Cost management program. Production cost management systems - abstract. Causes of the financial crisis at GRES

Production cost management systems

Industrial enterprises use the following basic methods of planning production costs:

direct account;

normative;

calculation and analytical;

parametric.

The simplest and least accurate is the direct counting method. With this method of planning the production costs of a unit of production, it is determined by dividing the total cost by the amount of manufactured products. The application of this method is possible only at enterprises producing homogeneous products, in connection with which the method is used very limitedly. In addition, it does not provide an indication of the costs of individual costing items.

The normative method for calculating the costs of production of products is used in enterprises where the accounting of changes in the actual costs of each type of resource per unit of a specific type of mass production product is clearly organized. It is based on the norms and standards for the use of labor, material and financial resources. At the same time, the norms and standards for the use of these resources should be progressive and scientifically grounded. Their values ​​need to be systematically reviewed.

The most accurate and perfect method for calculating the costs of production of products is computational and analytical. With this method, first of all, a comprehensive analysis of the state of production, possible changes in it is carried out. It studies what factors and how affect the cost of production. The standards and norms are based on technical, economic and organizational conditions of work in the projected period.

When calculating products of the same type, but different in quality, the parametric method is used. It consists in establishing patterns of change in production costs depending on the quality characteristics of products. So, the cost of a product is determined based on the cost of one kilogram, one ton of the structural weight of similar machines and equipment. Other indicators that are most typical for the given product may also apply. The same method can be used to determine additional costs for improving the quality characteristics of products.

Construction production, like other branches of material production, is a process of productive consumption of means, objects of labor and living labor. The consumption of these material factors leads to the formation of costs or production costs that form the cost of production.

Planning the production costs of construction work is an integral part of the production and financial activity plan, which it develops independently on the basis of construction contracts with customers, as well as contracts concluded with suppliers of material and technical resources.

The planned cost of construction work production costs is determined using a system of economically justified norms and standards approved in the prescribed manner, as well as engineering and economic calculations reflecting an increase in the organizational and technical level construction production as a result of the introduction of measures for new equipment and technology, improvement of its organization and management and other technical and economic factors.

To calculate the planned cost of production costs, planned cost estimates are drawn up, in which the costs are formed for the volume of work performed in the planned year on the object, taking into account the cost reduction due to measures to improve the technical and organizational level of construction production.

Thus, the planned cost of construction work for objects is determined as the difference between the cost of the planned volume of work established in the design and estimate documentation and the amount of cost reduction as a result of the implementation of measures and the amount of estimated profit.

The planned cost of the production costs of construction work as a whole for the organization is determined by summing up the planned cost of the production costs of work on objects.

At foreign enterprises, planning and accounting for production costs in terms of variable costs is widely practiced using the Direct-Costing method.

The essence of any concept should be reflected in its name. The name "direct costing", introduced in 1936 by the American D. Harison in his work, means direct cost accounting. It does not fully reflect the essence of the system; the main thing in the direct costing system is the organization of the limiting accounting of variable and fixed costs and the use of its advantages in order to increase the efficiency of management.

Currently, direct costing involves accounting for production costs not only in terms of direct variable costs, but also in terms of variable indirect costs. Therefore, there is a certain conventionality of the name here.

Having defined the essence of direct costing as a system management accounting based on dividing costs into fixed and variable costs depending on changes in production volumes, we will formulate the main features inherent in it.

The main feature of direct costing is that the cost of industrial products is taken into account and planned only in terms of variable costs. Fixed costs are collected in a separate account and, at specified intervals, are debited directly to the debit of the financial results account, for example Profit and Loss.

Fixed costs are not included in the calculation of the costs of production of products, but as the costs of a given period are written off from the profit received during the period in which they were made. Work in progress is also estimated at variable costs.

However, in accordance with International Accounting Standards, this one is not used for external reporting and tax calculation. It is used in internal accounting for technical and economic analysis and for making operational management decisions.

With the direct costing system, the scheme for constructing income reports is multi-stage (table 1.1). They contain at least 2 financial indicators: marginal income and profit.

Table 1.1

Direct costing income statement schema

The income statement does not have to be two-stage. If variable costs are divided into production and non-production, then this income statement will be three-stage. In this case, at the first stage, the production marginal income is determined as the difference between the volume of products sold and variable production costs. At the second stage, the marginal income for the company as a whole is determined as the difference between production marginal and non-production variable costs. At the third stage - the profit of the company by subtracting the amount of fixed costs from the total amount of marginal income.

