Course work, break-even conditions, margin of financial strength of the organization. Calculation of break-even sales volume and margin of financial strength Planning of break-even production of the enterprise's margin of financial strength

Break-even analysis is: 1. Calculation of the required volume of product sales, at which revenue is equal to gross costs and profit is zero. 2. Calculation of sales growth, in which the influence of factors that reduce profits is compensated by the influence of factors that increase profits. Break-even is the result of the activity of a company, firm or individual, in which income exceeds expenses or is equal to each other. Break-even analysis is now widely used to determine: the critical production volume for break-even operation; dependence of the financial result on changes in one of the elements of the ratio; reserve of financial strength of the enterprise; production risk assessments; the feasibility of own production or purchase; minimum contract price for a certain period; profit planning, etc. Margin of financial strength - the ratio of the difference between the current sales volume and the sales volume at the break-even point to the current sales volume, expressed as a percentage.

31. The essence of pricing at an enterprise, types of prices.

Price represents the amount of money that a buyer pays to a seller in exchange for a product. Most often, an enterprise using a pricing strategy can achieve the following: goals: 1. maintaining a stable position in the market; 2.expansion of market share; 3.maximizing profits and increasing the level of profitability of sales; 4. maintaining and ensuring the solvency of the enterprise; 5.gaining leadership in the market; 6.expanding the export capabilities of the enterprise. Depending on the area of ​​application, the following main ones are distinguished: types of prices: 1.wholesale prices – used when selling products between legal entities. 2.purchasing prices are set for agricultural products purchased from agricultural producers. 3.retail prices – prices at which goods are sold to the public. 4.estimated construction prices – are used during construction and installation work, their value is determined on the basis of estimated calculations and standard profit. 5.tariffs for services – like wholesale prices, they consist of cost and profit. 6..world prices - used in foreign trade. There are world prices for imported and exported products.

34. The relationship between revenue, expenses and profit from sales of products. The basic equation of microeconomics (economics at the enterprise level) can be presented as: Revenue = fixed costs + variable costs + profit, Loss - or formalized: S= F+ V+ P, S-V=F+P, where the difference (S-V) between revenue and total variable costs is called marginal income or gross margin. In particular, it depends on sales volume revenue (S), total variable costs (V) and profit (P). As can be seen from the figure, with zero sales volume, revenue and variable costs are equal to zero, but there are still fixed costs. An enterprise, selling products in a volume equal to Q min, has neither profit nor loss. It is at this value of sales volume that graphs S and C intersect. The intersection point is called break-even point.

36. 37. Functions and main types of profit. Factors influencing the amount of profit. In an economic system, profit does the following: functions: 1.is an indicator of the efficiency of the enterprise; 2.has a stimulating function, because is the main element of the financial resources of the enterprise; 3. is a source of formation of budgets at various levels. Concepts (types) of profit: Gross profit – the amount of profit (loss) from the sale of products (works, services, property of the enterprise) and income from non-sales operations, reduced by the amount of expenses for these operations. Profit (loss) from sales of products, works (services) is defined as the difference between sales revenue without VAT and excise taxes and production and sales costs included in the s/s. Relationship between indicators: B=P+P; P=V-R; P=V-P Profit before tax (balance sheet) – the final financial result reflected in the balance sheet of the enterprise and identified on the basis of the accounting of all business transactions of the enterprise and the assessment of balance sheet items. Taxable income – calculated within the framework of tax accounting (used to determine the taxable base). Net profit – profit remaining in the enterprise after paying all taxes and used for production development and social needs.

38. The procedure for the formation, distribution and use of enterprise profits. The object of use is profit before tax. Its division means the direction of profits to the budget and by items of use to enterprises. Only the part of the organization's profit that goes to the budget is regulated by law. The basic income tax rate is 24%. At enterprises, net profit is subject to distribution. The state does not directly intervene in the process of distribution of net profit, but by providing tax incentives it can stimulate the distribution of resources for capital investments, charitable purposes, environmental activities, etc. The distribution of profits is regulated in the statutory documents. In accordance with the charter, funds are created: consumption, savings, social sphere. If funds are not formed, then for the purpose of planned expenditure of funds, estimates are drawn up: for production development, social needs, material incentives for employees, and charitable purposes.

