COST ANALYSIS
The previous chapters have already covered the concept and cost of the goods. Regular review of the
cost of the business. This chapter provides details of various methods. The cost analysis is based on
some criteria. The methods of analysis are described later in the following section.
Cost analysis based on geographic comparison . This is a comparison of the costs (eg, for the cost
types, because each business is 'collect' them). and the analysis of the distribution costs of the partial
cost of particular cost groups.
An analysis based on chronological comparison could be


a retrospective cost analysis ;
prospective cost analysis.
A retrospective cost analysis or cost estimate. The prospective cost analysis practically means planning
for future costs. The average costs of the previous period, various trends, etc.
In the course of the analysis, costs must be determined according to predefined criteria. The purpose of
the analytical methods is the one set out in the report. Obviously, costs may be classified. It is based on
an analysis of the costs of a correlation with a cost attribute. Proportional degressive, progressive, or
even regressive costs.
Comparative ratios in cost analysis





Analysis of costs and cost variation
Cost breakdown
Cost ratio
Cost level
margin
Analysis of costs and cost variation
Costs and cost variations can be analyzed with dynamic ratios and absolute differences. The dynamic
ratios show variation between two periods as a percentage or as a coefficient. The difference between
the costs and the analysed period.
Absolute difference = Costs of the current period - Base or budget costs
Cost breakdown
The cost breakdown ratio shows the ratio of the costs of the group.
The following table classifies the costs of a manufacturing business:
Compared to the base period by HUF 1,605 thousand (12.75%). With the exception of depreciation, the
costs are higher than in the current period, etc .; Among the cost types, the highest rates are in both
periods, because they are the most important ones.
Cost ratio
The cost ratio expresses the correlation between the various cost types and production value.
Symbols:
q: produced quantity
f: resources / product (kg / item, liter / item, kg / meter, wh / item, mh / item, etc.)
p: specific resource price (HUF / kg, HUF / liter, HUF / wh, HUF / mh, etc.)
(a) sales price of the product (price);
:: unit cost of the product in a particular cost type
Cost level
The cost level is the coefficient of the cost of production.
Depending on the costs, the costs will be different.
The cost ratio indicator is identical to the cost indicator.
Remark: The cost-ratio and cost-level calculation, i.
margin
The margin is the gross profit and the revenues.
q: means the quantity sold in this case
q * a: revenues
Ö: production cost of the goods sold
If the cost is the level of the direct costs of sales,
(
) then the following formula:
The following table illustrates the correlation between the margin and the cost level:
Methods of direct cost analysis
Direct costs may include:
1. Analysis of the breakdown of the different direct cost groups.
2. Analysis of costs (analysis of the variation and dynamics of the direct costs).
3. Analysis of the following factors:
a) Cumulative difference breakdown
b) Alternative difference breakdown
c) Partial difference breakdown
Analysis of the direct costs of the chain method
The chain method in general
In the chain method, a single factor is changed at a time. Many of the factors there are. The method is
simple, but it is an inaccurate one.
The factors used in the analysis are the direct costs involved in the analysis. The costs of the direct costs
are the direct costs incurred by the company.
The cost of the following formula:
K 1 + K 2 + K 3 + ... + K n = VALUATION COST
The cost components (K) could be cost, wage costs, divided operating costs, etc. depending on which
types of costs are involved.
Particular cost component:
q: produced quantity
f: resources / product (kg / item, liter / item, kg / meter, wh / item, mh / item, etc.)
p: specific resource price (HUF / kg, HUF / liter, HUF / wh, HUF / mh, etc.)
ö: unit cost of the product
The
variation of cost components (q, f, p) is the variation of cost components.
Impact of volume changes
The f and p factors are considered fixed during the analysis.
Impact of any use of specific resources
In line with the chain method, any modified factor ( q ) Used also in the analysis at the modified value
(q 1 ).
Impact of tariff changes
(Q 1 , f 1 )
If several products are manufactured, cost variations are triggered not only by the quantity of product, but
also by changes in production, several resource norms makes a difference. Yes, the impact of volume
changes
1. Impact of the net volume changes (
2. Impact of the composition changes (
)
)
Impact of the net volume changes
Impact of the composition changes
Alternative difference breakdown
Steps of the standardization method:
1. Quantification of the single-factor impacts
2. Quantification of the concurrent changes
3. Breakdown of the concurrent changes to the factors involved in the influencing factors
the. based on the basis of differences from 1,
b. calculated from its logarithm
4. Addition of the results of the previous calculations
Partial difference breakdown method
Steps of the partial difference breakdown method:
1. Quantification of the single-factor impacts
2. Quantification of the concurrent changes
3. Distribution of the impacts of the concurrent changes in the effective factors involved in the concurrent
changes. (Any bi-factor concurrent changes are also a three-factor concurrent change.)
4. Summary of the results of the calculation.
Cost analysis based on flexibility
Where to use cost analysis based on flexibility?
(a) in the analysis of operating costs;
(b) in the analysis of direct costs;
(c) the analysis of the overhead costs of the head office.
Steps of a cost analysis based on flexibility
1. Classification of costs by function. (Establishment of a homogeneous cost group, determined by the
cost attribute.)
2. Definition of indicators with average or most frequent workload. (J 0 = Cost attribute with most frequent
workload, K 0 = cost with the most frequent workload)
3. Definition of the degree of reaction (r).
4. Calculation of the eligible costs.
Possible cost attributes:
For machine costs: machine hour
For heating costs: heated air cubic meter
For energy costs: kWh consumption
For maintenance cost: maintenance hours
For operating costs: working hour
For internal transportation costs: ton kilometre
(Classical) flexible cost analysis
The classical flexible cost analysis can be:

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a progressive cost analysis of cost-based analysis
a retrospective cost analysis
The progressive cost analysis is used for the analysis of the costs of the current period.
Correlations and symbols used in a cost analysis based on flexibility
r: degree of reaction
K 0 : base cost
K R : technically and economically eligible costs
J 1 : cost attribute, for a retrospective cost analysis,
V: dynamic correlation expressing the variation of the cost attribute containing the following information:
1. for retrospective cost analysis V = J 1 / J 0
2. for progressive cost planning V = J
t1
/J0
v: deviation of the variations of the cost attribute from 1,
K 1 : Actual Cost
K t R : eligible cost defined with planned cost attributes
K t R : eligible cost defined with actual cost attributes
Differences defined in flexible cost analysis
Necessary (justified) difference 1
Necessary (justified) difference 2
Other difference
Example of a flexible cost analysis
Exercises
Let's calculate the planned technically and economically eligible cost amount.
Let us calculate the general operating costs.
Solution
Part 1 solution
Machine cost:
Planned variation of the cost attribute: (132/110 - 1) * 100% =
20%
Planned machine cost: 15,000 * (0.75 * 0.2 + 1) =
HUF 17 250
th
Operating control costs
Planned variation of the cost attribute: (242 / 220-1) * 100% =
10%
Planned operating control costs 12,000 * (0.55 * 0.1 + 1) =
HUF 12 660
th
Planned total of other costs:
HUF 2 250 th
Total planned amount of operating costs:
HUF 32 160
th
Part 2 solution
Machine cost: (148.5 / 110 - 1) * 100% =
35%
Eligible cost: 15,000 * (0.75 * 0.35 + 1) =
HUF 18 937.5
th
Operating control costs: (278.3 / 220 - 1) * 100% =
26.5%
Eligible cost: 12,000 * (0.55 * 0.265 + 1) =
HUF 13 749
th
Other eligible costs:
HUF 2 250 th
Total eligible general operating costs:
HUF 34 936.5
th
Necessary difference caused by J t - J 0 difference and r: 32 160 - 29 250 =
+ HUF 2 910
th
Necessary difference caused by J t - J 0 difference and r: 34 936.5 - 32 160 =
+ HUF 2 776.5
th
Other difference: 34 170 - 34 936.5 =
- HUF 766.5
th
Descriptive evaluation:
Total operating costs increased by HUF 4,920 thousand (HUF 34,170 thousand - 29,250 th). The most of
the cost increase (HUF 2,910 thousand + 2,776.5 thousand HUF 5,686.5 th) is the volume of cost
attributes above the general workload. The other factors (eg, unit prices) had an overall cost of $ 766.5
thousand.