Establishing relationships and proportions between costs and volume of production is of great importance here. Using the methods of correlation and regression analysis, mathematical statistics, graphic methods, it is possible to determine the forms of dependence of costs on the volume of production or load of production facilities; build estimated equations, receive information about the profitability or loss-making of production, depending on its volume; calculate the critical point of the volume of production; predict the behavior of production costs, or certain types costs depending on volume or capacity factors, i.e. solve strategic tasks of enterprise management.

Direct costing allows management to focus on the change in marginal income both for the enterprise as a whole and for various products; to identify products with greater profitability in order to switch mainly to their production, because the difference between the selling price and the amount of variable costs is not obscured as a result of writing off fixed costs to the cost of specific products. The system provides the ability to quickly reorient production in response to changing market conditions.

In the statement of financial results compiled under the direct costing system, you can see the change in profit due to changes in variable costs, sales prices and the structure of products.

The information received in the system allows you to find the most advantageous combinations of price and volume, to pursue an effective price policy. In a market economy, direct costing also provides information on the possibility of using dumping in a competitive struggle. This technique is used during periods of temporary reduction in demand for products to conquer the sales market.

All of the above indicates that direct costing is an important element of marketing - an enterprise management system in a market and free competition.

Recently, there has been a steady upward trend in the share of fixed costs. Therefore, the requirements for the validity of planning and rationing the values ​​of these costs are increasing. Direct costing allows you to focus on solving these issues, since the amount of fixed costs for a given period is shown in a separate line in the income statement, and, thus, their influence on the amount of the company's profit is especially clearly visible.

In addition, direct costing makes it possible to control fixed costs more quickly, since standard costs or flexible estimates are often used in the cost control process.

Direct costing expands the analytical capabilities of accounting, and there is a process of tight integration of accounting and analysis.

However, the organization of management accounting according to the direct costing system is associated with a number of problems that arise from the features inherent in this system.

1. Difficulties arise in dividing costs into fixed and variable costs, since there are not so many purely fixed or purely variable costs. Basically, the costs are semi-variable, which means that difficulties arise in their classification. In addition, the same costs may behave differently in different environments.

2. Opponents of direct costing believe that fixed costs are also involved in the production of this product and, therefore, should be included in its cost. Direct costing does not answer the question of how much the manufactured product costs, what is its total cost. Therefore, additional distribution of conditionally fixed costs is required when it is necessary to know the full cost of finished goods or work in progress.

3. Keeping records of production costs for a reduced nomenclature of articles does not meet the requirements of domestic accounting, one of the main tasks of which until recently was the preparation of accurate calculations.

4. It is necessary in the prices set for the products of the enterprise to ensure coverage of all costs of the enterprise.

To draw up a consolidated budget, companies use data from a complex regulatory accounting method (standard-direct-costing) - it is such a system for keeping records of the company's operations, in which at all stages of the financial cycle and in the context of all main types of activities (types of products), allocated as an independent object of budget planning, the following are recorded:

a) planned (budget) indicators,

b) actual indicators,

c) deviations of actual indicators from planned ones.

The second feature of the complex regulatory accounting method is a clear distinction between conditional variables and conditionally constant ones for the purposes of management planning and, first of all, for information support of the cost-volume-profit analysis in drawing up and analyzing the execution of the sales budget, which, we recall, is the starting point for modeling the consolidated budget. The anglicized name of the complex regulatory accounting method “standard-direct-costing” just emphasizes two key aspects on which this accounting system is based.

Standard costing (standard- costing) - normative method of accounting for costs and financial results. This method is based on the fact that the accounting of costs and revenues is carried out according to standard (planned) indicators, and deviations from planned norms are accounted for separately and written off at the end of the budget period to the corresponding stage of the financial cycle, as a result of which the actual costs and financial results of the enterprise are established.

It should be noted that the planned indicators in the "standard costing" system, they are recorded twice:

First time before the start of the budget period in the planning documentation of management services (economic planning management, financial and economic management, UKS);

Second time during and after the end of the budget period after the fact performing business transactions in the accounting of the enterprise.

