Material costs represent a part of production costs, costs of ongoing activities of production of products, services and goods, which includes: costs spent on raw materials, basic and additional, auxiliary materials, energy, fuel.
Instructions
Step 1
Material costs are determined using the following formula: the quantity of material multiplied by the price of that material. In turn, the total change in the value of material costs can be calculated as the difference between the actual consumption of materials and the standard consumption of materials.
Step 2
Using the method of absolute differences, you can carry out a factor analysis of changes in material costs. In this case, the deviation from the standard indicators for the use of some individual materials is determined in the form of comparing the actually consumed materials with the standard costs for the actual output of products. This deviation can be calculated using the following formula: (Кф - Кн) * Цн, where: Цн - the size of the standard price of the material; Кф is the value of the actual material consumption; Kn - the value of the standard consumption of material for its actual release.
Step 3
In this case, the possible reasons for the deviation may be: replacement of any type of high-quality raw materials with another (lower quality), violation of standards in the supply of materials, direct cost overruns, which is associated with violations of technology, irrational or incorrect cutting, theft, damage.
Step 4
The change in the size of material costs within the framework of the influence of the price factor can be determined by the formula: Кф х (Цф - Цн), where: Цф - the value of the actual price of the material; Tsn - the size of the standard price of the material; Кф is the value of the actual material consumption.
Step 5
In turn, the possible reasons for the deviation of material costs are: price changes in the market, poor and illiterate inventory management, which leads to urgent purchases at the highest prices and additional transportation costs, miscalculations of the procurement service when searching for the most favorable suppliers, as well as many other reasons that may arise as a result of procurement activities.