Breakeven- the result of the activity of a company, firm or individual, in which income exceeds expenses or is equal to each other. In order to determine the volume of production at which the costs of the enterprise are covered, a break-even analysis is carried out. Also, this analysis is carried out in order to identify the optimal volume of production for the enterprise and the pace of its development, which is important for ensuring the solvency and break-even of the enterprise.

Break even is sales revenue that covers the sum of fixed and variable costs for given production volumes and capacity utilization rates, and the profit is equal to 0. The break-even point can be calculated by 2 methods:

• - analytical
• - graphic

Analytical method for determining the break-even point:

1) calculation of marginal income - the result from the sale of products after reimbursement of variable costs:

Contribution Margin = Sales Volume – Variable Costs

• 2) calculation of the marginal income ratio: TO MD = Marginal income / Sales volume as a percentage
• 3) the break-even point can be calculated both in value terms (rubles) and in physical terms (pieces):

TBCOST = Fixed costs / Marginal income ratio

TBNATUR = Fixed costs / Marginal income per unit of production

Knowing TB, it is not difficult to calculate the margin of financial stability. Financial strength margin represents the difference between the actual level of sales and the critical sales volume, and expresses the value upon reaching which the volume of revenue may begin to decline and the company will incur losses. It is defined as a percentage of expected sales: FFP = revenue from sales according to plan / threshold revenue from sales

A company begins to make a profit when actual revenue exceeds a threshold. The greater this excess, the greater the margin of financial strength of the enterprise and the greater the amount of profit. The financial safety margin indicator is used to assess production risk, i.e. losses associated with the structure of production costs.

The higher the financial strength indicator, the lower the risk of losses for the enterprise.

Sensitivity Analysis involves tracking how profit changes in response to changes in one of the parameters, provided that others remain unchanged. It is known that operating profit depends on sales volume, cost of products sold (work, services), the ratio of fixed and variable costs in cost. Sensitivity analysis allows us to identify what will happen to profit if sales volume decreases, for example, by 10%, or if the cost of a unit of production (work, services) decreases, or if variable costs amount to 60% of sales revenue, etc.

With the graphical method The break-even point (profitability threshold) is found as follows: we find the value of fixed costs on the Y axis and plot the line of fixed costs on the graph, for which we draw a straight line parallel to the X axis; select a point on the X axis, i.e. any value of sales volume, we calculate the value of total costs (fixed and variable) for this volume. We construct a straight line on the graph corresponding to this value; We again select any value of sales volume on the X-axis and for it we find the amount of sales revenue. We construct a straight line corresponding to this value. The break-even point on the graph is the point of intersection of straight lines built according to the value of total costs and gross revenue. At the break-even point, the revenue received by the enterprise is equal to its total costs, while the profit is zero. If a company sells products less than the threshold sales volume, then it suffers losses; if it sells more, it makes a profit.

Analysis of the volume of output and sales of products is part of management analysis and is carried out with the aim of justifying management decisions aimed at increasing production efficiency. In addition to the areas discussed in the previous paragraphs, the assessment of actual output and sales within the limits of production capacity is of great importance in managing product output, i.e. within the boundaries of “minimum - maximum” production volume. Comparison with the minimum, break-even volume allows you to assess the degree, or zone, of the enterprise’s “safety” and, if the “safety” value is negative, remove certain types of products from production, change production conditions and thereby reduce costs or stop production.

Comparing the achieved output volume with the maximum volume determined by the production potential of the enterprise allows us to assess the possibilities of profit growth with an increase in production volumes if demand or the enterprise's market share increases.

In economic management, both retrospective and prospective analysis is important, allowing one to justify the plan for the production and sale of products. A long-term analysis of product output is carried out in parallel with an analysis of market conditions and the enterprise's needs for production resources.

Break-even analysis assumes:

Comparison of break-even volume for several periods (or comparison with the plan);

Assessing the degree of “security” of an enterprise over time;

Quantitative assessment of the influence of factors on break-even production volume;

Calculation of planned production volume for a given amount of planned (expected) profit.

Break-even (critical) volume production is calculated from an equation based on the equality of revenue from product sales and the sum of fixed and variable costs, resulting from the definition of break-even:

Where R - unit price; Q- number of units of produced (sold) products; C F- fixed costs in unit costs; C V - variable costs in unit costs.

