Break-even analysis is a fairly simple in form and deep in content planning and adoption tool. management decisions V commercial organization. basis for decision-making regarding production activities is to consider options for possible changes in the market situation. Since the enterprise plan is a system of indicator values that the enterprise intends to achieve in the future, its implementation will depend on many factors. In the process of drawing up plans, the management of the enterprise will have to solve the following tasks:
- determine the volume of production, which will not only cover the costs, but also allow you to get the desired level of profit;
– determine the level of costs that allows you to remain competitive in the market.
Break-even analysis allows to solve these problems. There are other names for this procedure in the literature, for example: “critical sales volume method”, “dead point method”, “zero profit point method”, “operational analysis”, “marginal method”, “costs - volume - profit” method ”, or CVP analysis (Cost - Volume - Profit).
The essence of the method is to determine for each specific situation the volume of output that ensures break-even activity.
One-component break-even analysis.
The simplest is the break-even analysis of single-product production, i.e. production that produces only one type of product. In the general case, excluding tax effects, the operating profit of the enterprise (P) for the reporting period is formed as follows:
P \u003d VR - Z post - Z lane;
where BP is the company's revenue for the period in monetary units, BP = c × Q;
q - selling price of a unit of production, rub.;
Q - sales volume in physical terms, pieces, kg, etc.;
Z post - fixed costs, rub.;
Z lane - total variable costs, rub.
If we designate specific variable costs in rubles. - z lane, then the formula can be represented in the following form:
P \u003d (c - z lane) × Q - Z post.
Break even (Q cr)- this is an indicator characterizing the volume of sales of products, at which the company's revenue from the sale of products (works, services) allows you to cover all costs and reach a zero level of profit (P = 0). The break-even point can be found from the equation:
Another important value that characterizes the cost structure of an enterprise is the value marginal incomeor contribution enterprises. Marginal income at manufacturing enterprises is the difference between the company's revenue from the sale of products (works, services) and the variable costs incurred by the enterprise in the process of producing these products (works, services). Distinguish the value of the total marginal income (MD):
MD \u003d VR - Z lane \u003d c × Q - c lane × Q \u003d (c - c lane) × Q
and specific marginal income ( md):
md\u003d c - z lane.
There is another way to determine the amount of marginal income. The value of marginal income can be determined by adding the fixed costs and profits of the enterprise:
MD = 3 post. + P.
The dependence model of the indicators under consideration can be built graphically (Figure 6.2).
Rice. 6.2. Break even chart
A widely accepted and highly illustrative representation of earnings growth above the break-even point is shown in Figure 2. 7.3. On this graph, the line 3 full is the x-axis. The y-axis reflects the amount of "divergence" between the straight lines "Revenue" And Wfull, i.e. the amount of profit. When issuing below Qcr, the value on the y-axis will be negative (which corresponds to losses), and above Qcr - positive (profit). The slope of this graph to the x-axis will be equal to specific marginal income, and its intersection with the y-axis is the value Wfast, which is understandable - at zero output, losses are equal to the amount of fixed costs.
Rice. 6.3. Dependence of profit on the volume of output
The volume of production Q kr corresponds to the amount of revenue BP kr, which, by analogy with the release, is also called break-even point, in monetary units only:
or otherwise:
,
Where umd- the share of marginal income in the price.
The conclusion follows from the second formula: the higher the share of variable costs in the selling price of the product (ratio z per / c), the higher the break-even point. Otherwise, the lower the share of marginal income in revenue, the more products the company should produce in order to cover fixed costs and start making a profit.
Another indicator is calculated as part of the break-even analysis - safety threshold(otherwise called marginal margin of safety).This indicator is calculated asdifference between real volume and breakeven point and indicates how much output can be reduced before the company begins to incur losses. As already noted, the larger the output, the higher the profit. The higher the volume of production, the less fearful the enterprise is of fluctuations in market conditions - the more fluctuations in costs and revenues it can painlessly endure, remaining in the "profit zone".
Obviously, each specific volume of output has its own volume of security.
Consider the methodology of break-even analysis using an example.
Example.
The production enterprise "Zarya" is engaged in the production of dumplings. To develop a work plan for the next quarter, a break-even analysis of this one-product production is carried out. Planned variable costs per 1 kg finished products enterprises make up 3 lanes = 39 rubles. Fixed expenses for the quarter will be W post = 480,000 rubles. The selling price of 1 kg of dumplings is planned at the level of c = 67.5 rubles. Break even
.
Such a volume of production will cover all costs and reach zero profit. If the production for the quarter does not reach 16,842 kg, the financial result of the enterprise will be negative, and the activity will be unprofitable.
Based on the level of annual profitability desired by the owners of the enterprise, the following level of target profit is set - 100,000 rubles. Calculate how much output will allow you to get such a profit.
Having studied the market situation and the possibilities of their own enterprise, the management of Zarya planned the output of Q dumplings for the next quarter - 20,000 kg. With this volume of production, the level of profit will be:
P \u003d (c - z lane) × Q cr - Z post. \u003d (67.5 - 39) × 20,000 - 480,000 \u003d 90,000 rubles.
