total cost

Under total cost (Engl. Total cost ) is defined as the business cost accounting the sum of all costs , in a company incurred in a given period. The term is usually used in cost resolution , where costs are divided into variable costs and fixed costs .

General

If the costs of an operational reference object are made up of both fixed and variable cost components, then there are mixed or total costs. The cost theory usually assumes an S-shaped course of the total cost curve ( production function of type A ). However, Erich Gutenberg pointed out that, at least for industrial production, a linear cost curve of the total costs is more representative. Based on limitational production factors , he developed the type B production function from this . Then the total costs would increase by the same amount with increasing employment, the total cost curve is correspondingly linear, the marginal costs are constant; the variable average cost is equal to the marginal cost. However, Gutenberg's assumptions are not based on constant production conditions in a company.

composition

The total costs ( ) are made up of the fixed ( ) and variable costs ( ). These two cost components say something about whether costs react to changes in employment (variable costs) or not (fixed costs). A further division into direct costs ( ) and overhead costs ( ) is possible, depending on whether the costs can be assigned directly to a cost unit ( direct costs) or not (overhead costs): ${\ displaystyle K_ {g}}$ ${\ displaystyle K_ {f}}$ ${\ displaystyle K_ {v}}$ ${\ displaystyle K_ {e}}$ ${\ displaystyle k_ {g}}$

{\ displaystyle K_ {g} = K _ {\ mathrm {f}} + K_ {v}}

{\ displaystyle K_ {g} = K _ {\ mathrm {e}} + k_ {g}}

Hence:

{\ displaystyle K _ {\ mathrm {f}} + K_ {v} = K _ {\ mathrm {e}} + k_ {g}}

In the total cost method according to Section 275 (2) HGB , the total costs are broken down into different types of costs , in particular into material and personnel costs and depreciation .

Key figures

The absolute key figure of the total costs can become more meaningful when taken into account when determining business key figures . In this way, you can compare the total costs with the sales revenues and then get the cost coverage ratio

{\ displaystyle \ mathrm {Degree of cost coverage {\ ddot {}}} = {\ frac {\ mathrm {K_ {g}}} {\ mathrm {Sales revenue {\ ddot {o}} se}}}}

.

In addition, you can set the total costs in relation to the quantity produced in the same period ( unit costs as opposed to the total costs) ${\ displaystyle x}$ ${\ displaystyle k}$

{\ displaystyle k = {\ frac {K _ {\ mathrm {g}}} {x}}}

or calculate it per employee.

Demarcation

While one speaks of total costs in cost and performance accounting , the term full costs , which is identical with this, is used more in cost allocation and calculation .

Individual evidence

[1] Carl-Christian Freidank, Cost Accounting: Introduction , 2012, p. 53

[2] Erich Gutenberg, Introduction to Business Administration , 1958, p. 68