Explicit and implicit costs. The concept of costs: explicit, implicit, general, fixed and variable. Graphic interpretation

Costs(cost) - the cost of everything that the seller has to give up in order to produce the product.

To carry out its activities, the company incurs certain costs associated with the acquisition of necessary production factors and the sale of manufactured products. The valuation of these costs is the firm's costs. Most economically effective method production and sale of any product is considered to be such that the company’s costs are minimized.

The concept of costs has several meanings.

Classification of costs

• Individual- costs of the company itself;
• Public- the total costs of society for the production of a product, including not only purely production, but also all other costs: protection environment, training of qualified personnel, etc.;
• Production costs- these are costs directly associated with the production of goods and services;
• Distribution costs- related to the sale of manufactured products.

Classification of distribution costs

• Additional costs circulation includes costs for bringing manufactured products to the final consumer (storage, packaging, packing, transportation of products), which increase the final cost of the product.
• Net distribution costs- these are costs associated exclusively with acts of purchase and sale (payment of sales workers, keeping records of trade operations, advertising costs, etc.), which do not form a new value and are deducted from the cost of the product.

The essence of costs from the perspective of accounting and economic approaches

• Accounting costs- this is a valuation of the resources used in the actual prices of their sale. Enterprise costs in accounting and statistical reporting act as the cost of production.
• Economic understanding of costs is based on the problem of limited resources and the possibility of their alternative use. Essentially all costs are opportunity costs. The economist's task is to choose the most optimal option for using resources. The economic costs of a resource selected for the production of a product are equal to its cost (value) under the best (of all possible) use case.

If an accountant is mainly interested in assessing the company’s past activities, then an economist is also interested in the current and especially projected assessment of the firm’s activities, and in finding the most optimal option for using available resources. Economic costs are usually greater than accounting costs - this is total opportunity costs.

Economic costs, depending on whether the firm pays for the resources used. Explicit and implicit costs

• External costs (explicit)— these are costs in cash that a company makes in favor of suppliers of labor services, fuel, raw materials, auxiliary materials, transport and other services. In this case, the resource providers are not the owners of the firm. Since such costs are reflected in the balance sheet and report of the company, they are essentially accounting costs.
• Internal costs (implicit)— these are the costs of your own and independently used resource. The company considers them as the equivalent of those cash payments that would be received for an independently used resource with its most optimal use.

Let's give an example. You are the owner small store, which is located on premises that are your property. If you didn’t have a store, you could rent out this premises for, say, $100 a month. These are internal costs. The example can be continued. When working in your store, you use your own labor, without, of course, receiving any payment for it. With an alternative use of your labor, you would have a certain income.

The natural question is: what keeps you as the owner of this store? Some kind of profit. The minimum wage required to keep someone operating in a given line of business is called normal profit. Lost income from the use of own resources and normal profit in total form internal costs. So, from the standpoint of the economic approach, production costs should take into account all costs - both external and internal, including the latter and normal profit.

Implicit costs cannot be identified with the so-called sunk costs. Sunk costs- these are costs that are incurred by the company once and cannot be returned under any circumstances. If, for example, the owner of an enterprise incurs certain monetary expenses to have an inscription made on the wall of this enterprise with its name and type of activity, then when selling such an enterprise, its owner is prepared in advance to incur certain losses associated with the cost of the inscription made.

There is also such a criterion for classifying costs as the time intervals during which they occur. The costs that a firm incurs in producing a given volume of output depend not only on the prices of the factors of production used, but also on which production factors are used and in what quantities. Therefore, short- and long-term periods in the company’s activities are distinguished.

Explicit costs are determined by the amount of the company's expenses to pay purchased resources (raw materials, materials, fuel, labor, etc.). Implicit costs are determined by the cost of resources, owned of this enterprise. For the owner of capital, implicit costs are the profit that he could have received by investing his capital not in this, but in some other business (enterprise). For a peasant land owner, such implicit costs will be the rent that he could receive by renting out his land. For an entrepreneur (including a person engaged in self-employment), implicit costs can be considered the salary that he could receive for work of the same duration, intensity and nature, working for hire.

An enterprise usually owns durable assets: machinery and equipment, buildings and structures. It is clear that previously made expenses for their acquisition or construction cannot be attributed to expenses of this period. Therefore, the enterprise does not incur obvious costs in connection with their use, in addition to those necessary to maintain them in working order. However, it incurs implicit costs, which are defined as the costs of lost opportunities to use them.

