The break-even operation of an enterprise depends on many factors, including the choice of the optimal volume of production and the appropriate pace of development of the enterprise. To conduct a break-even analysis of production, a necessary condition is the division of enterprise costs into fixed and variable. To calculate the amount of revenue covering fixed and variable costs, manufacturing enterprises in their practice, they use such indicators as the size and rate of marginal income.
Marginal income (MD) is the difference between the company's revenue from the sale of products (works, services) (B) and the amount variable costs(WITH VARIABLE):
MD = V - AC (6.13)
On the other hand, the value of marginal income can be determined by adding the fixed costs (C POST) and the profit of the enterprise (P):
MD \u003d C POST + P. (6.14)
The value of marginal income shows the contribution of the enterprise to cover fixed costs and profit.
Under the average contribution margin understand the difference between the price of products and average variable costs. The average contribution margin reflects the contribution of a unit of a product to covering fixed costs and making a profit, and can be determined as follows:
MD SR \u003d C -. (6.15)
The rate of marginal income (N MD) is the share of marginal income (MD) in sales proceeds (B) or the share of the average value of marginal income (MD SR) in the price of goods (C) (for an individual product).
(6.16)
. (6.17)
For the analysis of break-even it is necessary to be able to determine the break-even point (self-sufficiency) of the enterprise.
The break-even point is the volume of production and sales at which the income received provides reimbursement for all costs and expenses, but does not make it possible to make a profit, in other words, this is the lower limit of output at which profit is zero.
The break-even point is characterized by the following indicators.
1) Critical (threshold) volume of production and sales:
, (6.18)
where WITH POST - fixed costs for the annual volume of production;
C - the price of a unit of production;
- specific variable costs (variable costs per unit of output).
2) Threshold of profitability (PR), which is the proceeds from the sale of the critical volume of production, at which the enterprise no longer has losses, but still does not make a profit:
PR \u003d Q CRIT × C. (6.19)
3) Margin of financial strength (FFP), defined as the difference between the proceeds from the sale of products (B) and the profitability threshold (PR), showing how much the company can afford to reduce revenue without leaving the profit zone:
ZFP \u003d B - PR. (6.20)
4) Margin of safety (MB), defined as the difference between the volume of sales in physical terms (Q FACT) and the critical volume of sales (Q CRIT):
MB = Q FACT - Q CRIT. (6.21)
The last two indicators measure how far the company is from the breakeven point. This affects the priority management decisions. If the enterprise approaches the break-even point, then the problem of managing fixed costs increases, as their share in the cost increases.
The margin of safety (MW) is the percentage deviation of the actual proceeds from the sale of products (works, services) (B) from the profitability threshold:
. (6.22)
Production leverage (leverage in literal translation - a lever) is a mechanism for managing the profit of an enterprise, based on optimizing the ratio of fixed and variable costs. With its help, you can predict the change in the profit of the enterprise depending on the change in sales volume, as well as determine the break-even point.
A necessary condition for the use of the production leverage mechanism is the use of the margin method. The lower specific gravity fixed costs in the total cost of the enterprise, the more the amount of profit changes in relation to the rate of change in the company's revenue. Operating leverage is determined using the following formula:
where EPL is the effect of production leverage.
The value of the effect of production leverage found using this formula is further used to predict the change in profit depending on the change in the company's revenue. To do this, use the following formula:
where ∆P is the change in profit from sales, %;
∆В is the change in sales proceeds, %.
With the graphical method, finding the break-even point is reduced to building a comprehensive "costs - volume - profit" schedule. The graph is shown in Figure 6.1.
Figure 6.1 - Break even chart
Algorithm for constructing a break-even point.
1) On the graph of the ratio of the volume of output (in kind) and the values of revenue and costs, a curve of fixed costs (C POST) is plotted. Since fixed costs do not depend on the volume of production, the fixed cost curve is parallel to the x-axis.
2) A curve of variable costs (FROM VARIABLE) is constructed (one point corresponds to the origin of coordinates - at zero production, variable costs are not implemented, the other point corresponds to the value of variable costs at actual production volume).
3) A curve of total costs (C LPO) (the sum of fixed and variable costs) is plotted, parallel to the curve of variable costs, higher by the amount of fixed costs.
4) The revenue curve (B) is built (one point corresponds to the origin of coordinates - in the absence of sales, the revenue is zero, the other point corresponds to the revenue from sales of the actual volume).
5) The intersection of the curves of total costs and revenue shows the break-even point.
6) When a perpendicular is drawn from the break-even point to the abscissa axis (X axis), a critical (threshold) volume of production and sales (Q CRIT) is obtained, when a perpendicular is drawn to the ordinate axis (Y axis), the profitability threshold is obtained.