Safety threshold:
The flexible budget of the company provides for the possibility of an unfavorable situation in the planning period, which may lead to an increase in rent, and, accordingly, fixed costs by 40,000 rubles. The managers of the organization do not consider it possible to increase the selling price of dumplings, since it is determined by the market. The easiest way to maintain the estimated level of profit is to cut variable costs. What savings in variable costs (s * ln) will allow you to cope with an unfavorable situation?
Therefore, the enterprise should achieve savings in variable costs in the amount of (39 - 37) = 2 rubles. per 1 kg of product. However, technologists and employees of the supply department, having studied all the possibilities for saving variable costs, came to the conclusion that it was impossible to achieve savings of more than 1.3 rubles. How much fixed cost savings would such a situation require?
Z * post \u003d (c - s * lane) × Qplan - P \u003d (67.5 - 37.7) × 20,000 - 90,000 \u003d 506,000 rubles.
506,000 - 40,000 \u003d 466,000 rubles.
480,000 - 466,000 \u003d 14,000 rubles.
Thus, in order to compensate for a possible increase in rent, the managers of the enterprise should, in addition to saving variable costs in the amount of 1.3 rubles. per 1 kg of products, it is necessary to find an opportunity to save 14,000 rubles in the existing structure of fixed costs.
Effective profitability management is impossible without determining the profitability threshold (critical point, "dead point", payback point). The profitability threshold or break-even point is revenue or production volume that covers all costs and zero profit.
In the process of analysis, the minimum amount of revenue received from the sale of products is identified, at which the level of profitability reaches an indicator greater than zero. In the event that the company receives revenue greater than the amount corresponding to the break-even point, therefore, it works profitably.
When considering the profitability threshold of an enterprise, it is possible to obtain an adequate value of the safe volume of sales (revenue) for a break-even existence. The amount of revenue that corresponds to the break-even point is called threshold revenue.
The safety (profit) zone of the enterprise is the difference between the volume of products sold in fact and the break-even volume of sales of products.
The enterprise security zone indicates the percentage of the actual sales volume and the critical one, upon reaching which the profitability is 0 .
The threshold of profitability and the safety zone of the enterprise is determined by analyzing the dependence "costs - production volume - profit".
In economics, the following methods are used for these purposes:
Graphic method;
Method of equations;
Method of marginal income (gross profit) .
The graphical method for finding the break-even point (accountinga model) consists in constructing a visual graph of the “cost-production-profit” relationship.
The result is presented in the form of a graphic image, the abscissa shows the volume of production, and the ordinate shows income and costs, which are in accordance with the volumes of production.
The accountinga model assumes that the variable costs and product prices remain unchanged during the period under review, and therefore only one point is shown on the graph, which is the profitability threshold (break-even point).
Figure 2 - Determination of the break-even point by a graphical method.
The break-even point, depicted in Figure 1.2, shows that the organization's revenue a is equal to its total costs, while profit is zero. The revenue that is in line with the break-even point is called threshold revenue. The output a at the break-even point is called the threshold output. In the case when the organization sells less products than the threshold volume of production, then it is at a loss, if more, then it makes a profit.
The graphical method for determining the profitability threshold is widely used in the economy due to its advantages: with the help of this method it is possible to accurately predict the main indicators of financial and economic activity organizations when market conditions change.
The method of equations is also used to calculate the threshold of profitability, it is based on the calculation of the profit of the enterprise according to the formula:
Profit = Revenue - Fixed Costs - Variable Costs(16)
Detailing the procedure for calculating the indicators of the formula, it can be represented as follows:
Profit \u003d (Sales price of a unit of production Number of units sold) - Fixed costs - (Variable costs per unit of production Number of units of production), where (17)
P - profit; x is the number of units sold; C - the selling price of products; PZ - total fixed costs; PR - variable costs of a unit of production.
The general formula looks like:
P \u003d C * x - PZ - PR * x (18)
Taking into account that the calculation of the profitability threshold assumes no profit, and equating revenue to the total fixed and variable costs, the formula becomes:
C * x \u003d PZ + PR * x(19)
x \u003d PZ / (C-PR)(20)
The above formula for calculating the threshold of profitability allows you to analyze the relationship between costs, production volume and profit of the organization.
The method of calculating the marginal income also allows you to calculate the profitability threshold of the enterprise.
Marginal income is the difference between variable costs and revenue, it is designed to recover fixed costs and make a profit.
The formula used to calculate profit is:
Profit = total contribution margin - total fixed costs.(21)
Since at the break-even point the profit is zero, we get:
Marginal income per unit of production *sales volume = total fixed costs.(22)
Thus, the formula for calculating the break-even point using the marginal income method will be as follows:
Break Even Point = Total Fixed Costs / Marginal Income per unit of output.(23)
The purpose of marginal analysisa is to determine the volumea of sold aproducts, in which the proceeds a from the sale is equal to its full cost.
