Production is such a person's activity, inthe result of which he satisfies his material needs. Since nature can not provide him with all the necessary goods in the right amount, he is forced to produce them. From this we can conclude that production is an objective necessity. Human needs are divided into spiritual and material, this is only an approximate division, but it very accurately reflects the social and natural needs of man. Satisfaction of the spiritual principle of man is no less troublesome than material, yet they are also provided by the industrial power of modern production.
With the development of the standard of living, thehuman needs, economic theory represents this trend, as the law of exaltation of needs. As a result of the growth of human needs, production must constantly grow in order to provide the necessary standard of living for the person. The purpose of production is complete satisfaction of the needs of human society, in part it is achieved because of the interactions of man and nature.
Each enterprise is ultimately orientedto get the highest possible profit, at the same time it is clear that no production of goods or services can not do without costs. To purchase raw materials, pay workers and advertise the company carries out specific costs. At the same time, it seeks to launch such a production process, in which the necessary volume of production will be ensured with minimal costs for the organization of this production.
Distinguish between variables and fixed costs.Variables include costs, the amount of which varies depending on the volume of production. Such costs include the payment of transportation services, wages, the purchase of raw materials, fuel and additional materials. Variables and fixed costs in the sum form common costs, which in many respects determine the profitability of this production.
In order to ensure the required levelthe company must implement a number of costs. Depending on the change in the volume of these costs, the volume of output varies. Some of the costs are subject to fairly rapid adjustments, while others require additional time to resolve this issue. Costs, the regulation of which requires a large amount of time, determine the size and parameters of the firm's production capacity and are called fixed costs.
The fixed costs are the costs ofuse of production factors, while costs determine the consumption of resources in their natural form, while costs represent the cost of the costs incurred. Within a single enterprise or firm, fixed costs include individual production costs, which are the costs of a specific subject, and public costs, which are aimed at producing the volume of a product.
Given the above facts, you can doconclusion that in a market economy it is possible and necessary to manage costs. Economic thinking goes to a completely new logical level, which means that variables and fixed costs are subject to fundamental change, which will require the creation of new theories, as well as a completely new professional training of employees. All these changes will be required for the progressive innovative management of production, which will inevitably lead to a significant improvement in the well-being of human life.
