Journal of Economics

1. Classification of costs to determine profit.

Inbox – is the cost of purchased and available resources, which should bring income into the future. >
These costs are reflected in the asset balance in the inventory. They are moving in the expenses of future periods.

Past – is expended resources that have generated in this and lost the ability to generate revenues in the future.
These costs are recorded as expenses in the profit and loss account of the current reporting period.

2. Types of cost.

1. Direct material costs: (direct costs, variable costs, basic operating expenses.)
2. Direct labor costs: (same characteristics as that of the previous block)
3. Production costs: (indirect, fixed production costs, conditional constants.)
4. Overheads: (indirect, non-productive expenditure, conditional constants.)
5. Selling expenses: (indirect, non-production costs, fixed and variable).

Traditionally, on the basis of articles costing divided into the following types of costs:

1. Guild cost (the sum of the first 10 articles costing);
2. Offsite costs (the sum of 13 articles costing);
3. Full cost.

In modern conditions it is expedient to group the costs as follows:

1. Cost of sales (the sum of the first three blocks)
2. Total production cost (the sum of the first 4 blocks)
3. Full cost.

3. Approaches to the definition of profit.

There are currently two main approaches to the calculus of costs and determination of earnings:

1) approach focuses on improving methods of calculation and control systems costs for each product.Characterized by dividing the total cost of direct and indirect costs, followed by grouping by type of expenditure.Accounting systems and cost management provide a map of our expenses;

2) approach aims to create and improve systems for managing costs and creating decision-making techniques, depending on market conditions and other external factors. It is characterized by dividing all expenses into fixed and variable. Cost accounting system provides a mapping depending on the size and cost structure of finished products, thus calculates the cost based on partial costs.

4. Profits.

1) Income and expenses from ordinary activities.
2) Operating expenses and revenues.
3) Non-operating income and expenses.
4) Extraordinary income and expenses.

To determine the profits previously obtained profits from sales is adjusted as follows.

1) nn (profit on sales)

2) + – Operating income (risk):

+ -% Receivable (payable)

+ – Income from participation in other organizations

+ – Other operating income.

3) + – Non-operating income (expense)

= Profit before tax

- Income tax

= Profit from ordinary activities

4) Extraordinary income (expense)

= Net Income.

5. Profitability and performance.

The economic effect – it’s an absolute figure, which is calculated as the difference between revenues and expenditures, which result in a profit. Such indicators are profits.