Murashevska A., Bondarenko N., Reutskova O.
Oles Honchar Dnipropetrovsk National University, Ukraine
THEORETICAL APPROACHES TO THE ESSENCE OF PRODUCT COST
Introduction. In unfavorable conditions prevailing today in Ukraine under the influence of the global economic crisis, the issue of reducing costs and saving resources of any manufacturing businesses are brought to the foreground. Most companies can retain their market position thanks to skillful management of the production process and successful planning of the cost of manufactured products. But in order to manage effectively, you need to understand its essence, know all the components of this category and its impacts on the level. Unfortunately, according to the research, such popular term as "cost of production" is used in practice without proper understanding of the concept. For most companies the cost of production is the cost required to manufacture a type of product. But the characterization of this category is not complete. Moreover, scientists also debate which definition of production costs discloses its economic content in full.
The most extensive researches of cost in both historical and economic terms are done in the writings of such scholars as T. Karpov, A. Yaruhova, V. Zavgorodniy, V. Panasyuk, V. Myakota, T. Voitenko, P. Armless, I. Matskevichus, P. Novchenko, V. Paliy, V. Parkhomenko, V. Sopko, S. Stukov, M.G. Chumachenko and others.
Task setting. The aim of the study is the substantiation of theoretical principles of product cost formation.
Results and their substantiation. The studies have shown that there no consensus about what the cost of production is. However, detailed analysis of the most common approaches to the definition of this concept will make it possible to identify one that would disclose the economic content and provide a deeper understanding of the term.
The first debates among scientists about the economic category of "cost" appeared when all the expenses associated with manufacturing production began to appear in financial form, it was necessary to count the product cost and cost value of returns in money terms or losses from its implementation.
The definitions of production costs category given in the works of our economists were not significantly different. Besides, F. Butynets [1, p. 301] defines the cost of production as operating costs on production and sales of goods in money terms.
This view is supported by V. Myakota [2, p. 27], who states that production costs is one of the main economic indicators of industrial enterprises and expresses all costs of businesses connected with manufacturing and marketing in money terms.
According to L. Napadovskaya [3, p. 139] the cost of production includes all the expenses for both manufacturing and sale of products because it shows how effectively the company uses all kinds of resources. N. Tkachenko [4, p. 627] also defines the cost as money term of direct costs of an enterprise associated with the production, work performance products. According to T. Voitenko [5, p. 89], the cost is formed directly in the company and reflects the individual expenses and production conditions, concrete results of industrial enterprise management. B. Sopko [6, p. 341] notes that used in the production process all the different substances to manufacture a new product create the concept of expenses, but the money term of amount cost of expenses of a specific product defines the concept of cost.
V. Panasyuk [7, p. 132] defines the cost of production as the central object of management and quality indicators, which characterizes the efficiency of an enterprise. In opinion of T. Karpova, ".. the cost (expenses) is the value of resources used for particular purposes in money terms" [8, p. 194].
The analysis of the studies suggests that cost is the amount of all expenses connected with not only simple reproduction, but also with getting business income. Thus, the term "cost" should be regarded: as an economic category and as an indicator of economic activity.
Cost as an economic category characterizes, first of all industrial relations between entities and the state concerning the use of labor in manufacturing process, objects of labor and natural resources. Its basis is the social production costs, including the cost of the consumed means of production (raw materials, fuel, depreciation of fixed assets) and labor. The money spent on production and included in the cost must be reimbursed as a result of simple reproduction.
Cost as an indicator of economic activity reflects the costs of a particular organization in manufacturing these products in money term. Therefore, it is the most important quality indicator of the organization. According to the level you can conclude about the effectiveness of productive potential (labor force, material resources), organization and production technology.
Cost figure is widely used at all levels of economy. It is the base for pricing of manufactured products and is used to determine the limit price, reasons for decisions on the volume and the structure of output.
At the level of organization cost is the criterion which helps to judge the necessity of a particular kind of production that involves the comparison of costs with its revenues, profits from sale of products and services. Internal calculation requires the calculation of the cost of not only an organization as a whole, but also in terms of its business units. At this level of management cost is one of the most important parameters, which determines the effectiveness of management in different formations: actual unit cost is compared with planned one(estimated), fund saving effect and sizes of material stimulation of workers that provide cost cutting are defined.
Therefore it has been stated that from an economic point of view the cost of production characterizes the use of enterprise resources, in money terms for production and sales, as an indicator of economic activity it is a qualitative indicator of an enterprise effectiveness. Due to the introduction of national standards the system of national accounting and costing has significantly changed, that's explained by fundamentally different approaches to stock evaluation are displayed in the forms of external reporting.
It was found that the cost of production is not currently economically justified and cannot reflect the level of actual production costs both the whole of output and its particular forms in full. The actual cost of production cannot be the basis for determining the selling price, but it is the mechanism for evaluation of the cost of manufacturing products and in many cases is a measure of quality of plan drafting and regulatory calculations. As a result, economists do not know the cost of a unit of output, which product made a profit, which one made losses.
Conclusions. Having reviewed the approaches to the economic essence of the production cost we can come to the following conclusions:
- In accounting the most appropriate definition of the notion "production costs" which reveals economic meaning, is that the cost of production – an important economic category which reflects the level of current cost of production and sale of products expressed in money terms;
- Business owners, accountants and analysts are interested in the evaluation of costs of product units at all stages of an enterprise activity;
- Cost of production reflects the level of expenses on its production and comprehensively describes the efficiency of all its resources, organizational and technical level of production, the level of labor productivity.
Literature:
1. Butynets F.F. Accounting / F.F.Butynets, L.V.Chizhevskaya, S.L. Birch. – Zhitomir: ZHITI, 2000. – 672 p.
2. Myakota B. Cost of production: from production to sales / V. Myakota. – [2nd ed., Revised. and add.]. – X.: 2006. – 268 p.
3. Napadovskaya L. Managerial Accounting: [monograph] / L.V. Napadovska. – Kiev: Science and Education, 2000. – 356 p.
4. Tkachenko N.M. Business Accounting, tax and accounting [use]. – K.: Alert, 2006. – 1080 p.
5. Voitenko T. All about cost accounting in manufacturing company / T. Voitenko, N. Voronaya. – X.: Factor, 2005. – 266 p.
6. Sopko B. Accounting: [teach. manuals] / B. Sopko – K.: MBK, 2000. – 578 p.
7. Panasyuk V.M .Vitrati virobnitstva: upravlіnsky aspect / V.M. Panasyuk. – Ternopil: Aston, 2005. – 288.
8. Karpova T.P. Management accounting: a textbook for high schools / T.P. Karpovа. – M.: UNITY, 2003. – 350 p.
9. Efremova A.A. Sebestoymost: from upravlencheskoho record the cost of accounting to record the rashodov / A.A. Efremova. – Moscow: Top, 2006. – 208 p.
10. Osadchaya G.G. Cost: aspects of accounting, tax and management accounting / G.G.Osadchaya, I.Vlasenko. – Accounting and Finance AIC. – 2011. – № 3. – S. 34–38.