Examples of problem solutions
Task 1
The company sells the product at a price of 575 rubles. The total fixed costs for its production amount to 235,000 rubles. Specific variable costs in 2004 amounted to 320 rubles. Material prices declined in 2005, resulting in a 15% reduction in unit variable costs. Determine how the critical volume of production was affected by changes in material prices.
Given:
C \u003d 575 rubles;
WITH POST \u003d 235,000 rubles;
WITH PER1 \u003d 320 rubles;
FROM PER2 ↓ by 15%.
Solution:
; 
ed.; 
ed.;
ΔQ = 776 – 922 = - 146 ed.
A 15% reduction in variable costs resulted in a reduction in critical production by 146 items.
Task 2
Planned indicators for product A are: price 57 rubles, cost 50 rubles. During the year, the company achieved a reduction in the cost of production for product A by 8%. The wholesale price remained unchanged. Determine how the profitability of products has changed.
Given:
C \u003d 57 rubles;
C 1 \u003d 50 rubles;
From 2 ↓ to 8%.
Solution:
; 
; 
;
ΔR = 23.91 - 14 = 9.91%.
Reducing the cost of production by 8% led to an increase in the profitability of products by 9.91%.
Task 3
Revenue including indirect taxes is 2560 thousand rubles, including VAT - 10%, excise tax 120 thousand rubles, cost of goods sold 1300 thousand rubles, selling and management expenses 570 thousand rubles. Interest receivable 108 thousand rubles, non-operating income 302 thousand rubles, non-operating expenses 328 thousand rubles. other operating income 286 thousand rubles, other operating expenses 135 thousand rubles. Determine the gross profit, profit from sales, profit before tax and net profit, profitability of production from net profit, profitability of products and sales from profit from sales, if the income tax is 20%, the average annual cost of the OPF is 2250 thousand rubles, and the cost of working capital production assets 520 thousand rubles
Given:
B \u003d 2560 thousand rubles;
Excise tax = 120 thousand rubles;
WITH PROD = 1300 thousand rubles;
KR and SD = 570 thousand rubles;
% FLOOR = 108 thousand rubles;
D OP = 286 thousand rubles;
R OP \u003d 135 thousand rubles;
D VNER = 302 thousand rubles;
P VNER \u003d 328 thousand rubles;
OF = 2250 thousand rubles;
OS = 520 thousand rubles.
P SHAFT, P PROD, P TAX, P H, R PROD, R SALES, R OPF - ?
Solution:
WITHOUT VAT \u003d 2560: 1.1 \u003d 2327.27 thousand rubles. – revenue excluding VAT;
WITHOUT VAT AND ACC = 2327.27 - 120 = 2207.27 thousand rubles. – revenue excluding VAT and excises;
P SHAFT \u003d B - C PROD;
P VAL \u003d 2207.27 - 1300 \u003d 907.27 thousand rubles. - gross profit;
P PROD \u003d P SHAFT - KR - UR.
P PROD \u003d 907.27 - 570 \u003d 337.27 thousand rubles. - revenue from sales;
P TAX \u003d P PROD +% FLOOR + D OP - R OP + D VNER - R VNER;
P TAX \u003d 337.27 + 108 + 286 - 135 + 302 - 328 \u003d 570.27 thousand rubles. - profit before tax;
P H \u003d P TAX - N PR;
P H \u003d 570.27 × (1 - 0.2) \u003d 456.22 thousand rubles. - net profit;
; 
- profitability of products;
; 
- profitability of sales;
; 
- Profitability of production.
4.4. Analysis of the break-even level of the travel agency
The previously considered methods and techniques for analyzing financial and economic activity commercial organizations were based, as a rule, on financial accounting data, i.e., on data from official financial reporting forms intended for external users. The degree of generalization and frequency of presentation of such information (mainly quarterly) are sufficient for financial authorities, state statistics authorities, potential investors at the initial stage of familiarization with the object. The results of the analysis of financial statements may suit the owners, as well as be used by the company's management in the development strategic decisions and planning long term development. However, for guidance in current activities this information is clearly insufficient.
As already mentioned, under the conditions market economy the role of economic factors in managerial activity has immeasurably increased. Despite the importance of the technical and technological aspects of the development of production, very often it is not them, but economic considerations that determine the choice of certain solutions, which necessitates the development of systems management accounting. consideration this issue much attention has been given in the economic literature. This is primarily due to the applied nature and the great importance of research on this issue from the point of view of management. commercial organizations. Without dwelling on the review of the problem of management accounting, we only note that it is based on much more specific and detailed technical and economic information about the enterprise and its structural, functional and production divisions than the data provided in the framework of financial accounting. Decisions made on the basis of this information are aimed at improving the efficiency of the current activities of enterprises.