A graphical interpretation of the break-even point is shown in Fig. 6.4.

As can be seen in the graph, the break-even volume of production is achieved when the total amount of costs and revenue (income) from sales is equal, or when the marginal income is equal (MD) and variable costs (With F). Marginal income, or gross margin, is the income after covering variable costs.

Break-even (critical) volume can be calculated in several ways.

1. Minimum output volume in physical terms:

2. To calculate the volume of output in value terms, the left and right sides of expression (6.5) are multiplied by the price (rubles).

Where Q∙r = N- proceeds from sales (taken without VAT); - unit variable costs, or the share of variable costs in the price.

3. The critical sales volume can be calculated using the marginal income value. Marginal income MD is defined as the difference between revenue and variable costs:

If the production is multi-industry, the calculation of the critical volume uses average indicators of price, variable costs, and marginal income:

Where md- specific marginal income.

In this case, the impact of structural changes on the break-even volume can be calculated.

4. To determine the impact of structural changes on the critical volume of production (sales), the following expression is used:

Where D i - the share of each type of product in the total volume.

The concept of “margin of financial strength” is closely related to the concept of “break-even volume”. The margin of financial strength (safety zone) is the difference between the actual and break-even volumes.

The increase in the critical volume point is explained by a decrease in the share of marginal income in the price, i.e. growth of specific variable costs.

The dependence of the volume of output and sales of products on the ratio of costs and sales price is used to justify plan targets. If fixed and variable costs per unit of production (or specific variable costs) are known, as well as the amount of planned profit, then required sales volume determined by the formula.

Analysis of the financial strength margin (break-even zone) of the enterprise

Having examined the enterprise's profit in detail and found out the reasons for its decline, it would be advisable to calculate the margin of financial strength (break-even zone) of the enterprise, which is also a criterion for assessing the financial condition.

Break-even is a state when a business makes neither profit nor loss. This is the revenue that is necessary for the company to start making a profit. It can also be expressed in the number of units of products that need to be sold to cover costs, after which each additional unit of products sold will bring profit to the enterprise.

The difference between the actual quantity of products sold and the break-even sales volume is the safety zone (profit zone), and the larger it is, the stronger the financial condition of the enterprise.

Break-even sales volume and the enterprise's safety zone are fundamental indicators when developing business plans, justifying management decisions, and assessing the activities of enterprises.

This analysis is more important for the lender than for the investor, since he is primarily concerned with the viability of the company and its ability to service debt, while the investor is looking for options with a high rate of return. In any case, break-even analysis helps determine the most important stage in the life of the enterprise - the point at which the proceeds from sales become sufficient to pay the expenses incurred by it.

All costs of the enterprise, depending on the volume of production and sales of products, should first be divided into variable and constant, determine the amount of marginal income and its share in revenue from sales of products, then calculate the break-even sales volume.

The profitability threshold is the ratio of the amount of fixed costs in the composition of sold products to the share of marginal income in revenue.

The profitability threshold is the break-even point of product sales, below which production will be unprofitable.

T = N / Du, where

T - break-even point of product sales (profitability threshold),

Du - the share of marginal income in revenue from product sales.

To determine the safety zone (margin of financial strength) based on cost indicators, the following formula is used:

ZB = V - T / V, where

ZB - security zone,

B - revenue from sales of products

To express as a percentage:

ZB = V - T / V*100

The margin of financial strength (safety zone) depends on changes in revenue and break-even sales volume. Revenue, in turn, can change due to the quantity of products sold, its structure and average selling prices, and the break-even sales volume - due to the sum of fixed costs, sales structure, selling prices and unit variable costs.

Let's calculate the profitability threshold and break-even zone for the previous year. The calculation results are presented in Table 3.3.1.

Calculation of the profitability threshold and margin of financial strength of an enterprise

Table 3.3.1

This table shows that despite the increase in sales revenue by 110.9 thousand rubles. profit in the analyzed year decreased by 224.4 thousand rubles, due to an increase in the total cost of manufactured products. Due to the increase in the amount of variable costs, marginal income decreased by 258.3 thousand rubles, and therefore the share of marginal income in revenue decreased to 53.3%. As a result of the above, the profitability threshold or break-even sales volume decreased by 344.3 thousand rubles.