With the help of a marginal analysis, it is possible to establish not only the break-even point of production, but also the critical level of the amount of fixed costs, as well as prices for a given value of other factors.
The critical level of fixed costsa for a given level of marginal incomea and sales volume is calculated as follows:
PZ cr \u003d V n (C - PR) \u003d V n M d, (24)
where C is the price of a unit of sold products;
PR - variable costs per unit of output;
PZ kr - critical level of fixed costs;
Вн - the number of products sold in natural units;
M d - marginal income per unit of production.
The meaning of this calculation is to determine the maximum allowable value of fixed costs, which is covered by marginal income for a given volume of production, price and level of variable costs per unit of output. If fixed costs exceed this level, then the company will be unprofitable.
Thus, the threshold of profitability and the security zone of the enterprise are fundamental indicators in the development of business plans, the rationale for management decisions, and the assessment of the enterprise's activities.
In 2017-2018, they became even more relevant. Especially since search engine filters for SEO links have become commonplace. In particular, Yandex with its Minusinsk. SEO-links (not only rented, but also eternal in articles) are often not taken into account, and may be a minus for the site.
In December 2017, the Referr service made such an expert survey “What links will work in 2018? Analytics from 65+ experts". Interesting to read.
This is besides the fact that natural and pseudo-natural links are airbag from reference filters(up to a certain threshold). If there are more of them in your link profile, the more SEO links you can buy (but only do it in a quality way).
First of all diverse.
If the link profile is natural, good, then it contains links:
- of the most different types - closed in nofollow, noindex, open, direct, via script, active, mentions
- a variety of types and anchors
- to different pages of your site
from different types of sites.
Comments on websites, aturich and some kind of manual creative link building - this is additional, on its own.
In the TOP Base, I just try to collect live sites of various types - it is extremely useful in work, saves a lot, a lot of time - not hours, but days to search for suitable sites. There is no other such base in Runet, therefore, either make your work easier or assemble it yourself.
It is sorted by subject and region and other categories - about 16 thousand sites, almost 2000 categories and subcategories for ease of use.
But, of course, you have to work. It's not the kind of tool where you go and post on every site and get posted everywhere. It is necessary to make high-quality texts, and each project has its own specifics. It is on the quality of your placement that your exhaust depends primarily.
And it will also be necessary to quickly weed out those that do not fit, or on which it was not possible to accommodate. You will quickly determine the most suitable for you by eye. The base is just a primary wide manual screening and sorting by an experienced specialist of live sites suitable for free hosting, and then you yourself, specifically for your case, determine what to use, where to host.
Either way, it's much faster. It takes me all day to find 100 new live forums in any topic - 6-7 hours at last count. And in the database I have more than 7 thousand live forums.
And most often, a natural link is placed in places where visitors go (and not in some hidden sections, as sites that sell articles on exchanges often do), and within the main content (and not in the footer, sidebar, like this most often it happens with a leased link such as from the Sape exchange, etc.).
Getting natural links is usually poorly scalable, and in each case you have to put your head in one way or another. Therefore, the results of working even with the same database always differ by several times, if not dozens of times.
There is another option, such as Spamming.
Of course, it is ideal if the link is from a trusted, non-spam and also thematic site. But, as I wrote above,
a natural link can easily be from a spammy site - from a press release, or a large forum that puts direct links, for example.
Another thing is if the site sells links from stock exchanges, this link will be worse. Now there is a good service from -. It works completely free of charge and without registration, you can check if sites sell links on exchanges like sape, etc., and a couple of popular exchanges of eternal links are also taken into account - Gougetlinks and Rotapost.
Sergey Koksharov (Devaka) in 2013 wrote an article “What does a natural link look like. 10 signs ". In principle, it is still fully relevant.
As Sergey Koksharov writes in it:
“The main property that unites all the signs listed below is a link made by a person for a person.”
Below (at the end of the article) I will provide several videos from the Yandex webmaster (the official conference from the leading search engine), where the speakers present their point of view on what is a natural link and how it can be obtained in non-standard ways.
Many webmasters are rather skeptical about the report from Yandex and the one they conducted. it is not clear how to extract such links, which Yandex chose as winners, for ordinary commercial projects - corporate sites, online stores. But, in principle, this is possible if, for example, you maintain a high-quality blog on the same domain. Well, in general, it is useful to look at these materials in any case.
Here I heard different opinions lately.
A year ago, in his detailed webinar about Minusinsk, Dmitry Sevalnev, based on careful large-scale research, gave a threshold of 300-400 purchased SEO links. Later lowered the threshold to approximately 250 unique SEO donors(not SEO links, but donor sites) - so that it is definitely safe. And he also said that it is very desirable to dilute the link mass with natural links. That is, even for the largest portals or online stores today it is highly discouraged to purchase too many links.
Alexander Alaev, for example, in his link guide, written a couple of years ago, based on his experience, based on the feeling that after buying about 100 links to a site, the rest have almost no effect, recommends smoothly purchasing about 100 links, diluting them immediately and then natural.