It can be said that in the implementation of management accounting practices, managers and analysts operate with data that is an order of magnitude more detailed than the summary technical and economic information provided for the whole enterprise. This follows from the fact that one of the goals of management accounting is to separate the activities carried out in the process production activities costs by responsibility centers and cost centers, which are usually separate structural divisions or business areas. This distribution of costs allows you to link the amount of expended resources with the performance of individual production units. If there are somehow certain standards for the consumption of resources per unit of output (work), management accounting allows you to accurately localize those stages production process where unreasonably high costs of material, labor or other resources are observed. Also, specific measures can be developed on this basis to reduce resource consumption and increase production efficiency.
Naturally, for the most effective use of management accounting data, special techniques and methods of economic analysis are being developed. One of these methods, which are very widely used in the modern practice of managing commercial organizations, is the analysis of the level of break-even activity of the enterprise.
Note that such an analysis is one of the standard techniques used in business planning to justify the effectiveness of investment projects.
Consider general scheme break-even analysis of the travel agency. The break-even level of a travel agency is determined by the minimum sales volume required to cover all costs. The calculation of this volume, or, as it is also called, the break-even point, is based on three indicators.
These indicators are:
Marginal profit margin,
- fixed costs
- volume of sales or revenue.
Variable costs are costs, the value of which increases with the growth of sales and decreases with their decrease (for the tourism industry, these can be costs associated with issuing tours, providing visa services, transportation, accommodation, meals for one tourist or their group, depending on whether what is accepted as a unit of calculation, payment for the services of accompanying and guide interpreters, costs for the sale of vouchers or tours, etc.).
Fixed costs are costs that remain unchanged regardless of the dynamics of sales volumes (advertising costs, administrative and management costs for central office, depreciation costs, costs for the acquisition and maintenance of information databases, etc.).
Marginal profit is the difference between the proceeds from the sale of products and the variable costs of its production.
Marginal profit margin The ratio of marginal profit to sales volume, multiplied by 100%, if profit margin is expressed as a percentage.
The "break-even point" of sales is the measure of sales volume or revenue that ensures break-even operation. With this value of sales volume, the firm operates both without profit and without loss. Over time, the break-even level changes, so you need to constantly monitor the values of this indicator.
The break-even sales calculation can be carried out for different periods (day, week, month, etc.).
The break-even level is calculated as follows:
The average price of one tour is 500 rubles.
- Variable costs for one tour 300 rubles.
- Marginal profit of 200 rubles.
Marginal profit margin is defined as follows:
200 / 500 ∙ 100% = 40%
Thus, the share of marginal profit in revenue is 40%. This information is used to find the breakeven point. It is defined as follows. Suppose that the fixed costs of a travel agency for a certain period are 1000 rubles. In this case, the revenue that ensures break-even production will be equal to the following value:
1000 ∙ 100% / 40% = 2500 rubles
As can be seen from the above example, the scheme for calculating the level of break-even activity is relatively simple. However practical implementation it requires a sufficiently large experience and high qualification of expert analysts. The main problem in calculating the break-even level, as in many applied economic studies, is the classification of costs with their division into fixed and variable, the formulation of reasonable assumptions and assumptions about their behavior and quantitative certainty, and the determination of the range of production volume (works, services), within which the assumptions made about the costs can be considered appropriate.
Variables are the costs associated with the sale finished products. However, in order to correctly take into account the many types of costs that form selling expenses, additional research is required on their nature in technological process production and sale of products.
Fixed costs include depreciation of fixed assets (using a straight-line method of calculation), as well as many types of enterprise management costs. To clarify the nature of the change in the management costs of the shop level with an increase in the scale of activity, special studies are also required. It is quite difficult to attribute the cost of repairing fixed assets to a particular type of cost. If the costs associated with the expense material resources, when performing current repairs, they are linear in nature depending on production volumes, then the remuneration of labor of repair workers, depending on the accepted system of remuneration for work, can refer to both variable and fixed costs.
The conditionality of attributing costs to fixed and variable is well illustrated by the example of depreciation. In accordance with the Regulations on maintaining accounting And financial statements V Russian Federation depreciation deductions can, along with the linear method, in which depreciation costs are unconditionally fixed, be charged in proportion to the amount of work performed, i.e. depreciation in this case will refer to variable costs. As can be seen from this example, both the ratio of variable and fixed costs and the breakeven point are determined not only technological features specific production, but also by the adopted cost accounting policy.
Above, the calculation of the breakeven point was shown for a rather rare case in the real economy when an enterprise produces one type of product. If a company produces two or more various kinds production, then when determining the level of self-sufficiency it is necessary to take additional assumptions. For example, you can find the breakeven point, i.e. volumes of output of each type of product, in which the revenue received allows you to cover all costs, at a given ratio certain types products.
The calculation of the breakeven point is of great importance in substantiating the effectiveness of various investment projects. The project is considered good if the planned production volumes, secured by the effective demand of consumers, significantly exceed the level of self-sufficiency.
However, the division of costs into fixed and variable and their periodic recalculation have independent significance. Based on their analysis, management decisions that are very important from the point of view of the efficiency of current production can be made.
