COSTS

- is the consumption of the factors of production in order to produce goods and services.
Costs are expressed in money value. We distinguish total cost, average cost, marginal
cost.
Total costs
- all the costs in the company – consist of total fixed costs and total variable costs
Average costs
- total costs divided by the level of output (we get the cost on the production of 1 product)
Marginal costs
- costs on producing of extra unit of output -(hranicne naklady)

Division of costs:
A, according to dependence on the cost on value of production
- fixed costs (don't change with change in volume of production, we have them
even we don't produce anything. eg. insurance, administration, salaries, rent) -
company has no control over these costs
- variable costs – change directly with the volume of production. eg. Costs on
material, energy used for production, wages for production workers. There are 3
types:
Proportional (the costs increase proportionally with the increased production),
Progressive (The costs increase in higher speed than output),
Degressive ( costs increase in lower speed than output).

Proportional Progressive Degressive

- semi variable costs eg. costs on labour. Are partially fixed (eg.
Administration- employer has to pay contributions to social insurance company +
health insurance contributions) and partially variable (in wages)

B, according to various kinds (types):

1-costs on raw material and energy
2-costs on external services -service provided by external firm
(guards,advertisement,transportation)
3-wages and salaries
4-taxes and various fees
5- costs on depresiation (odpisy)

6- financial costs (paid interests + fees to bank)

C, according to the field of business activity:
I,- costs on everyday activities (naklady z beznej cinnosti)
i) business costs, day to day running (prevadzkove)

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 ii) financial costs, fees to bank (financne)
II,- costs on specific activities (mimoriadne)
i) cost on shortfall (schodok pri inventure) +various damages
ii) calculation division (for calculating cost for 1 unit of output) given by
calculation formula – each branch has its specific calculation formula.

D, From the calculating point of view we distinguish:

ii1--direct costs -(priame,jednicove) -can be calculated directly on 1 unit of output,
material or wages of production workers
ii2--indirect costs or overhead (rezijne naklady) -can't be calculated directly, can be
only estimated

REVENUES
or also called sales, their division:

1. Revenues from sales-(vynosy z trzieb) are the revenues from main business activity.
(vyplyvaju z prevazdkovej cinnosti)
2. Yields inside the company (vnutropodnikove vynosy)-are calculated only when the
company is large and has more departments. If so- each department calculates its costs
and yields. If 1 department produces semi-finished product, it sells it to another
department.
3. Other yields, which are not from day to day running of company. (nie trzby,ale
normalne vynosy) eg. When useless material is sold or some fixed assets are sold, for
example inventar.

Accounting division

Revenues can be divided into:

• Revenues from everyday activity (vynosy z beznej cinnosti)
i--revenues from day to day runing of company- SALES (prevadzkove)
ii-- financial revenues (financne) eg: earned interest from lending smt, or revenues
from buying and selling of securities
• Revenues from specific activities (z mimoriadnych) – can't be planned eg: surplus in
cash (prebytok) or shortfall as well

TR – TC =
a) PROFIT (if TR higher than TC)
b) LOSS (if TC higher than TR)
- TR-TC = accounting profit
- accounting profit - taxes = Disposable profit

Usage of disposable profit:

a) Compulsory profit (involuntary)
1. for creation of risk fund (rezervny fond, in case of LLC 5% of profit from intial
capital to risk fund and every year 5%of profit to fund until it reaches 10% of
inicial capital. In case of joint=stock companies is up to 20%.
2. for creation of other compulsory funds for eg: social fund, fund for revenues
3. can be divided into dividends of share holders
4. to pay the revenues to members of Board of management (spravna rada) in
case of Joint-stock companies to Supervisory board as well (dozorna rada).

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 5. Dividing part of profit to partners (in case of partnership)
b) Voluntary
6. Investments eg: buy new machinery
7. The rest of profit can be remained in form of retained profit (nerozdeleny zisk)

How the loss can be covered, from following resources:

• from retained profit from previous years
• by saving of partners or contribution of partners
• from the risk fund or by decreasing the initial capital
• can be taking in accounting as retained loss