Here is a quote from his manual:
“So the answer to the question of how many links you can buy is: 100 pieces. – safe threshold, 250 pcs. - acceptable threshold.
Both of these well-known experts and a number of others say that the use of natural links allows you to increase the security of the site's link promotion and increase the threshold for purchasing SEO links (if desired).
“Natural links are an important aspect that directly affects the threshold for purchased links. The more natural links to your site, the higher the acceptable threshold for buying seo links. Links in the anchors of which commercial keywords are not used, links placed on the thematic site in the appropriate context, links that are clicked can be considered natural.
Alexander Alaev.
True, I do not quite agree with the proportions of anchor and non-anchor links given by Alexander Alaev in his guide. I would increase the percentage of non-anchor a little, although, there is still a moot point what he considers to be non-anchor, whether he considers various brand mentions to be anchor or non-anchor, for example. And the fact that he recommends making all link anchors unique is a very good and right moment.
To work with link exchanges you can’t do without a program (here with a link of 15%) and an online service (there is a promotional code for CheckTrust for you for a 30% DISCOUNT, and the first 500 checks are free) - both tools work very well for checking the quality of donor sites. Today, without them, it is better not to buy links.
When I asked him how he works today in filtering SEO link donors on exchanges, he replied like this:
“I am guided by a simple principle - I take the best available.
I drive the link base into CheckTrust, and then filter it, choosing links with the highest trust, the least spam, no AGS, sometimes I look at other parameters, but usually this is enough.”
I, on my own, do exactly the same thing. But at the same time, I always (without exception) look at how alive and active the site is. This also largely guarantees how long he (and the link) will live.
Regarding the volumes for placing free natural links I wrote above - I recommend 200-300 successful placements per month for a zero site in terms of link mass. If the site is not zero, you can increase it a little - one and a half times.
Here are a couple more screenshots from Alexander's presentation at the AllinTop 2016 conference:
so bad:
so good:
"Natural Link Magic"(Ekaterina Gladkikh, Yandex)
Here, including, more about the competition "Natural Link 2015" from Yandex.
A great help for the agro-industrial complex was the increase in the availability of credit resources, achieved through large-scale state subsidies. The priority of supporting the countryside was once again emphasized in the Address of Russian President Dmitry Medvedev to the Federal Assembly.
Already, private farms account for about half of the agricultural products produced in Tatarstan. However, in order to survive in the face of fierce competition, peasants need to learn how to produce products on an industrial scale, master advanced technologies, and organize the marketing of products. How to help them with this? In our republic, for example, a set of measures providing for grant support, favorable credit and leasing conditions, provision of vacant premises, agricultural machinery and much more on preferential terms is provided by law.
We are faced with the task of making agriculture a profitable business, a leader in terms of economic growth for years to come. But this requires quality legislative regulation. Until now, Russia has no law on food security, which would clearly spell out the relationship between the state and agricultural producers and establish the minimum share of domestic agricultural products in the total volume of commodity resources of the domestic market. Now, according to experts, the share of imported food in general is about 40 percent, which is twice the food security threshold.
It is long overdue that there is a need to regulate the relationship between producers, processors and sellers of agricultural products at the legislative level. The current situation is such that in the final price of the product, the share of the manufacturer in Russia accounts for only about 20 percent of the cost of the goods, while in countries with developed market economies this figure is several times higher.
Some existing federal laws also need serious adjustment. In particular, in the Law "On the Development Agriculture"It seems that a separate article should appear regulating the ratio of prices for agricultural products and related sectors of the economy, as well as the creation of an appropriate mechanism for state compensation to agricultural producers. In order not to return every time in a fire order to seasonal fluctuations in fuel prices or a decrease beyond the margin of profitability milk and grain prices.
Requires change and the federal law"On insolvency (bankruptcy)", which does not yet sufficiently take into account the specifics of agricultural production. In Tatarstan, half of the organizations undergoing bankruptcy proceedings are precisely agricultural formations. And I want to say frankly that this system, in the form in which it was originally conceived, is not working properly now.
Break-even sales volume and safety zone are fundamental indicators in the development of plan targets, substantiation of management decisions and evaluation of enterprises. The calculation of these indicators is based on the interaction of two quantities: costs (with the allocation of variables and constants) and revenue. Since the second part of the costs is also subject to minor changes, the term "conditionally fixed costs" is used in relation to it in the future. The definition of the indicators under consideration is carried out by graphical and analytical methods.
The analytical method of calculation is more convenient than the graphic one, because is highly accurate and does not require a significant investment of time for the preparation of graphs.
On the presented chart, two similar triangles can be distinguished: OTA and OVB. Based on the similarity of these triangles, we can write the following proportion:
where D y is the share of marginal income in the proceeds from product sales.
If we replace the sales volume in monetary terms with the corresponding sales volume in physical units (K), then we can calculate the profitability threshold in physical terms:
It is easy to see that the ratio semi-fixed costs to the total amount of marginal income is the coefficient that determines the location of the cost recovery point on the presented graph.