In the context of constantly changing market conditions and the level of prices for production resources, especially for a multi-product enterprise, it is important to choose a production program that ensures high efficiency of its (enterprise) activities. In order to determine the most preferable product range under the given conditions, specific (i.e. per unit of production) variable costs and marginal profit (in terms of this case the difference between unit price and unit variable costs).
The profitability of each type of product is determined by dividing the marginal profit by its price. Naturally, in conditions of limited production capabilities with a sufficiently high demand, when forming a production program, preference should be given to the manufacture of the most profitable products. On the other hand, in an unfavorable market environment, the price of products acts as the upper limit of specific variable costs. If the product gives non-zero contribution margin, the output of each additional unit generates an inflow of additional financial resources to pay back fixed costs and reduce the amount of possible losses. Making a decision to continue the production of products, the variable costs of production of which exceed its price, is economically unprofitable and can be justified by the need to preserve the market, the hope of reducing variable costs in the future, etc.
Unlike industrialized countries, where the determination of the level has long been an integral part of technical and economic calculations in the justification and formation of short- and medium-term plans for the development of enterprises, in Russia such calculations are carried out only occasionally. Even far from all business plans contain relevant sections with such calculations. However, it can be assumed that as the choice of the development strategy increases, the action market factors determination of the point of self-sufficiency and we will become the same routine analytical procedure.
7. Calculation of the critical break-even point
It is known that the purpose of the activity of the firm (enterprise) in modern economy is to make a profit. It is under this condition that the firm can exist stably and provide a basis for growth. The stable profit of the company manifests itself in the form of a dividend on invested capital, helps to attract new investors and, consequently, increase the equity of the company. Therefore, it becomes clear interest in the problems of profitability of the company. A very important aspect of this issue is the concept of break-even activity of the company.
The break-even operation of an enterprise is its state, which is characterized by a situation where the current income from the sale of products exceeds the total cost of production and sale of products.
The break-even point is the minimum volume of production and sales of products at which costs will be offset by income, and in 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 taking into account the expected profit margin.
In this section, it is necessary to estimate how much products (works, services) should be produced and sold in order to cover the current costs of the enterprise and production did not turn out to be unprofitable, that is, to reach the break-even point.
After analyzing Table 3, we can divide all expenses into conditionally variable and conditionally fixed for the year:
Fixed and variable costs.
Table 8
|
Calculation items |
U measurement |
"Meteor" 342E |
"Rocket" 340E |
|||
|
Salary with social security contributions |
||||||
|
Labor costs during winter layup |
||||||
|
Ship depreciation expenses |
||||||
|
Contributions to the repair fund |
||||||
|
Costs for navigational materials |
||||||
|
other expenses |
||||||
Breakeven point calculation:
Table 9
|
Indicators |
U measurement |
"Meteor" 342E |
"Rocket" 340E |
|
|
Fixed expenses per year |
||||
|
Variable expenses per year |
||||
|
Number of passengers carried per year |
||||
|
Shipping cost |
||||
|
Variable costs per passenger |
||||
|
Proportionality factor |
||||
|
Critical volume (cost) of sales of a type of product (works, services) |
||||
|
Critical amount of products (works, services) |
1) Variable cost per passenger = Variable cost per year / Number of passengers carried per year
Variable expenses per 1 passenger = 89028.1 / 217942.4 = 0.41 rubles
Variable expenses per 1 passenger = 83971.5 / 112486.4 = 0.75 rubles
2) Proportionality coefficient = Variable cost per 1 passenger / Cost of transportation
Proportionality coefficient \u003d 0.41 / 14.5 \u003d 0.0282%
Proportionality coefficient \u003d 0.75 / 29.4 \u003d 0.0255%
3) The critical volume of sales of a type of product = Fixed costs for the year / (1-Proportionality coefficient)
Critical sales volume of a type of product = 2398354.37 / (1-0.0282) = 2472530.3 rubles.
Critical sales volume of a type of product = 2184815.64 / (1-0.0255) = 2252387.3 rubles.
4) Critical quantity of products = Critical sales volume of the type of product / Cost of transportation
Critical production quantity = 2472530.3 / 14.5 = 170519.3 units.
Critical production quantity = 2252387.3 / 29.4 = 76611.8 units.
The dependence of the change in the size of profit on the volume of sales, on fixed and variable costs, as well as the break-even point can be represented on the graph.
"Meteor"
"Rocket"
8. Settlement for a loan received from a bank
Credit -- economic relations between the lender and the borrower regarding the transfer of a temporarily free amount of money (value) on the principles of repayment, urgency, payment. Other conditions for providing funds are also possible, such as intended use, security, and others.
Credit plays an important role in self-regulation of the amount of funds required for economic activity. Thanks to the loan, enterprises have at any time the amount of money that is necessary for normal operation.