How can these costs be determined? The closest alternative to the use of such objects by an enterprise would be to sell them at market prices and deposit the proceeds from the sale in a bank at the market interest rate. The corresponding income is one of the components of the opportunity costs of using similar objects in a given enterprise.

The owner of capital property has another alternative. He could rent it out.

In this case, he would receive not only income in an amount corresponding to bank interest, but also an amount compensating for losses in the market value of this property as a result of wear and tear or changes in market conditions during the rental period.

Thus, opportunity cost, associated with the use of equipment owned by the enterprise, represent the amount of interest income on the market value of the property at the beginning of a certain period and the decrease in its market value during this period.

This amount is usually called costs of use(user cost ( English.).

Various cost concepts suggest and various concepts profit. Normal profit appears when the total revenue of the enterprise is equal to the total costs, calculated as the costs of rejected opportunities for all resources used.

If total revenue exceeds the costs calculated in this way, the enterprise receives a net, or economic, profit.

The presence of economic profit means that resources are used more efficiently at a given enterprise than elsewhere. Accounting profit exceeds the economic value by the amount of implicit costs, estimated as the costs of rejected opportunities.

cost profit cash flow

Or, in other words, accounting profit represents the amount of the enterprise's profit before deducting the costs associated with the use of the enterprise's own resources. IN Russian literature 60-80s costs of rejected opportunities, or costs in economic sense, were often called total present costs, and economic profit - excess or net profit.

It is economic, and not accounting profit, that serves as a criterion for the success of an enterprise and the efficiency of its use of available resources.

Its presence or absence is incentive attracting additional resources or, accordingly, their flow into other areas of use.

Table Figure 8.1 illustrates the differences between the two concepts of profit.

Table 8.1 Calculation of accounting and economic profit (thousand rubles)

As we can see, with positive accounting profit, economic profit in our example turned out to be negative.

This means that it is more profitable for an entrepreneur to get out of business and find another occupation that would bring him at least the same 50 thousand rubles, and the equity capital withdrawn from the enterprise is 2000 thousand rubles. invest in securities, bringing at least 10% annual income.

It cannot be assumed that one of the considered approaches to determining costs and profits is correct, and all the others are wrong. Each of them has its own area of ​​application.

Economists generally prefer the economic approach because it is important for decision making. But in some cases it is impossible to give a timely and accurate estimate of the costs of the best rejected opportunity. Therefore, for tax purposes, when distributing income, including profit and depreciation, and profit itself, enterprises use an accounting approach to determining costs. In addition, in many cases, the costs of rejected opportunities and the costs in the accounting sense are the same (for example, the costs of acquiring resources in a balanced market).

In what follows, we will (unless otherwise stated) assume that there are no externalities or costs, and consider the costs of rejected opportunities as the sum of explicit and implicit costs. This, in particular, means that we will include normal profit in the amount of costs. Accordingly, we will understand profit in the economic sense, i.e. as an excess of accounting profit compared to normal.

From profit determined by the difference between revenue from sales of products and costs her production, one should distinguish between the magnitude net cash flow(net cash flow ( English.), determined by the difference between cash receipts and payments of the enterprise for a certain period of time(month, year). It is obvious that the amount of net cash flow, as a rule, does not coincide with the amount of profit. Let's say that in February a company can receive payment for products released in January and purchase the materials needed to produce products in March.

In addition, the amount of net cash flow largely depends on the solvency of customers. If it is low, then the net cash flow of the most profitable enterprise will be low. In Russia, such a situation arose in 1992 in connection with the crisis of non-payments, when significant amounts of profit were frozen as part of the mutual non-payments of enterprises, which as a result found themselves on the verge of bankruptcy.

The difference between profit and net cash flow is also associated with the costs of using machinery, equipment, and other durable items owned by the enterprise. At the time of their acquisition, the company's payments increase sharply and, therefore, net cash flow decreases. During this period it is usually less profitable. In subsequent periods, depreciation of such items (in the form of depreciation charges) increases the implicit costs of production, so that net cash flow is higher than economic profit.

Production costs- these are expenses, monetary expenditures that must be made to create goods. For enterprises(firms) they act as payment for purchased factors of production.

Private and public costs.

Costs can be viewed from different perspectives. If they are examined from the point of view of an individual firm (individual producer), we are talking about private costs. If costs are analyzed from the point of view of society as a whole, then externalities and, as a consequence, the need to take into account social costs.