In the analyzed year, it was necessary to sell products worth 1027.9 thousand rubles in order to cover all costs. With such revenue, profitability is zero. The actual revenue received in the analyzed year was 610.5 thousand rubles higher than the threshold. or by 37.3%, which constitutes the margin of financial strength or the break-even zone of the enterprise. Compared to the previous year, the financial safety margin decreased by 233.4 thousand rubles. This happened due to an increase in the profitability threshold by 344.3 thousand rubles. However, the margin of financial strength remains quite large. Revenue could decrease by another 37.3%, and only then would profitability be zero. If the revenue falls below, then the enterprise may become unprofitable, will “eat up” its own and borrowed capital and after some time will go bankrupt.

In foreign countries, marginal income is used to calculate profit:

Recently, increasing interest has been shown in precisely this method of profit analysis, based on dividing production and sales costs into variable and constant. This technique is widely used in countries with developed market relations. It allows you to study the dependence of profit on a small range of the most important factors and, on the basis of this, manage the process of forming its value. Unlike the profit analysis methodology that is used in domestic enterprises, it allows us to more fully take into account the relationships between indicators and more accurately measure the influence of factors.

As a result of the analysis of the financial stability of the enterprise, it was found that during the reporting year the enterprise went from being financially unstable to the level of absolute stability, i.e. own working capital fully covers the total amount of inventories and costs (1105.7622.3). This was due to an increase in the company's own working capital, as well as a decrease in inventories and costs. To eliminate the unstable financial situation at the enterprise, the following measures were taken6

• 1. Obsolete and unused fixed assets were liquidated.
• 2. New markets for finished products have been found.
• 3. The mobilized funds were used to pay off accounts payable and increase inventories of raw materials.

analysis of financial stability ratios confirms the enterprise’s independence from borrowed capital and its financial stability. This is evidenced by the autonomy coefficient equal to 0.93 at the end of the period, which significantly exceeds its standard value and the financial dependence coefficient, which decreases to 1.08 at the end of the period. however, the coefficient of maneuverability of equity capital is below its standard value (0.15), which indicates insufficient mobility of equity capital. To achieve even better financial results, it is necessary to use your own capital more efficiently.

liquidity analysis showed that the company’s balance sheet cannot be called absolutely liquid, because the most liquid assets are less than the most urgent liabilities, but at the same time, an analysis of liquidity ratios suggests that the enterprise is solvent both at the moment and in the future. The absolute liquidity ratio at the end of the year was 0.15, and the current liquidity ratio was 3.7; therefore, the company will be able to pay creditors in a timely manner and in the shortest possible time. However, the excess of current assets over short-term liabilities by more than two times confirms the irrational and ineffective use of own funds.

Considering the indicators of business activity, we can note some of their growth, which means an acceleration of the circulation of enterprise funds, and therefore an improvement in their use. An increase in the turnover of receivables and payables indicates an expansion of commercial credit provided and provided to the enterprise. The company pays off its obligations much faster than it receives money from loans: the average turnover period for accounts receivable is 87.6 days, while the average turnover period for accounts payable is 105.85 days. Hence the conclusion: the enterprise underutilizes commercial loans.

Considering the indicators characterizing the profitability of the enterprise, it should be noted that the return on sales decreased by 20.49%. This indicates a decrease in sales profits, which decreased due to stale products from the warehouse at lower prices.

Indicators characterizing the return on capital and its parts indicate ineffective use of both the entire capital of the enterprise and its individual components, in particular fixed assets and other non-current assets.

All of the above allows us to conclude that the financial condition of the analyzed enterprise is stable and stable, therefore shareholders, business partners and investors can have no doubt about its solvency. The company knows how to earn a profit, provide fairly high dividends to its shareholders (profitability threshold), that is, the amount of revenue that is necessary to reimburse the enterprise’s fixed expenses.

All enterprise costs that are associated with the production and use of products can be divided into variable and constant.

Variable costs depend on the volume of production and sales of products. Basically, these are direct resource costs for the production and sale of products - direct wages, consumption of raw materials, materials, fuel, etc.

Fixed costs do not depend on the dynamics of production volume and sales of products. One part is related to the production capacity of the enterprise (depreciation, rent, wages of management and service personnel on a time basis and general business expenses), the other - with the management and organization of production and sales of products (costs of research, advertising, advanced training of workers and etc.)