This approach is not accidental, because it allows one to isolate deviations from the plan and the effect of deviations on financial results the activities of the enterprise in the context of individual stages of the financial cycle and individual business transactions. The fact is that various types of deviations from planned indicators have a different effect on the activities of the enterprise, depending on the time of the business transaction and the stage of the financial cycle to which it belongs. So, deviations in the procurement budget simultaneously affect:

Increase in the book value of material working resources;

- an increase in the actual budget of production costs compared to the plan;

increase in production costs of release;

increase in production costs of sale;

Depending on how much of the raw materials and materials purchased in this budget period as of the end of the budget period remained in the warehouse, was written off into production, “materialized” as part of the production costs of the manufactured and sold products. A high-quality plan-fact analysis of costs and their effect on the final financial results is possible only if there is regulatory accounting as an integral element of accounting during the budget period .

Perhaps the most effective method of solving interrelated tasks for the purpose of operational and strategic planning is the operational analysis called Costs-Volum-Profit-CVP, which tracks the dependence of business financial results on costs and volumes of production and sales. The key elements of operational analysis are: operational leverage, profitability threshold, and the financial strength of the enterprise. Unlike external financial analysis, the results of operational (internal) analysis may constitute a trade secret.

The action of the operational (production, economic) leverage is manifested in the fact that any change in sales proceeds always generates a stronger change in profit.

In practical calculations, the ratio of the so-called gross margin (the result from sales after reimbursement of variable costs) to profit is used to determine the strength of the impact of operating leverage. Gross margin represents the difference between sales revenue and variable costs. This indicator in the economic literature is also designated as the amount of coverage. It is desirable that the gross margin be sufficient not only to cover fixed costs, but also to generate profits.

Operating Leverage Strength = Gross Margin / Profit

The operating leverage is always calculated for a specific sales volume, for a given sales revenue. Sales proceeds change - so does the operating leverage. The strength of the influence of the operating leverage depends on the average industry level of capital intensity: the higher the cost of fixed assets, the higher the fixed costs - this, as they say, is an objective factor.

At the same time, the effect of operating leverage can be controlled precisely by taking into account the dependence of the strength of the leverage on the value of fixed costs: the higher the fixed costs and the lower the profit, the stronger the operating leverage.

When the revenues decrease, the operating leverage increases. Each percentage decrease in revenue then gives a larger and larger percentage decrease in profits. This is how the formidable power of the operating lever manifests itself.

With an increase in sales proceeds, if the profitability threshold (cost-recovery point) has already been passed, the impact of the operating leverage decreases: each percentage of revenue growth gives a smaller and smaller percentage of profit growth (while the share of fixed costs in their total amount decreases. a jump in fixed costs dictated by the interests of further increasing revenue or other circumstances, the company has to pass a new threshold of profitability. profitability threshold.

With a decrease in the company's income, it is very difficult to reduce fixed costs. Essentially, this means that a high specific gravity fixed costs in their total amount indicates a weakening of the flexibility of the enterprise. If it is necessary to leave your business and move to another field of activity, it will be very difficult for an enterprise to diversify abruptly both in the organizational and especially financial sense. The higher the cost of tangible fixed assets, the more the company “gets bogged down” in its current market niche.

Moreover, the increased share of fixed costs increases the action of the operating leverage, and the decline in business activity of the enterprise translates into multiplied profit losses. We can only console ourselves with the fact that if revenue is still growing at a sufficient pace, then with strong operating leverage, the enterprise, although it pays the maximum amount of income tax, is able to pay solid dividends and provide financing for development.

Thus, in the current market management system, the cost of production of products (works, services) is one of the main qualitative indicators of the activities of economic entities. The financial results (profit or loss), the rate of expansion of production, and the financial condition of economic entities depend on the level of production costs. As a result, it is important for an enterprise to choose an effective method of planning and cost accounting, so that, when analyzing production costs, to find out the trends in the change in this indicator and to determine the factors influencing it. Therefore, the management of production costs is directly related to the implementation of the enterprise planning, control and management decision-making functions.

Management costs production at the enterprise in order to reduce them ...

