Purchasing cheaper raw materials

[subornaakter20]

Let's consider the case when a company decides to reduce the cost of production by purchasing cheaper raw materials. One chair costs 5001.8 rubles under the item "Material costs" (Table 2).

Table 2. Material costs for the production of one unit of output.

Purchasing cheaper raw materials

The purchasing department monitored raw chile mobile phone numbers database material prices and selected several suppliers with more favorable conditions (see columns 7 and 8 in table 2). Changing suppliers will reduce the cost of one chair by 356 rubles, the costs of producing the entire volume of products will decrease by: 356 * 4640 = 1,651,840 rubles.

Let's calculate the increase in enterprise profit due to the reduction in cost price:

Revenue in the reporting period = 111,360,000 rubles.

Fixed costs = 16,850,180.04 rubles.

Variable costs in the planning period = 4,640 * (10,655.94 + 4,645.80) = 71,000,073.6 rubles.

Profit for the planned period = 111,360,000 – 16,850,180.04 – 71,000,073.6 = 23,509,746.36 rubles.

Another effective way to optimize costs is to reduce overhead costs that are not directly related to the production process and do not have a significant impact on the quality of goods, works and services.

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Let us analyze the effectiveness of the considered methods of increasing enterprise profits (Table 3).

Table 3. Comparative analysis of the effectiveness of using various methods to increase profitability

Method of increasing profitability Revenue, RUB Cost price, RUB Profit, RUB
Initial data

111,360,000.00

89,493,741.64

21 866 258,36

Increase in sales volume

120,000,000.00

95 129 880,04

24 870 119,96

Increase in retail selling price

116,000,000.00

89,493,741.64

26 506 258,36

Reduction of the cost item "Wages"

111,360,000.00

83 319 523,69

28 040 476,31

Reduction of the cost item "Material costs"

111,360,000.00

87 841 901,64

23 518 098,36



Based on the table, the following conclusions can be drawn:

The greatest effect in the form of a 30% increase in enterprise profits comes from reducing the number of employees and reducing the main cost item in the cost structure - wage costs.

To achieve this result using other methods, the company would have to increase sales volume by 16.7% (or 760 units) or increase prices by 8.3% (or 2 rubles).

At the same time, the production costs of producing additional units of output, the availability of the necessary production capacity, and the level of market demand would have to be taken into account. Increasing the price could backfire and cause customers to leave.

The most optimal solution is to reduce the cost of production based on an analysis of forecast profit values.

Let us analyze the impact of the considered methods on the indicators of profitability of product sales and profitability of sales (Table 4).

Each of the methods leads to an increase in the enterprise’s profit, with the maximum profitability values ​​being achieved by reducing the costs of wages for production workers – 33.65% and 25.18%, respectively.

Table 4. Analysis of changes in profitability indicators