Unlike variables, fixed costs are not so easy to reduce during a decline in production and a decrease in revenue from product sales. And during these periods, the enterprise must charge depreciation in the same amounts, pay interest on previously received loans, pay wages, etc.

It is more profitable for an enterprise if there is a smaller amount of fixed costs per unit of production, which is possible when the maximum volume of production and sales of products for which these costs were determined is achieved.

Marginal income (MI) is profit in the amount of fixed costs of the enterprise (N):

MD = P+N, where

MD marginal income,

P - profit,

N - fixed costs.

Due to the increase in revenue from product sales, the amount of marginal income will increase and amount to 1,475.8 thousand rubles in the planning period, and the share of marginal income in revenue will decrease to 50.9%, which is 2.4% less than in the analyzed year. Data for comparison with the analyzed year can be taken from Table 3.3.1.

As a result of all these changes, the break-even sales volume (profitability threshold) will be 1098 thousand rubles, which is 70.1 thousand rubles. more than in the analyzed year.

In this case, the margin of financial strength (break-even zone) will be 1,602 thousand rubles. or 59.3%, which is 22% more than in the analyzed year.

The main task of a trading enterprise is the purchase and sale of goods in order to satisfy the needs of the population, at a minimum level of distribution costs and obtain a sufficiently high level of profit.
The profitability of any trading enterprise determines its functioning regardless of the economic policy of the state. Profit as an economic category has received new content in the context of the transition to market relations, which are characterized by the development of competition, free pricing, private ownership of capital, etc. Profit is the main incentive for carrying out any business activity (including trading), since it ensures an increase in the welfare of the owners enterprises through return on invested capital. Hired workers are also interested in the profitability of the enterprise, which to a certain extent is not only a guarantee of their employment (long-term perspective), but also provides additional material remuneration for their work and satisfaction of social needs (short-term perspective). In addition, the profit of the enterprise through the system of tax payments makes it possible to form the revenue side of state budgets at all levels, thereby creating the basis for the economic development of the state as a whole. Thus, ensuring the interests of the state, owners and personnel of enterprises, profit is one of the most important indicators for assessing the efficiency of an enterprise in a market economy. A high level of profitability gives any enterprise an advantage in attracting investments, obtaining loans, choosing suppliers, etc., which determines competitiveness, as well as the degree of its independence from unexpected changes in market conditions. In this regard, issues of economic analysis of the level of profitability in trade in order to identify reserves for its increase become extremely important.
The purpose of writing this course work is to disclose the concept of profit from sales and its dependence on the volume of sales and the cost structure of the organization.
Achieving this goal is carried out by solving the following tasks:

Consider the relationship between the concepts “cost - volume - profit”;
Study one of the trade and production enterprises of the Arzamas region;
Conduct an analysis of the formation of profit from sales at this enterprise;
Study the profitability indicators of the enterprise.

1.1. Analysis of the cost-volume-profit ratio

In practice, the head of any enterprise has to make many different management decisions. Every decision made regarding the price, costs of the enterprise, volume and structure of product sales ultimately affects the financial results of the enterprise. A simple and very accurate way to determine the relationship and interdependence between these categories is to establish the break-even point - determining the moment from which the enterprise’s income completely covers its expenses.
One of the powerful tools for managers in determining the break-even point is production break-even analysis or cost-volume-profit ratio analysis (Cost-Volume-Profit; CVP analysis).
This type of analysis is one of the most effective means of planning and forecasting the activities of an enterprise. It helps business managers identify the optimal proportions between variable and fixed costs, price and sales volume, and minimize business risk. Accountants, auditors, experts and consultants, using this method, can give a more in-depth assessment of financial results and more accurately substantiate recommendations for improving the operation of the enterprise.
The key elements of the analysis of the cost-volume-profit relationship are marginal income, profitability threshold (break-even point), production leverage and marginal safety margin.
Marginal income is the difference between the enterprise's revenue from sales of products (works, services) and the amount of variable costs.
The profitability threshold (break-even point) is an indicator characterizing the volume of product sales at which the enterprise’s revenue from the sale of products (works, services) is equal to all its total costs, i.e. This is the sales volume at which the company has neither profit nor loss.
Production leverage is a mechanism for managing the profit of an enterprise depending on changes in the volume of sales of products (works, services).
Marginal safety margin is the percentage deviation of actual revenue from sales of products (works, services) from the threshold revenue (profitability threshold).
To analyze the break-even of production, a necessary condition is to divide the enterprise's costs into constant and variable. As is known, fixed costs do not depend on production volume, but variable costs change with an increase (decrease) in output and sales. To calculate the volume of revenue covering fixed and variable costs, manufacturing enterprises in their practical activities use indicators such as the amount and rate of marginal income.
The amount of marginal income shows the enterprise’s contribution to covering fixed costs and making a profit.
There are two ways to determine the amount of marginal income.
In the first method, all variable costs are subtracted from the enterprise’s revenue for products sold, i.e. all direct costs and part of overhead costs (production overhead), depending on production volume and classified as variable costs.
In the second method, the amount of marginal income is determined by adding the fixed costs and profit of the enterprise.
The average marginal income is the difference between the product price and average variable costs. The average marginal income reflects the contribution of a unit of product to covering fixed costs and making a profit.
The rate of marginal income is the share of the marginal income in sales revenue or (for an individual product) the share of the average marginal income in the price of the product.
The use of these indicators helps to quickly solve some problems, for example, determining the amount of profit at various output volumes.