To determine the profitability threshold, instead of the amount of marginal income, you can use the rate of marginal income in the price per unit of production (D s): D s \u003d D m / K. From here D m = K D s. Then formula (4) can be written as follows:
The difference between the actual number of products sold and the break-even sales volume is the financial safety zone (profit zone), and the larger it is, the stronger financial condition enterprises. To determine the financial safety zone (ZB) by cost indicators (in multi-product production), the following formula is used:
The above graph and analytical formulas show that the profitability threshold and the financial security zone depend on the sum of semi-fixed and variable costs, as well as the level of product prices. When prices rise, it is required to sell less products in order to receive the necessary amount of revenue to compensate for the costs of the enterprise, and vice versa, when the price level decreases, the break-even volume of sales increases. An increase in specific variable and semi-fixed costs raises the threshold of profitability and reduces the safety zone.
Therefore, each enterprise should strive to reduce conditionally fixed costs. Such a financial plan is considered optimal, which allows you to reduce the share of fixed costs per unit of output, reduce break-even sales volume and increase the financial security zone.
Enterprise capacity planning
At the final stage of preparing the sales budget, the resulting break-even sales volume is compared with the expected capabilities of the enterprise. Their specific expression is productive capacity, which characterizes the maximum possible output of products (services) per unit of time (usually per year) in the planned assortment with the full use of all available economic resources based on the use of advanced technology, advanced forms and methods of organizing production and labor.
Production capacity determines the level of production of products (services) or the upper limit of sales. It is limited by the availability of production facilities, technological equipment, material, labor and financial resources. It is customary to distinguish between theoretical, practical, normal, planned and other types of production capacity.
Theoretical production capacity represents the volume of business transactions that can be achieved in ideal working conditions. This is the maximum possible output, called passport production capacity of the enterprise.
Practical production capacity defines the highest level of production that is achieved while maintaining an acceptable degree of efficiency, taking into account the tolerable or unavoidable loss of working time associated with renovation equipment and regime enterprise work.
Normal production capacity characterizes average level economic activity, sufficient to meet the demand for goods and services produced by the company for a number of years, taking into account seasonal and cyclical fluctuations in demand, trends in its growth or reduction.
Planned production capacity should be normal. Full use of technological equipment means compliance with the planned production program enterprises of its power.
IN market conditions production capacity essentially determines the firm's annual supply, taking into account the availability and use of resources, the level and change in prevailing prices, and other factors. Production capacity subject to certain reserves must be balanced with the production program or, in the language of the market, it is necessary to achieve equilibrium between supply and demand for products and services. This requirement must be taken into account when planning. In the event that demand exceeds supply, it is necessary to provide for a corresponding increase in production capacity in the strategic plan. Consequently, the basis for establishing planned targets in the field of innovation and investment activity is revealed.
However, a situation is possible when, for various reasons (for example, due to the lack of necessary financial resources), the company cannot increase its production capacity to the level of prospective demand. Then it makes sense to consider the option artificial limiting demand by setting higher market prices.
There are input, output and average annual production capacity. input capacity is determined taking into account the production assets available at the beginning of the planned year, work force and other resources, and day off- at the end of the year with subsequent adjustment in case of a corresponding change in equipment and technology.
In planning calculations, the indicator is most often used average annual power, determined by the formula:
M p - production capacity, pieces / year;
Ф eff - effective annual fund of equipment operation time, hours;
T pcs - the labor intensity of a unit of work or products, hours / pcs.
Often the production capacity is set according to leading workshops where the largest share of operating technological equipment is concentrated. In this case, the annual capacity is determined for each group of technologically interconnected equipment according to the formula:
| M o \u003d K about | F ef | , Where |
| T pcs |
M o - production capacity of a group of technological equipment, pieces / year;
K about - the number of units of equipment of this group;
Ф eff - effective fund of the operating time of a piece of equipment per year;
T pcs - the complexity of one product.
Based on the calculation of the production capacity of individual units and groups of equipment, workshops and sections of the enterprise, the so-called "narrow places" and measures are planned to equalize capacity, including through the introduction of new equipment.
The process of planning production capacity is completed by determining the coefficient of its use, which is the ratio of the annual volume of output to the average annual value of capacity:
| K m = | N g | , Where |
| M avg |
K m - coefficient of utilization of production capacity;
N g - the annual volume of output.
If the chosen level of base prices does not provide the optimal ratio between the threshold of profitability, the financial safety zone, demand and production capacity, then the base prices adjusted, and the considered cycle of calculations is repeated. Schematically, this process can be represented as follows:
In conclusion, we note that consideration of issues related to the prospective change in production capacity allows finally determine the planned sales volume and price level for each strategic business unit, i.e. calculate the initial version of the prospective sales budget, which is an input indicator for calculating the production budget:
N prod = N prod ± D N gt
Chapter XI. Preparation of operating rooms and
Support budgets
Operating budgets
In market conditions, the first indicator from which it is necessary to start financial planning is the sales forecast. That is why budgeting should begin with the preparation of a sales budget based on sales forecasts, reflecting the dynamics of the company's total turnover in the upcoming budget period. This document should answer the following fundamental questions: what to sell, how much to sell, at what price to sell (see Table 11.1).