Management, in the broad sense of the word, is understood as a purposeful impact on any controlled object. Consequently, the concept of "management" is a complex category that acts as a category of the system. If "management" is applied to such an object as the economy, then in principle it can be identified with the concept of "economic mechanism" ("the mechanism of economic management"), because managing the economy without using all the structural elements of the latter (planning, economic levers and incentives , organizational structures), impossible. According to control theory social production, there are three groups of management methods, called organizational and administrative, economic, moral and psychological. It is more intelligible to call them methods of coercion, motivation and persuasion. Cost management is a means of achieving high economic result... It is not just about reducing costs, but extending to all controls. Cost management is based on the theory of enterprise economics, technology and organization of production, planning, accounting, personnel management, product quality management, technical and economic analysis of the enterprise and other areas of knowledge. Production costs represent a cost estimate of the products used in the production process natural resources, raw materials, materials, energy of all types, fixed assets, labor resources as well as other production costs. The process of changing costs can be controlled, since they depend on the volume of labor and material resources, technology, prior art, organization of production and other factors. The following activities are related to the production cost management system: 1. Analysis of the cost of the main types of products. The analysis is aimed at determining changes in production costs in dynamics as a whole for the enterprise and for each main direction economic activity, types of work, dividing them into elements and cost items, identifying changes in each element or each article, establishing their relationship in a single whole and the degree of their significance in the overall change in production costs. Here, the main factors that affect individual elements and cost items as a whole, production costs and production costs are identified. First of all, the influence on the costs and unit cost of the productive indicators of economic activity, the system of factors that form these indicators, as well as such a combination of factors that leads to an increase in production at the lowest cost per unit of output are determined. 2. Determination of the standard level of costs for the production of basic types of products. Calculations of standard costs allow you to visually represent the required amount of production resources in comparison with the actually consumed. The development of cost standards in the enterprise, especially when drawing up a business plan, should be carried out according to options that characterize different levels of production. 3. Determination of the actual costs of production of the main types of products. To calculate the cost, various methods are used, such as by process, by process, by order, and by standard. The method used in the enterprise should be reflected in the accounting policy of the enterprise. Formation process actual cost products can consist of several stages: - primary accounting of production costs. - assignment of direct costs to specific objects of calculation; - accumulation and distribution of overhead costs by type of product, such as general production and general business expenses. 4. Calculation of the forecast of production and total cost of production. Forecasting allows, on the basis of studying the trends in changes in production costs, identifying patterns and quantitative relationships between the main factors, to establish quantitative parameters of cost indicators for the future. Enterprises most often use following methods planning of production costs: normative, calculation and analytical, direct account. The normative method is a planning method based on the application of norms and standards of production costs to substantiate planning, program and forecast documents. The essence of the calculation and analytical method lies in the fact that, based on the analysis of the achieved value of the cost of production, taken as the base, and the indices of its change in planned period the planned value of this indicator is calculated. The simplest and least accurate is the direct counting method. With this method of planning the production costs of a unit of production, it is determined by dividing the total cost by the amount of manufactured products. 5. Development of measures to minimize the cost of production for the future. The main measures to reduce the cost of production include: compliance with the economy in all areas; saving resources; reducing the cost of maintaining the management staff; reduction of losses from marriage; increasing labor productivity; introduction of modern technology, improvement of technology, automation of all work processes; right choice suppliers and contractors; market research, etc. Priority areas for minimizing costs are developed on the basis of actual costs and calculations of cost standards. Moreover, special attention should be paid to increasing the level of costs of using the available production and technical potential.

Management of production costs and sales of products in order to minimize them is an integral part of the management of the enterprise as a whole. To solve this problem, they develop general comprehensive program, which depends on the specifics of the enterprise, the current state and development prospects, taking into account the changed circumstances, and it reflects the following Events:

For a more rational use of material resources:

introduction new technology and waste-free technology, which allows more economical use of material resources;

improvement regulatory framework enterprises;

use of new materials;

complex and rational use of raw materials and materials;

use of production waste;

improving product quality and reducing rejects, increasing incoming control over the quality of incoming material resources.

To improve the use of fixed assets:

release of the enterprise from unnecessary machinery and equipment;

usage production facilities enterprises by at least 80 - 90%.

renting out property;

organization of the PPR system, direction to improve the quality of maintenance and repair of fixed assets;

ensuring a greater load of machines and equipment by increasing the number of shifts in the operation of equipment and reducing intra-shift downtime;

raising the level of qualifications of personnel serving machinery and equipment;

application of accelerated depreciation of the active part of fixed assets;

replacement and modernization of outdated equipment, introduction of more advanced machines and equipment, etc.

To improve the use work force:

determination and maintenance of the optimal number of personnel, including the reduction of the number of administrative and service personnel;

raising the level of qualifications;

increase in labor productivity, which should outpace the growth of average wages;

application of progressive systems and forms of remuneration;

improving the regulatory framework;

improving working conditions and improving safety;

mechanization and automation of all production processes;

providing motivation for highly productive work, etc.