1.2. Break-even conditions

Break-even analysis (BREAK-EVEN ANALJSIS) is one of the most important elements of financial information used in assessing the effectiveness of an investment. Particularly important here is the determination of the sales volume at which the enterprise breaks even. In other words, it is necessary to determine the break-even point, below which the company loses money, and above which it makes money. The question of how much money an enterprise earns can only arise when production volume exceeds the break-even point; If the enterprise's production volume is below the break-even point, one can ask only one question: how many days does the enterprise have left before bankruptcy?
To calculate the break-even point, the values ​​of variable (direct) and fixed (total) costs are used. However, it must be taken into account that absolutely constant costs do not exist, and they can also change over time, as, for example, rent of premises, wages, energy costs, etc. increase. The break-even point can be calculated again for different periods of time if there have been changes in the structure of the enterprise or in its financing system. In this case, the average values ​​of the total costs of the enterprise for a certain period of time should be taken as fixed costs.
The break-even point (profitability threshold) is such sales revenue at which the enterprise no longer has losses, but does not yet have profits, i.e. the result from sales after reimbursement of variable costs is exactly enough to cover fixed costs, and the profit is zero.
Break-even analysis compares the use of planned capacity with the level of production below which the firm incurs losses. The break-even point can also be defined in terms of physical units produced or the level of capacity utilization at which sales revenue and production costs are equal. Sales receipts at the break-even point represent the cost of break-even sales, and the unit price in this situation is the break-even selling price. If the production program includes a variety of products, then for any break-even sales volume there will be a variety of product pricing options, but there will not be a single “break-even” price.
Before calculating break-even values, you should ensure that the following conditions and assumptions are met:

production and marketing costs are a function of production or sales volume (for example, when using equipment);
production volume equals sales volume;
fixed operating costs are the same for any volume of production;
variable costs change in proportion to the volume of production, and, therefore, the total costs of production also change in proportion to its volume;
sales prices for a product or product complex for all levels of output (sales) do not change over time. Therefore, total sales value is a linear function of sales prices and quantities sold;
the level of selling prices per unit of production, variable and fixed operating costs remain constant, i.e. the price elasticity of demand for inputs and outputs is zero;
break-even values ​​are calculated for one product; in the case of diversity of nomenclature, its structure, i.e. the ratio between the quantities produced must remain constant.

Chapter 2. Production leverage of the organization and the influence of the main factors on its value

2.1. Classification of production costs

The company carefully analyzes each item of distribution costs. The company is looking for ways and developing measures to reduce distribution costs. Thus, to reduce transportation costs, the company achieves a reduction in empty mileage by fully loading vehicles. Use of trailers and tractors, expansion of centralized and ring delivery of goods.
Planning of transport costs is carried out by the Diveevsky Spring company by component elements and modes of transport. The company is dominated by road transportation costs. To forecast these costs, the calculation of transport freight turnover is used. Transport cargo turnover is planned in the amount of 15 thousand rubles. at a tariff for transportation of 1 ton of cargo 350 rubles. Thus, transportation costs are determined by multiplying the tariff for transportation of 1 ton by transport freight turnover. It is 5250 tr. (350 x 15000).
The basis for planning the wage fund is the staffing table, which forecasts the number of employees, monthly salaries and, on their basis, the wage fund for the month, quarter, and year. There are no plans for changes in the staffing table for 2008. The company's management plans to increase the average wage of employees by 60 rubles. (760 – 700). This will lead to an increase in the cost of paying employees by 262 thousand rubles. (3312 – 3050).
Table 3.7
Planning by cost items of the Diveevsky Spring company (in comparable prices, thousand rubles)