The role of credit is important for replenishing working capital, the need for which is not stable for each enterprise, it changes depending on the working conditions: market, natural, climatic, political, etc.
The role of credit is great for the reproduction of fixed assets. Using a loan, an enterprise can improve, increase production much faster than without it.
A bank loan is a cash loan issued by a bank for a certain period of time on the terms of repayment and payment of credit interest.
Cumulative calculation authorized capital the enterprise showed that it does not have enough own sources to start production activities and it is necessary to obtain a loan from the bank. Negotiations with the bank showed the possibility of obtaining a loan in the amount of 6.8 million rubles. for a period of 12 months at an annual interest rate of 18%. The loan is granted 2 months before the start of the enterprise, repayment of the loan begins at the end of the second month of the enterprise, no later than the last working day. Loan repayment is made according to the agreed schedule.
Based on these conditions, you should perform the calculation in the table of monthly loan repayment and interest on it. The possibility of loan payments to be commensurate with the presence of net profit. (Payment of interest for the loan is included in the cost of tourist products, in other expenses).
|
Months of loan use |
Loan repayment amount, rub |
Amount % for a loan to a bank, rub. |
The total amount of the contribution to the bank, rub. |
Balance of the outstanding loan, rub. |
|
Effective rate
Ef.st \u003d Total amount% for a bank loan h Total loan amount h 100
Eff.st \u003d 927000 h 6800000 H 100 \u003d 13.63%
Conclusion: As a result of equal payments, the total amount of the contribution does not fluctuate significantly, but is not provided by the enterprise's funds.
In total, the net profit is not enough (loan amount - PE) for the Meteor project - 6,260,024.89 rubles. and for the project "Rocket" - 5949999.38 rubles.
With the chosen variant of the loan repayment schedule, the loan repayment provides, in contrast to 18%, only 13.63% per annum.
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The break-even operation of an enterprise depends on many factors, including the choice of the optimal volume of production and the appropriate pace of development of the enterprise. For the analysis of break-even it is necessary to be able to determine the break-even point (self-sufficiency) of the enterprise. The break-even point (critical volume of production or sales) is the volume of sales at which the income received provides reimbursement of all costs, but does not provide an opportunity to make a profit. In other words, it is the lower limit of output at which profit is zero. To determine the break-even point in practice, three methods are used:
mathematical;
graphic;
gross profit method (marginal income).
The threshold of profitability is the proceeds from sales, at which the company no longer has losses, but still does not receive profits, that is, this is a critical volume of sales, but not in kind, but in value terms. The margin of financial strength is the amount by which an enterprise can reduce revenue without leaving the profit zone, while necessarily receiving some amount of profit from the sale of products.
The indicators "margin of financial strength" and "margin of safety" (the first - in value terms, the second - in physical terms) evaluate financial condition enterprises, which has an impact on management decision-making. If the company approaches the break-even point, then the problem of managing fixed costs increases, as their share in the cost increases. Semi-fixed costs are depreciation, management and repair costs, rent, interest on a loan, taxes attributable to the cost of production, etc. The greater the difference between the actual volume of production and the critical one, the greater the margin of financial strength of the enterprise and hence its financial stability.
The value of the critical volume of sales and the threshold of profitability is influenced by the change in the amount of fixed costs, the value of average variable costs and the price level. Thus, an enterprise with a small share of fixed incomes can produce relatively less products than an enterprise with a large share of fixed costs in order to ensure the break-even and safety of its production. The margin of financial strength of such an enterprise is higher than that of an enterprise with a larger share of fixed costs. Thus, the margin of financial strength of an enterprise with a smaller share of fixed costs is greater than that of an enterprise with a significant share of fixed costs.
Along with the indicators listed above, to analyze the break-even operation of the enterprise, indicators of marginal income (gross margin), relative income and gear ratio (production leverage) are used. Marginal revenue (gross margin) is the difference between sales revenue and the variable costs of its production, i.e. it includes the sum of fixed costs plus profit. Relative revenue is the ratio of marginal revenue to sales revenue, expressed as a percentage.
The gear ratio is the ratio of marginal revenue to the profit from product sales. The gear ratio expresses the relationship between variable and fixed costs. It is the higher, the higher the fixed costs in relation to the variables. With an equal growth in sales volume, higher profit growth rates will be for those enterprises that have a higher value of the “gear ratio” indicator.
In the context of scientific and technological progress, fixed costs grow at a higher rate than variables due to the use of more productive and, accordingly, more expensive equipment. Hence it follows that marginal revenue higher where the proportion of fixed costs is higher. A business will be profitable if marginal revenue is higher than fixed costs. Thus, the fall in output has the greatest impact on the activities of the most efficient enterprises, technically more equipped. Therefore, the management of technically equipped enterprises must necessarily predict the growth rate of profits depending on the growth in sales and the ratio between fixed and variable costs.
the more competently the enterprise manages its resources, the lower the costs, and the profit, accordingly, will be greater. This can be seen from the following formula:
Dv \u003d V - C,
where Dv - gross income;
V - gross revenue (full amount of cash receipts without VAT and excises); C - the cost of the tourist product (services), (except for labor costs).