Table 11.1
Strategic sales budget
The sales budget can be compiled in various ways, depending on the specifics of the economic activity of the enterprise. Common to any approach to its compilation is the definition in value terms of the volume of products sold or the forecast of sales proceeds.
The total sales of a company can be calculated in two ways: by contracts (orders, deliveries, consignments of goods) or by products (by types of products and services). You just need to keep in mind that with a large range of products and services sold by the company, it is necessary to group them according to the so-called strategic business units (SBU). After that, a sales budget is compiled either for product groups and average prices for each group, or for those types of products and services whose combined share in total sales is quite large (at least 70%). In the latter case, for other types of products in the sales budget, breakdown is not required.
The total turnover is determined by multiplying the number of products intended for sale in physical terms by the selling prices of the enterprise (separately for each type of product). It should be borne in mind that along with the schedule of the physical volume of sales in physical terms, it is often necessary to draw up the same schedule for the firm's selling prices. This has to be done primarily in conditions of high inflation.
At the same time, it is advisable for the leaders of the organization to determine the so-called net sales or that part of the sales volume that remains at the disposal of the company after settlements with the budget, deducting all payments to the budget from the total turnover (non-refundable VAT, local taxes, excises and other fees levied on turnover). This can be done in two ways:
It is better to adjust selling prices when there is confidence that the taxation rules in terms of turnover taxes will remain unchanged for the upcoming budget period. Otherwise, the budgets will have to be adjusted after each such change.
It is better to set a limit in the form of a certain percentage of the total turnover for settlements with the budget when tax legislation suffers from constant unpredictability of change. Then it is better to set as tight a limit as possible (a higher percentage), so to speak, with a “margin of safety”, in order to better imagine what income in the form of net sales the company can realistically expect in a given period. At the same time, it must be remembered that the planned result is not at all what will then be reflected in financial statements. Budgeting and accounting are two different things. If it later turns out that the limit exceeded the real needs of the enterprise in terms of settlements with the budget, then there will be nothing wrong with that. Much worse when you have to look for money for unexpected payments.
Along with the schedule, the budget should present income schedule cash from sold (delivered) products. The cost of sales needs to be converted into incoming cash. The period during which it is expected complete the receipt of cash (excluding bad debts) for previously shipped products is called account reconciliation period. The schedule of receipts is primarily necessary for a more accurate compilation of the BDDS.
Since the conditions for the functioning of a particular business are different for each company, the format of the income schedule will also be different. The definition of such a format is one of the problems that the managers of the enterprise have to solve when setting up budgeting.
After the necessary forms of the sales budget are drawn up, you can proceed to the next stage - the development of production budgets and stocks of finished products. However, it should be remembered that the prepared sales budget is only a draft, which may need to be adjusted after other operating budgets are prepared, and probably later - after the development of the OBD, BDDS or all three main budgets. For small and medium-sized firms, it is not always possible to draw up a detailed sales budget. Therefore, a simplified procedure for compiling this document can be applied.
Production budget. It is customary to include the following operating budgets in the production budget: production budget, inventory budget, direct materials budget, direct labor budget, direct production (operating) cost budget, and overhead budget.
Purpose production budget- determine the production program of the enterprise for the upcoming budget period (Table 11.2). Knowing the production program and the amount of stocks of finished products, you can set the production cost and the cost of storing stocks.
To determine production volumes, it is necessary to know the total sales volume and its distribution within the budget period in accordance with the sales budget, commodity balances at the beginning and end of the planning period. The budget for production and stocks of finished products can only be drawn up in natural units of measurement, and then on its basis the corresponding costs in terms of value are determined. The algorithm for calculating the production budget can be represented as follows:
Table 11.2
Strategic production budget
| Production nomenclature | Rep. year | First year | Second year | 3rd year | ||||
| I sq. | II quarter. | III quarter. | IV quarter. | 1st pg | 2nd pg | |||
| A | ||||||||
| Sales volume, pcs. - strategic unit No. 1 - strategic unit No. 2 - strategic unit No. 3 Plus Target standard for stock of finished goods at the end of the period, pcs. - strategic unit No. 1 - strategic unit No. 2 - strategic unit No. 3 Minus Target standard for stock of finished goods at the beginning of the period, pcs. - strategic unit No. 1 - strategic unit No. 2 - strategic unit No. 3 Equals Volume of production, pcs. - strategic unit no. 1 - strategic unit no. 2 - strategic unit no. 3 |
Knowing the production volumes by months or other budgeting sub-periods, as well as the cost standards for raw materials, materials, labor, etc., it is possible to calculate the production cost, including direct costs and part of overhead costs (general workshop, overhead costs structural unit or business) needed to produce the planned output. Cost standards are determined for each SEB and then summed up. For a more accurate calculation of the production cost of products, the company must develop a budget for materials and a budget for overhead costs.