Expenses for rent, maintenance of buildings, structures, equipment and inventory are planned according to their component elements. In 2008, the company plans to rent trade pavilions and tents in city markets and regional centers to organize retail trade. Expenses for repairs of fixed assets include expenses for all types of repairs of fixed assets, including expenses for repairs of leased buildings. Their planning is based on drawing up cost estimates for the repair of fixed assets.

2.2. Production leverage

Production leverage (leverage in literal translation - leverage) is a mechanism for managing the profit of an enterprise, based on optimizing the ratio of fixed and variable costs. With its help, you can predict changes in the profit of an enterprise depending on changes in sales volume, as well as determine the break-even point.
A necessary condition for the use of the production leverage mechanism is the use of the marginal method, based on dividing the enterprise's costs into fixed and variable. The lower the share of fixed costs in the total costs of the enterprise, the more the amount of profit changes in relation to the rate of change in the enterprise's revenue.
Production leverage is determined using the following formula:
(1)

or = (2)

where EPL is the effect of production leverage;
MD - marginal income;
Zpost - fixed costs;
P - profit.
The value of the production leverage effect found using formula (1) is subsequently used to predict changes in profit depending on changes in the enterprise’s revenue. To do this, use the following formula:
(3)
where P is the change in profit, in%;

B - change in revenue, in%.