To improve production and labor:

deepening of concentration, specialization, cooperation of production;

introduction of a brigade form of organization of production and labor;

introduction scientific organization labor (labor): application of advanced methods and techniques of ore;

preparation of the workplace, its full load, etc.

The planning and implementation of individual measures to reduce production costs give a certain effect, but do not solve the problem as a whole, therefore, only the implementation of a comprehensive program will minimize costs in full.

Example... The company acquired 9 machining centers (OC) capable of performing turning, milling, and drilling operations for the manufacture of product A. The introduction of such equipment makes it possible to carry out complex of measures to minimize costs:

rational use of material resources: modernization of the technical process based on the OTs will reduce the material consumption of products by reducing the technological allowances and the weight of blanks by 14%. In turn, this provides savings in tool consumption, electricity and low production waste. In addition, the accuracy and quality of parts processing increases, the likelihood of rejects is minimized;

improving the use of fixed assets: the productivity of the new equipment is 20% higher than the old one. Under the terms of the sales contract, warranty service and repair of the OC will be carried out by the manufacturer for five years. Accelerated depreciation method will be applied to new equipment.

The introduction of the OC frees up eight turning, three milling and two drilling machines, decisions were made on them:

write off the machines that have worked out their useful life: four lathes, one milling;

sell or lease machines: two lathes, one milling and one drilling at the residual value (they have little wear and tear);

the remaining released equipment should be transferred to the balance of the mechanic department for the manufacture of spare parts for the company's machines and equipment.

Organization of work of the OC in three shifts will increase the volume of production by 2 - 3 times. Therefore, it is possible to resolve the issue of either increasing the volume of product A, or introducing the manufacture of new types of products;

improving labor utilization: technology based on OTs will require improving the structure of production workers: reducing the number of turners, drillers, milling operators and replacing them with operators of machining centers based on higher technical education. One OC operator is capable of servicing 2 - 3 machines, therefore it is necessary to train four operators;

improving the organization of production and labor: it is advisable to organize a team for the operators of the OC, since this creates conditions for increasing internal mutual assistance and the effectiveness of the work of the team, which will increase the amount of bonuses to employees by 20% (subject to fulfillment or overfulfillment of the plan).

Such a set of measures will ensure a reduction in production costs and will give a significant economic effect.

Cost of products (works, services)

Cost value

1. Costing

Assignment of grouping costs by economic elements

Assignment of cost classification by costing items

Describe the article of the calculation "Basic raw materials and materials"

How do nominally variable costs differ from nominally fixed costs?

1. What costing methods do you know?

The peculiarity of "direct costing" and its advantages over other methods of calculation

What is included in margin income?

How do costs change with production volumes?

CONCLUSIONS. This topic allows the student to clearly understand that the cost price is based on the costs associated with the production and sale of products, which are subdivided into conditionally constant and conditionally variable. With an increase in production volumes, the share of conditionally fixed costs per unit of production decreases, and the cost of a unit of production decreases accordingly. Purposeful activity to minimize costs (cost) leads to an increase in profits.

THEME 4 ∙ 2

PRICE AND PRICING

When studying this topic, the student gains knowledge that, in market conditions, price is the most important economic lever in increasing production efficiency and has a direct impact on production, distribution, exchange and consumption.

A STUDENT SHOULD:

Functions and types of prices

Price structure

Pricing procedure

Know

on the antimonopoly policy of the state

Have an idea

Manufacturer's wholesale prices

Be able to count

Price

Keywords

Free prices. State prices

Manufacturer's wholesale prices. Wholesale selling prices

Retail prices

Purchase price. Tariffs

Antitrust Policy

Pricing

and terms

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Enterprise cost management is central to financial management because it deals with the fundamental premise of any viable business - product profitability. Cost management needs to be done to maximize profit.

As you know, costs are any expenses incurred by a company in the course of its activities.

Managing them involves applying a systematic approach to determine real costs; understanding the cause of their occurrence; taking measures to improve the cost structure of the enterprise based on the analysis and cost reduction, as well as the implementation of the correct strategic policy; tracking opportunities for cost savings.

In the daily activities of many Russian enterprises, these processes often occur, but they are not meaningful and purposeful.

However, it is systems approach, including analysis and measurement of costs, will allow you to correctly understand and evaluate the effectiveness of activities, and not only the overall efficiency of the enterprise; but also the effectiveness of individual products or assortments, the effectiveness of decision-making by management.