Pv \u003d Dv - Zob.exp.,
where Pv - gross profit - part of gross income minus all mandatory expenses;
Zob.exp. - all obligatory expenses.
Under the costs (cost) is understood the totality of all costs of a tourism industry enterprise necessary for the production and sale of a tourist product (services). Therefore, the total costs of the tourism industry enterprise are production costs and distribution costs, and they underlie the definition of cost.
The cost can be determined both for the total volume of production and per unit (unit cost).
When determining the cost of the total output, all costs are grouped according to the principle of homogeneity according to the following elements:
· material costs;
· labor costs;
· deductions for social needs;
· depreciation of fixed assets;
· other costs.
When determining the unit cost (calculation), all costs are grouped not by cost elements, but by costing items, i.e. expenditure items are determined depending on their purpose and place of occurrence. In this case, the following types of costs are distinguished:
· basic and overhead;
· direct and indirect;
· constant (conditionally constant) and variable (conditionally variable).
Main costs are directly related to the created tourist product (service), invoices expenses associated with the promotion and sale of the tourist product. Unlike the main costs, which are directly related to the cost of the tourist product, overhead costs must be distributed. To determine the cost of a particular tourist product (service), all costs are divided into direct and indirect.
Direct costs are directly borne by the cost of the tourist product (services), and indirect- no, because they refer to the entire volume of tourism products during a certain period of time. Indirect costs must be distributed in proportion to a predefined feature (as a feature, as a rule, one of the types of direct costs is taken, for example, wages of key employees). Indirect costs are divided into production and non-production.
Indirect production costs (I):
· wages of employees;
· expenses for time-based and monthly payment of telephone conversations;
· expenses for paying interest on loans taken to pay providers of certain types of services;
· rent;
expenses for utility bills, repairs and maintenance Vehicle;
depreciation and upkeep industrial premises;
· expenses for paying third-party organizations related to the formation and sale of a tourist product (services), etc.
Indirect non-production costs (II):
salary management personnel, accounting staff, security services, etc.;
· depreciation of fixed assets for management and general business purposes;
· payment for third party services (audit and consulting services, notary services);
· expenses for training and retraining of personnel, certification, etc.
Of particular importance for tourism industry enterprises are costs, the behavior of which depends on changes in the volume of production or sales of the tourism product (services), i.e. when demand fluctuates, some costs respond to these changes, while others remain unchanged. Such costs are called variable and fixed. Such a division is justified in the short term, since almost all costs in the long term depend on changes in the volume of production (sales) of the tourist product (services).
fixed costs(conditionally fixed) - these are costs that do not directly depend on the size and structure of production and sales of products (services). They include wages employees of the enterprise (management and support staff) with all mandatory deductions, rental costs, depreciation of fixed assets, public utilities, telephone subscription fees, advertising costs, licensing and certification costs, etc. These costs are related to time and are also called time costs.
variable costs(conditional variables) - these are costs that directly depend on the volume of production and sale of the tourist product (services). They include the costs necessary to create a tourism product (services), in particular, the costs of delivery and accommodation of tourists, food, wages of employees of the tourism industry enterprise (that part of the staff, the remuneration of which depends on the amount of production and sale of products (services)) with all mandatory deductions, payment of commissions to agents, etc.
Since the functioning of the tourism industry is very dependent on various external factors(seasonality, economic, political, natural), then for planning and strategic management accounting and management of these costs are of great importance for their activities.
On the one hand, fixed and variable costs react differently to changes in the total volume of production (sales) of the tourist product (services). On the other hand, the changes (fluctuations) themselves make it difficult to isolate fixed and variable costs to include them in the cost of goods and services, which, in turn, affects the financial results of tourism industry enterprises.
Therefore, in order in order to correctly divide the costs into fixed and variable for each area of activity and type of services provided, tourism industry enterprises need to:
1) develop methods for dividing costs into fixed and variable;
2) identify trends in the behavior of certain types of costs from changes in the volume of production and sale of goods and services;
3) determine the relativity (conditionality) of the classification of total costs into fixed and variable.
Separating costs into fixed and variable is not always a trivial task. In most cases, costs can be fairly accurately attributed to either fixed or variable costs. But in some cases, when the economic situation changes, costs can move from one state to another: say, they were constant, but became variable, and vice versa. An example is the following situation. The employee works at the enterprise under the contract. At this stage, his salary is considered a variable cost. In the event of its reduction, the enterprise has to pay him an allowance (average salary) for some time, which becomes a permanent cost for the enterprise that does not carry any benefit. And if we consider the behavior of costs in a long time period, then all costs in general can be considered variable. Therefore, fixed and variable costs are also called conditionally fixed and conditionally variable. In addition to the time factor, the conditionality of costs can also be influenced by various production situations. We will return to the development of methods for dividing costs into fixed and variable a little later, but first we will deal with their behavior.