Let us clarify the concept of external effects. In market conditions, a special purchase and sale relationship arises between the seller and the buyer. At the same time, relationships arise that are not mediated commodity form, but having a direct impact on people's well-being (positive and negative externalities). An example of positive external effects is expenses for R&D or training of specialists; an example of a negative external effect is compensation for damage from environmental pollution.

Social and private costs coincide only if there are no external effects, or if their total effect is equal to zero.

Fixed costs - this is a type of cost that an enterprise incurs within one production cycle. Determined by the enterprise independently. All these costs will be typical for all product production cycles.

Variable costs These are the types of costs that are transferred to finished product in full.

General costs- those costs incurred by the enterprise during one stage of production.

General = Constants + Variables

Accounting costs-- this is the cost of the resources used by the company in the actual prices of their acquisition.

Accounting costs = Explicit costs

Economic costs-- this is the cost of other benefits (goods and services) that could be obtained with the most profitable possible alternative use of these resources.

Opportunity (economic) costs = Explicit costs + Implicit costs

Explicit and implicit costs.

From the division of costs into alternative and accounting costs follows the classification of costs into explicit and implicit.

Explicit costs are determined by the amount of expenses enterprises to pay for external resources, i.e. resources not owned by the firm. For example, raw materials, materials, fuel, labor, etc. Implicit costs are determined by the cost of internal resources, i.e. resources owned by the firm.

An example of an implicit cost for an entrepreneur would be the salary that he could receive as an employee. For the owner of capital property (machinery, equipment, buildings, etc.), previously incurred expenses for its acquisition cannot be attributed to the explicit costs of the present period. However, the owner incurs implicit costs, since he could sell this property and put the proceeds in the bank at interest, or rent it out to a third party and receive income.

Implicit costs, which are part of economic costs, should always be taken into account when making current decisions.

Explicit costs-- these are opportunity costs that take the form of cash payments to suppliers of factors of production and intermediate goods.

Explicit costs include:

• · wages workers
• · cash costs for the purchase and rental of machines, equipment, buildings, structures
• · payment transport costs
• · utility bills
• · payment to suppliers of material resources
• · payment for services of banks, insurance companies

Implicit costs-- these are the opportunity costs of using resources owned by the company itself, i.e. unpaid expenses.

Implicit costs can be represented as:

• cash payments that a company could receive if it uses its assets more profitably resources
• · for the owner of capital, implicit costs are the profit that he could have received by investing his capital not in this, but in some other business (enterprise)

Refundable and sunk costs.

Sunk costs are considered in a broad and narrow sense.

In a broad sense, sunk costs include those expenses that a company cannot return even if it ceases its activities (for example, costs of registering a company and obtaining a license, preparing an advertising sign or company name on the wall of a building, making seals, etc. .). Sunk costs are like a company's payment for entering or leaving the market.

In the narrow sense of the word sunk costs These are the costs of those types of resources that have no alternative use. For example, the costs of specialized equipment manufactured to order from the company. Since the equipment has no alternative use, its opportunity cost is zero.

Sunk costs are not included in opportunity costs and do not influence the firm's current decisions.

firm cost short-term competition

The production and sale of any product requires certain costs - raw materials, fuel, energy, labor; to cover transport, transaction and other costs. All the company's expenses for purchasing the materials and services it needs are production costs. However similar definition incomplete and requires some reservations. The fact is that sometimes not all production resources are actually paid for. The enterprise can use some of them “for free”. For example, if the owner of a bakery has his own (owned) premises and money capital, and even organizes his own business, then the use of these resources (production space, investments in equipment, management services) will not require direct cash costs from him. In this regard, economists distinguish between explicit and implicit costs.

Explicit costs (also called external) are monetary payments for resources received from outside (payment of employees, supplies of raw materials, transport, financial, legal and other services). It is these costs (and only they) that are taken into account by accounting, which is why they are often called accounting costs.

Implicit costs (or internal) are the costs associated with the firm's use of its own (internal) resources. Unlike explicit ones, these costs are not paid and are not reflected in the financial statements. They are hidden in nature, acting as opportunity costs of the company’s own resources used in production. The magnitude of these costs is determined by the income that these resources could bring with their most profitable alternative use. Thus, the bakery owner mentioned above, using his own money, premises and entrepreneurial abilities, loses the interest, rent and management fees that he could have received for these resources with their better alternative use (say, by lending money, premises - for rent and offering your management services to another company). The profit lost here (interest, rent, manager's salary) constitutes the implicit costs of baking. Economists call the sum of explicit and implicit production costs economic costs.