2.3. Factors influencing the amount of production leverage

The amount of production leverage may change under the influence of:
- prices and sales volumes;
- variable and fixed costs;
- combinations of any of the above factors.
Let us consider the influence of each factor on the effect of production leverage based on the above example.
An increase in the selling price by 10% (up to 16 rubles 50 kopecks per unit) will lead to an increase in sales volume to 82,500 rubles, and marginal income to 32,500 rubles. (82500 - 50000) and profits up to 17500 rubles. (32500 - 15000). At the same time, the marginal income per unit of drink will also increase from 5 rubles. (25,000 rub. : 5,000 bottles) up to 6 rub. 50 kopecks (RUB 32,500: 5,000 bottles). Under these conditions, a smaller sales volume will be required to cover fixed costs: the break-even point will be 2,308 bottles. (15,000 rubles: 6 rubles 50 kopecks), and the marginal safety margin of the enterprise will increase to 2,692 bottles. (5000 - 2308) or by 53.8%. As a result, the company can receive additional profit in the amount of 7,500 rubles. (17500 - 10000). At the same time, the effect of production leverage will decrease from 2.5 to 1.86 units (32500: 17500).
A reduction in variable costs by 10% (from 50,000 rubles to 45,000 rubles) will lead to an increase in marginal income to 30,000 rubles. (75,000 - 45,000) and profits up to 15,000 rubles. (30000 - 15000). As a result of this, the break-even point (profitability threshold) will increase to 37,500 rubles. , which in physical terms will be 2500 bottles. (37500: 15). As a result, the marginal safety margin of the enterprise will be 37,500 rubles. (75000 - 37500) or 2500 bottles. (37500 rub.: 15 rub.). Under these conditions, the effect of production leverage at the enterprise will decrease to 2 units (30,000: 15,000). If fixed costs are reduced by 10% (from 15,000 rubles to 13,500 rubles), the enterprise’s profit will increase to 11,500 rubles. (75000 - 50000 - 13500) or by 15%. Under these conditions, the break-even point in monetary terms will be 34,848 rubles. , and in physical terms - 2323 bottles. (34848: 15). In this case, the marginal safety margin of the enterprise will correspond to 40,152 rubles. (75000 - 34848) or 2677 bottles. (40152: 15). As a result, as a result of a reduction in fixed costs by 10%, the effect of production leverage will be 2.17 units (25,000: 11,500) and, compared to the initial level, will decrease by 0.33 units (2.5 - 2.17).
Analysis of the above calculations allows us to conclude that the change in the effect of production leverage is based on a change in the share of fixed costs in the total cost of the enterprise. It must be borne in mind that the sensitivity of profit to changes in sales volume may be ambiguous at enterprises that have different ratios of fixed and variable costs. The lower the share of fixed costs in the total costs of the enterprise, the more the amount of profit changes in relation to the rate of change in the enterprise's revenue.
It should be noted that in specific situations, the manifestation of the production leverage mechanism has a number of features that must be taken into account in the process of its use. These features are as follows:
1. The positive impact of production leverage begins to appear only after the enterprise has passed the break-even point of its activities.
In order for the positive effect of production leverage to begin to manifest itself, the company must initially receive a sufficient amount of marginal income to cover its fixed costs. This is due to the fact that the company is obliged to reimburse its fixed costs regardless of the specific sales volume, therefore, the higher the amount of fixed costs, the later, other things being equal, it will reach the break-even point of its activities. In this regard, until the enterprise has achieved break-even, a high level of fixed costs will be an additional “burden” on the way to achieving the break-even point.
2. As sales volumes continue to increase and move away from the break-even point, the effect of production leverage begins to decline. Each subsequent percentage increase in sales volume will lead to an increasing rate of increase in the amount of profit.
3. The mechanism of production leverage also has the opposite direction - with any decrease in sales volume, the profit margin of the enterprise will decrease to an even greater extent.
4. There is an inverse relationship between production leverage and enterprise profit. The higher the profit of the enterprise, the lower the effect of production leverage and vice versa. This allows us to conclude that production leverage is a tool that equalizes the ratio of the level of profitability and the level of risk in the process of carrying out production activities.
5. The effect of production leverage appears only in a short period. This is determined by the fact that the enterprise’s fixed costs remain unchanged only for a short period of time. As soon as another jump in the amount of fixed costs occurs in the process of increasing sales volume, the company needs to overcome the new break-even point or adapt its production activities to it. In other words, after such a jump, the effect of production leverage manifests itself in new economic conditions in a new way.
Understanding the mechanism of manifestation of production leverage allows us to purposefully manage the ratio of fixed and variable costs in order to increase the efficiency of production and economic activities under various trends in the commodity market conditions and the stage of the enterprise’s life cycle.
In case of unfavorable conditions on the product market, which determines a possible decrease in sales volume, as well as in the early stages of the enterprise’s life cycle, when it has not yet overcome the break-even point, it is necessary to take measures to reduce the enterprise’s fixed costs. And vice versa, with favorable conditions on the commodity market and the presence of a certain margin of safety, the requirements for implementing the fixed cost savings regime can be significantly weakened. During such periods, an enterprise can significantly expand the volume of real investments by reconstructing and modernizing fixed production assets.
When managing fixed costs, it should be borne in mind that their high level is largely determined by industry characteristics of activity, which determine different levels of capital intensity of manufactured products, differentiation of the level of mechanization and automation of labor. In addition, it should be noted that fixed costs are less amenable to rapid change, so enterprises with a high value of production leverage lose flexibility in managing their costs.
However, despite these objective limitations, each enterprise has sufficient opportunities to reduce, if necessary, the amount and share of fixed costs. Such reserves include: a significant reduction in overhead costs (management costs) in the event of unfavorable commodity market conditions; sale of part of unused equipment and intangible assets in order to reduce the flow of depreciation charges; widespread use of short-term forms of leasing of machinery and equipment instead of purchasing them as property; reduction in the volume of a number of consumed utilities and others.
When managing variable costs, the main guideline should be to ensure constant savings, since there is a direct relationship between the amount of these costs and the volume of production and sales. Providing these savings before the enterprise overcomes the break-even point leads to an increase in marginal income, which allows it to quickly overcome this point. After overcoming the break-even point, the amount of savings in variable costs will provide a direct increase in the profit of the enterprise. The main reserves for saving variable costs include: reducing the number of workers in main and auxiliary production by ensuring an increase in their labor productivity; reducing the size of stocks of raw materials, supplies and finished products during periods of unfavorable commodity market conditions; ensuring favorable terms for the enterprise for the supply of raw materials and materials, and others.
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