It should be noted that fixed (Zpost) and variable (Ztrans) costs behave differently in relation to the entire volume of production of goods and services and in relation to one service (goods) in the total volume of their production. Let's represent the behavior of these costs graphically (Fig. 37-40).
Permanent and variable costs together make up the gross (cumulative, general) costs of the enterprise:
Ztotal = Zpost + Ztrans,
where Ztotal, Zpost, Zper - general, fixed and variable costs (expenses) of the enterprise.
The function of the behavior of the total costs can be represented by the following graphs:
These graphs characterize the so-called normal behavior of atrates. But due to various reasons, they may have a different look.
Variable costs are divided into the following types:
1) proportional variables that change proportionally (in direct accordance) with changes in the volume of production of products (services). A graphic representation of the behavior of such costs is shown in fig. 33;
2) regressively (degressively) - variable costs - such costs, the relative growth of which is slower than the relative increase in production;
3) progressively variable costs - such costs, the relative growth of which is faster than the relative increase in production volumes.
Fixed costs can be residual and start-up. Residual costs- part of the fixed costs that the enterprise of the tourism industry continues to bear, regardless of the fact that the activity of the enterprise is either completely or temporarily suspended.
Such costs include, for example, rent.
Starting costs- part of the fixed costs that arise with the start (resumption) of this activity (for example, a license).
Fixed costs can be:
1. Completely (absolutely) fixed - such costs that occur even when no activity is carried out (for example, depreciation of fixed assets, rent).
2. Fixed costs necessary to support the activity (occur only during the implementation of the activity) (for example, the cost of electricity).
3. Spasmodic, constant for a given period (conditionally fixed) costs. Such costs remain constant until the production of products (services) has reached a certain value (i.e., they do not change over a certain time period). Then, with an increase in the volume of production (services) per unit, the costs change dramatically, after which they again remain unchanged for a certain period of time, then again a jump. The behavior of such costs is presented graphically in fig. 44.
The shorter the period of time during which these fixed costs remain unchanged, the more frequent the jumps, and the behavior of fixed costs becomes closer in nature to the behavior of variables.
The period of time during which these costs remain unchanged is called the relevant period.
In Western practice, in order to analyze intermittent fixed costs and justify attributing them to the cost of production, the latter are divided into useful (Zpol) and useless (idle - Zhol).
This arises from the indivisibility of such a production factor as labor power.
Zpost = Zfloor + Zcold
To improve the efficiency of resource use in enterprises hotel complex it is advisable to use the following approaches:
· involvement of seasonal workers. In this case, the work contract is concluded only for a specific season, and with good work, the employee can be guaranteed the conclusion of a contract for subsequent seasons;
· engagement of employees for a specific time (hours). In this case, work is provided only at certain hours, for example, in the evening with the maximum load of the restaurant;
· sliding (floating) work schedule of employees. It lies in the fact that all employees go to work together only during those hours when the largest number of visitors comes (in the evening). The rest of the time they work according to the established schedule.
IN general view the value of useful and idle costs can be calculated using the following formulas:
where Qf is the actual total volume of services rendered;
Qn - the maximum possible (normative) total number of services (products).
The graph of the behavior of useful and idle costs is shown in Figure 45.
Rice. 45. The ratio of useful and idle costs depending on the volume of production of products (services)
Average and marginal costs
Tourism industry enterprises, in order to increase profits, are interested in constantly reducing unit costs. For ease of calculation, you can use the indicator of average costs.
Average costs- this is the amount of total (gross) costs per unit of output (services).
It is also interesting for a tourism industry enterprise to know how costs will change with a change in production (sales) volumes.
This can be determined in terms of marginal cost.
marginal cost- this is the average value of the increase or reduction in costs per unit of production (services), with a change in production (sales) volumes by more than one unit.
economic sense marginal cost is that they show what it will cost the enterprise to increase the volume of production or sales of products (services) per unit.
Break-Even Theory
With the transition to market relations for each enterprise, the system of proper accounting and cost management necessary for the production of products (services) is of particular importance. That is, the enterprise needs to organize a system of management (production) accounting, which, on the one hand, allows for the accounting of costs incurred, on the other hand, the analysis of costs, their impact on the result of the enterprise's activities and the adoption of appropriate management decisions. Unlike the costing system at full cost, the direct costing system is based on the division of costs into fixed and variable costs and their separate accounting. This approach allows you to correctly take into account the impact of fixed costs on the final output of products (services), especially when it changes.