Along with the calculation of the production program, an inventory budget is drawn up. The formation of inventories is necessary to ensure the production of products of a given volume. The basis for calculating the volume of inventories is the production budget. The inventory budget is required to generate two planning documents:
1) the budget of income and expenses - in terms of preparing data on the cost of goods sold;
2) balance forecast - in terms of data on the state of stocks of finished products, work in progress and materials at the end of the planning period.
The inventory budget is compiled in monetary terms and contains planned indicators for stocks of finished products, work in progress and materials (Table 11.3).
In order to evaluate reserves finished products in monetary terms, it is necessary to calculate the planned cost per unit of production. The cost of finished goods will depend on the method chosen for costing and inventory valuation. There are the following methods of accounting and costing:
1) method full cost inclusion in the cost of production, i.e. traditional for domestic enterprises accounting at full cost, or "standard costing", adopted in foreign practice;
2) method incomplete, limited inclusion of costs into the cost price on some basis, for example, according to the dependence of costs on the volume of production, or the "direct costing" method.
However, the cost of finished products is determined not only by production costs, but also by the value leftover work in progress. At the beginning of the budget period, the enterprise has a balance of work in progress (in accounting it is recorded by debit
Table 11.3
Strategic inventory budget
at the end of the relevant period
| Stock nomenclature | Rep. year | First year | Second year | 3rd year | ||||
| I sq. | II quarter. | III quarter. | IV quarter. | 1st pg | 2nd pg | |||
| A | ||||||||
| 1. Stocks of finished products, pcs. - strategic unit No. 1 - strategic unit No. 2 - strategic unit No. 3 2. Unit cost of finished products, rub. - strategic unit No. 1 - strategic unit No. 2 - strategic unit No. 3 3. Stocks of finished products, rub. - strategic unit No. 1 - strategic unit No. 2 - strategic unit No. 3 4. Stocks of materials in physical terms: - material A - material B - material C 5. Unit cost. material, rub. - material A - material B - material C 6. Stocks of materials, rub. - material A - material B - material C 7. Inventory of work in progress, thousand rubles. |
account 20 "Main production"). Work in progress is a product that has not passed all the stages provided for technological process, as well as products that are not completed, have not passed tests and technical acceptance. The planned cost of the finished product output (credit turnover on account 20) is equal to the planned production costs (debit turnover on account 20), adjusted for the amount of change in the balance of work in progress:
GP \u003d NP np + PS kp - NP kp,
where GP is the planned cost of production of finished products;
PS kp - production cost of products at the end of the period;
NP np and NP kp - inventories of work in progress, respectively, at the beginning and end of the period.
Calculation of the volume of work in progress in various industries can be produced by several methods, depending on the nature of production. One of the methods involves the calculation of the standard of work in progress at the end of the planning period for following formula:
In organizations where the costs of technological processing of products are carried out evenly, the cost increase coefficient is determined by the formula:
where Costs np - costs incurred at a time at the beginning of the production process;
Costs after - subsequent costs until the end of the production of products.
For an accurate definition direct costs three budgets are needed, the first of which is budget for direct material costs. The purpose of this budget is to calculate the costs of raw materials, materials, semi-finished products and components required for the production of finished products, whose cost is entirely related to sales volume and varies in proportion to the size of production. In addition, within the framework of this budget, it is necessary to determine the carry-over stock of raw materials and materials, as well as the repayment schedule for accounts payable, i.e. establish the conditions and procedure for mutual settlements with suppliers. To calculate the amount of purchases of raw materials and materials for the upcoming budget period, it is necessary to know the volume of sales and production for the entire planning period and within it. The annual need for raw materials and materials can be determined by the formula:
The form of the budget of direct costs for materials is presented in table. 11.4. Along with the material procurement schedule, the direct cost budget should include a supply payment schedule (accounts payable schedule) in which the cost of supplies is converted into an outgoing cash flow. The main materials that serve production needs are included in the direct material cost budget. The main materials used in the shipping and marketing phase are included in the distribution budget.
Table 11.4
Strategic budget for direct material costs
| Indicators | Rep. year | First year | Second year | 3rd year | ||||
| I sq. | II quarter. | III quarter. | IV quarter. | 1st pg | 2nd pg | |||
| A | ||||||||
| Number of product units to be manufactured, pieces: - strategic unit No. 1 - strategic unit No. 2 - strategic unit No. 3 Direct costs for materials per unit of production, rub./unit: - strategic unit No. 1 - strategic unit No. 2 - strategic unit No. 3 Direct costs for materials - total, thousand rubles. Plus Desired stock of materials at the end of the period, thousand rubles. Less Inventory of materials at the beginning of the period, thousand rubles. The amount of costs for the purchase of materials - total, thousand rubles. |
After the direct material cost budget has been developed, or at the same time, two other direct cost budgets can be created. Direct labor costs are the piecework wages of the main production personnel, the amount of which directly depends on the quantity of products produced. Purpose direct labor cost budget- define variables salary costs in accordance with the previously compiled production budget. According to the rules of financial planning, it usually takes into account only direct labor costs, i.e. salary of the main production personnel. To determine the direct labor costs, it is necessary to calculate the cost of working time in man-hours, going to the manufacture of a unit of output, and the cost of 1 man-hour of working time at the average tariff rate (Table 11.5).
