output, and variables are directly proportional to the volume of output.
Enterprise Cost Analysis Process
From the point of view of the strategic analysis of costs and costs, it is necessary to conduct a study of all costs that arise in the enterprise in the course of its work.
The study of the costs and costs of the enterprise can be divided into several stages:
Identification of cost items.
Estimation of cost expression of costs.
Find ways to reduce costs.
This sequence of actions provides a general overview of the cost analysis of the production process.

Analysis of enterprise costs In order to study the study of costs and costs in more detail, consider this process on the example of a specific production company “B”. Firm “B” is engaged in the production of spare parts and works mainly under the order.
1. Identification of cost items.
The cost items reflect the generic cost names required to support the production process. In addition to the cost of labor, taxes, etc., characteristic of all companies, the costs that are specific and are associated with a particular sector of the economy and the features of the production process should be studied.
Cost items of the firm “B”:
Acquisition of inventories.
The cost of labor.
Obligatory payments.
Other expenses.
These are general cost groups that include several items of expenditure. For a comprehensive analysis of the cost structure, you need to detail each item of expenses:
Acquisition of inventories: the cost of the purchase of materials necessary to ensure the production process and are the basis for the production of finished products.
In the article “Acquisition of material stocks” in relation to the firm “B” we can distinguish the following items of expenditure: raw materials and materials, purchased semi-finished products, fuel, containers, spare parts, inventory, materials for special purposes, overalls and special equipment.
The cost of labor – cash incentives for staff of the organization.
Mandatory payments – compulsory legal penalties. Within this cost item, the following costs can be distinguished:
taxes and fees;
social security and welfare costs.
Other expenses – costs not related to ordinary activities.
After the cost structure is indicated, you can proceed to the next stage of the strategic cost analysis.
2. Estimation of cost expression of costs.
For the study of the expenses of the firm “B”, these 1C: Accounting programs (reports on the relevant accounts) were used.
To reduce costs, it is proposed to apply the following tools and activities:
Planning stock balances in warehouses and the purchase of materials only in connection with the need.
Search for suppliers with lower prices for raw materials.
Scheduling vacations and replacements.
Increase production capacity and increase output.
Motivation of staff to better work.