By understanding the relationship between enterprise costs and efficiency, cost control can be established to maximize efficiency, which in turn will lead to increased profitability, competitive pricing, increased sales and better resource allocation.

Unfortunately, many executives currently do not see the added value of effective management costs, namely: more cost-competitive goods, and thus increased sales opportunities; correct prices for products; better resource allocation; better management enterprise; information on indicators for individual products and business units.

As a result of cost control, quality will increase management activities, the best guiding decisions will be made.

In turn, the consequences of ineffective cost management (waste Money; setting the wrong prices for products - prices are too high compared to market prices, and this negatively affects sales; targeting resources to “wrong” products, activities, or customers; management does not know how the company can reduce its costs; increased costs because they are not tackled or managed; drop in profitability for unknown reasons) inevitably leads to bankruptcy.

Thus, the positive aspects arising from tight control over the costs of the enterprise are obvious.

That is why in the modern scientific and practical literature there are already many developed methods for managing costs, up to a list of possible positions, according to which their value is usually reduced at many enterprises. However, despite this, two important questions remain:

• 1. How to systematically apply cost management techniques and focus efforts so that you can quickly identify and implement those cost reduction measures that will bring the greatest benefit enterprise?
• 2. How can you optimize a specific production strategy in terms of costs in order to then correctly set prices for products and sell them at a profit?

Answering the questions asked requires the use of costing models ( necessary condition- the ability to measure the costs of production of certain types of products).

Cost measurement methods are often referred to as “cost models”. Three basic models are widely used in the world.

Model I - “Costing model with full distribution of costs by category”. IN Soviet time the law required businesses to determine the cost of a product by allocating all of the costs of the business or a specific production line across the entire product range.

This model can be useful for transferring costs to intermediate users and consumers, as well as for calculating tax liabilities in a planned economy.

However, it does not provide an accurate or sensitive measuring tool for determining which products are profitable and which are damaging.

Obviously, under the conditions market competition those enterprises that will be able to reduce their costs per unit of production to a minimum will be able to sell it at a lower price. Those who fail to lower their costs will lose customers or incur losses.

Another method used by some Western companies is to select some of the overheads and assign them to a specific product.

This method is called the “Eligible Costing Model”.

Eliminate costs are those overheads that could have been avoided if a given product had been completely discontinued. financial investment competitiveness

This method provides a more accurate estimate of the cost of an item than the full cost categorization method, but it still does not accurately measure all of the costs associated with that item.

Despite the positive aspects of this method, for Russian enterprises in a transition period, the most preferable is the third method, which is often called the “Model of calculating the cost of variable costs”.

Its second name is the “Margin Calculation Model”. It provides accurate accounting of the costs associated with the production of a unit of a specific product. It is this model that is most often used in the West.

The variable costing method determines the cost of each additional unit of a given type of product and focuses on how the cost changes when the volume of production changes.

It consists in determining which costs are directly attributable to a given product (variable costs).

Once the variable unit costs are known, they can be subtracted from the price of the item to determine how much of the price is available to cover the overhead. This amount, included in the coverage of fixed costs, is called profit on variable costs.

The variable costing model determines how much is spent on the production of each additional unit of production, and how much it contributes to cover fixed costs, what kind of profit it gives.

Thus, if variable costs are the cost of those production factors, which are necessary for the manufacture of a unit of production, for example, lumber for the production of furniture, then the profit on variable costs is: unit price minus the amount variable costs its production.

It is this technique that will make it possible to quickly and clearly determine the "sensitivity" of the cost when the volume of production changes.

Moving further in the analysis and cost reduction, when considering how to identify specific areas for cost reduction, whatever type of analysis is used, the following positions will always be critical:

• 1. Is it significant this article expenses?
• 2. Is the article controllable?

It is quite obvious that significant savings will not come from changing the item of expenses, which is 1% of all expenses of the enterprise.

On the other hand, a large but uncontrolled item does not provide a practical opportunity for savings in the form of cost savings. In this case, while taking into account the high costs, management should focus on those that can be influenced.

Thus, cost management is a difficult but completely solvable problem. The choice of a successful strategy in this area will allow any enterprise to achieve its goals in terms of maximizing profits, using, as is often noted, "lower-order advantages", namely, cost reduction. However, it is this parameter that will directly (and not indirectly) affect the amount of profit received.