However, auxiliary workers, managers and foremen, controllers and other support personnel are also associated with production. His wage also included in production costs. Since these labor costs cannot be directly attributed to a specific type of finished product, they are called indirect (indirect) costs. Like support materials, indirect labor costs are included in either the general production budget (support staff salaries) or the management budget (administrative staff salaries). Indirect labor costs are attributed to the cost of individual products, distributing in proportion to the estimated rate of these costs per unit of output.
Budget of direct production (operating) costs is designed to establish the costs associated with those categories of production costs that are directly proportional to changes in the volume of production. Such production costs, depending on the specifics of the business, may include: electricity, water, some related materials. Direct operating costs include cargo insurance, forwarding and other costs associated with the delivery of goods. Usually these categories of expenses are taken into account as part of general production overhead costs. But if for the company these costs are critical (quite important, constituting a significant share of the total cost of production), it may be necessary to plan them separately from overhead costs.
Table 11.5
Strategic budget for direct labor costs
| Indicators | Rep. year | First year | Second year | 3rd year | ||||
| I sq. | II quarter. | III quarter. | IV quarter. | 1st pg | 2nd pg | |||
| A | ||||||||
| Number of units to be manufactured: - strategic unit No. 1 - strategic unit No. 2 - strategic unit No. 3 Direct labor costs per item, hours/unit: - strategic unit No. 1 - strategic unit No. 2 - strategic unit No. 3 Direct labor costs - total, thousand hours. Hourly tariff rate, rub./hour. Direct labor costs, thousand rubles: - strategic unit No. 1 - strategic unit No. 2 - strategic unit No. 3 Total direct labor costs, thousand rubles. |
A feature of the budget of direct production (operating) costs is the lack of accounting stock movements, since the latter are simply absent here. The composition of operating expenses, of course, will vary depending on the specifics of the industry. For example, for manufacturing structures, direct production costs may be the cost of electricity. For trade and purchasing enterprises in this category of costs there may be forwarding costs, cargo insurance, transportation costs, if they are tied as a certain percentage to the cost of a consignment of goods purchased for subsequent resale (Table 11.6).
Table 11.6
Strategic budget for direct manufacturing
(operating) costs
| Indicators | Rep. year | First year | Second year | 3rd year | ||||
| I sq. | II quarter. | III quarter. | IV quarter. | 1st pg | 2nd pg | |||
| A | ||||||||
| Volume of production, thousand units: - strategic unit No. 1 - strategic unit No. 2 - strategic unit No. 3 Cost (rate) of cost unit, rub./unit: - strategic unit No. 1 - strategic unit No. 2 - strategic unit No. 3 Production (operating) costs – total, rub.: - strategic unit No. 1 - strategic unit No. 2 - strategic unit No. 3 |
When drawing up a schedule for paying direct operating expenses, it must be borne in mind that some of these costs can be paid in the 100% prepayment mode (for example, insurance), and some - after using some resources (for example, electricity) to produce a certain volume of final products.
Budget for general production (overhead) expenses(Table 11.7) allows you to determine part of the semi-fixed costs required to produce the planned output. Such costs usually include various types of so-called general shop expenses or costs of a structural unit (business).
Table 11.7
Strategic budget for general production (overhead) expenses
| Nomenclature of expenses | Rep. year | First year | Second year | 3rd year | ||||
| I sq. | II quarter. | III quarter. | IV quarter. | 1st pg | 2nd pg | |||
| A | ||||||||
| 1. Planned direct labor costs (per hour) 2. Variable overhead rate (rubles/hour) 3. Total variable overheads, rubles. Including: 3.1. Auxiliary materials 3.2. Assistance salary. workers 3.3. Bonus fund 3.4. Motor electric power 3.5. Other variable expenses 4. Fixed general production expenses, rub. Including: 4.1. Depreciation deductions for shop equipment 4.2. Property insurance 4.3. Salary of controllers, foremen, heads of shops 4.4. Electricity for lighting 4.5. Workshop repair 5. Total overhead costs accrued (p.3 + p.4) 6. Total overhead rate (rubles / hour), p.5: p.1 |
General production costs consist of two groups:
Equipment maintenance and operation costs include:
1) depreciation production equipment And Vehicle;
2) current maintenance and repair of production equipment;
3) energy costs for equipment;
4) services of auxiliary industries for the maintenance of equipment and jobs;
5) wages of production workers servicing the equipment (repairers);
6) expenses for intra-factory transportation of materials, semi-finished products, finished products;
7) losses from downtime;
8) other expenses associated with the use of equipment.
General shop management costs include:
1) costs associated with the preparation and organization of production;