Consider, using a conditional example, the methodology for conducting calculations using the direct costing system, and the advantages of this approach for making the right management decisions, in contrast to the methodology for calculating the calculation of products (services) at full cost.
When calculating the direct costing method (in the second variant), the increase in profit was due to the separate accounting for the influence of fixed and variable costs on the output of products (services), which made it possible to identify a decrease in fixed costs per unit with an increase in the total output of products (services) by 400 numbers (bed days).
This corresponds to the general economic law of the scale of output, which says that with an increase in output, unit total costs decrease (profit does not grow linearly).
Thus, choosing the right option for accounting for cost behavior leads to making the right management decisions. Another important feature of the direct costing method is that it allows you to graphically represent the relationship between the behavior of costs and the results obtained depending on the change in the volume of production (sales) of products (services) (Fig. 46).
Rice. 46. Break-even schedule for total and specific costs: V - revenue:
for the break-even schedule of total costs - the number of products (services) produced multiplied by the unit price; for the break-even schedule of unit costs - the price of a unit of production (service)
The intersection of direct revenue and total costs is carried out at a point called the break-even point or the point of critical volume of production (sales) of products (services), a turning point, a critical point, etc. This point shows how much product (service) is needed to cover all the costs of the enterprise. Starting from this point, the production (sale) of products (services) begins to make a profit for the enterprise. The break-even point is important economic indicator making managerial decisions for the enterprise of the tourism industry. The concept of defining a critical point is widely used when choosing options for action from a variety of alternative solutions.
The best solution is the one at which the value of the critical volume (Qcr) is the smallest, all other things being equal.
The break-even point can be measured both in natural terms and in value terms:
in physical terms - Qkr - the critical volume of production (sales) of products (pieces), at which profit is equal to zero;
in value terms - Pr - profitability threshold - the critical amount of proceeds from sales, at which profit is zero. (see fig. 46).
The calculation of the critical volume of output (sales) of products (services) is carried out according to the following scheme:
Since at the critical point the profit is equal to zero, then, by equating this expression to zero, we obtain
where P - profit;
Zed - the price of a unit of production (service);
Qcr - critical volume of output (sales) of products (services);
where the profit is zero.
Profitability threshold(Prent) can be calculated using the following formula:
where Kvm - gross margin ratio (marginal income) -
share of marginal income in total revenue:
M - marginal income, (marginal income, gross margin1) - the difference between revenue and variable costs.
Margin of financial strength
In order to assess how much the actual revenue exceeds the revenue at which the company operates at breakeven, you can calculate the margin of financial safety (FFS). This indicator can be calculated as absolute values, as well as in percentage. In absolute terms, the financial safety margin is calculated as the difference between revenue and the profitability threshold:
This indicator characterizes the amount by which sales revenue can be reduced so that the company remains breakeven.
The calculation of the financial safety margin as a percentage shows the percentage deviation of the actual revenue from the critical (threshold) revenue; in other words, it estimates by how many percent it is possible to reduce sales proceeds while remaining in the break-even area:
where Vfact, Prent - the actual and critical amount of the company's revenue.
For the operational management and forecasting of the activities of the enterprise of the hotel complex, there is an indicator called the effect operating lever.
Operating leverage effect shows that any change in sales revenue always generates a stronger change in profit, i.e. Revenue grows at a slower rate than profit. The effect of operating leverage is calculated for a certain volume of production (sales proceeds) of products (services), i.e. for each specific point. The volume of production (revenue from sales) changes, and the strength of the operating leverage also changes. The effect of operating leverage (ERM) is calculated as the ratio of marginal income to profit:
The effect of operating leverage shows how many times the increase
profits more than the increase in the volume of sales of products (services). Force
operating leverage depends on the amount of fixed costs, and how they
the larger, the stronger the effect:
With an increase in sales volume, the effect of operating leverage can be calculated through the indices of change in sales volume (IV) and profit (Iп):
where IV, Ip - respectively, the index of change in sales and profits;
V1, V2 - respectively, the base and modified value of the volume of sales (revenue);
P1, P2 - the basic and modified value of profit, respectively.
Then the effect of operating leverage can be calculated as the ratio of the increase in profit (ΔP) to the increase in sales volume (ΔI):
where ΔP = Ip - 1, ΔI = Iv - 1.
Cost differentiation
The mathematical relationship describing the behavior of total costs is determined by the equation of the first degree:
where Y - total costs (Ztot);
a - fixed costs (Zpost);
b - variable cost rate;
X - the number of produced (sold) products (services).
This formula can be represented in following form:
Ztotal = Zpost + b × X,
where b × X = Zper.
In order to divide costs into fixed and variable costs, it is necessary to determine the rate of variable costs - the average variable costs in the unit cost of production.
There are three main methods of cost differentiation:
1) method of maximum and minimum point;
2) graphical (statistical) method;
3) the method of least squares.