Fixed costs do not depend on the size of production. Their value is unchanged, because they are associated with the very existence of the enterprise and must be paid, even if the company does not produce anything (rent for land and premises, depreciation charges for buildings and equipment, maintenance of the administrative apparatus, etc.). Such costs are sometimes called indirect or overhead.

Variable costs directly depend on the quantity of products produced, because they consist of the costs of raw materials, materials, fuel and energy, labor and other consumable production resources. The magnitude of these costs is directly proportional to the volume of production.

Total costs represent the sum of fixed and variable costs, that is, these are the total (or gross) costs of producing a certain volume of products.

The next two types of costs (average and marginal) are costs per unit of production. They are convenient for ongoing monitoring of production efficiency and profitability.

Thus, average costs, as their name implies, are found by dividing total costs by the number of units produced. They clearly reflect the dynamics (decrease or increase) of costs as production volume changes: if average costs decrease with an increase in production volume, then efficiency increases, and vice versa.

Unlike average costs, marginal costs are the additional costs of producing each subsequent unit of output in excess of the existing volume. In other words, it is the amount by which total costs increase when output increases by one unit. With the help of marginal costs, the boundaries of the profitable volume of production are determined. To do this, they are compared with average costs and the market price of the product.

IN modern conditions market economy production costs are calculated by the enterprise itself, taking into account the specifics of the industry.

Since enterprise costs are the main limiter on profits and at the same time main factor, affecting the volume of supply, then decision-making by the company’s management is impossible without an analysis of existing production costs and their value for the future.

Thus, calculating the costs of an enterprise is a necessary attribute for its proper and profitable functioning, since they are the initial indicator for determining the profitability of a particular production, and form the basis for determining product prices. Correct and accessible determination of enterprise costs is one of the main tasks of an economist.

The most common type of definition is explicit definitions. The definition is called explicit , if and only if it is given by a linguistic construction of the form: A «B. Here A represents the determined part ( definiendum ), IN– defining part ( definition ), and the symbol " « » expresses the convention to use A in meaning IN.

A) qualifying – define the meaning of the term as an object that has some distinctive features. For example, “A homeless person is a person who does not have a fixed place of residence.” Here it is indicated hallmark homeless - lack of housing.

b) genetic - indicate the method of occurrence (generation) of an object. For example, “Lightning is the collision of opposing electrically charged particles in airspace.”

V) operational – indicate the object recognition operation. For example, “Ammonia is a liquid that has a pronounced odor.”

d) targeted - reveal the purpose of the item. For example, “A barbell is a sports equipment used in weightlifting.” It indicates what the bar is intended for and thereby explains the meaning of this concept.

It should be noted that definitions that do not have the form of equality A«B, are called implicit. [And there is something that satisfies points B 1, B 2, ..., B n].

Implicit definitions are divided into three types: inductive, recursive And axiomatic.

Inductive definitions set the class of objects A by specifying some of its subclass ( induction basis) and those procedures by which all other objects of this class are generated ( inductive step). Let us give an example of an inductive definition - the definition of a natural number.

1. 1 is a natural number. Induction basis

2. If 2 – natural number, inductive step

That 3 – natural number.

3. Nothing else is a restrictive condition

natural number.

The first point of the definition is the basis of induction: 1 is declared to be a natural number. After that, all other natural numbers are generated using a single procedure - the “follow” function. This is an inductive step. Thus, the class of natural numbers includes all integers that are greater than one.

Recursive Definitions define a function f by specifying its values ​​for some initial arguments ( recursion basis) and methods for determining all other values ​​of f, knowing the original ( recursion). Here is an example of a recursive definition of addition:

1. x + 0 = x.

2. x + y’ = (x + y)’.

The first clause of the definition (recursion basis) states that the value of the function x + y equals X, in the event that y = 0. The second point (recursion) says that if we want to calculate the value x + y’, Where y’– the number following at, then we need to calculate for this at, what is equal x + y, and take the following for x + y number.

Axiomatic definitions explain the meaning of a certain term by indicating the set of axioms in which it is contained. Usually we go the opposite way: knowing the meaning of the terms included in the statement, we then decide the question of its truth or falsity. Thus, the axioms of classical propositional logic implicitly define the concepts of negation, implication, conjunction, disjunction, etc.