Influence of production leverage mechanism on cost management of industrial enterprise.

Natalia Radionova
PhD in Economics, Associate Professor, Department of Accounting and Audit, Kyiv National University of Technology and Design, Ukraine, e-mail:radionova_n@ukr.net, ORCID ID:https://orcid.org/0000-0002-8855-2963

Cite this article:

Radionova, N. (2018). Influence of production leverage mechanism on cost management of industrial enterprise [Vplyv mekhanіzmu vyrobnychoho leveridzhu na upravlіnnia zatratamy promyslovoho pіdpryiemstva; za red.: М. I. Zveriakova (gol. red.) ta in.], Socio-economic research bulletin; Vìsnik socìal’no-ekonomìčnih doslìdžen’ (ISSN 2313-4569), Odessa National Economic University, Odessa, No. 1 (65), pp. 119‒124.

Abstract

The article substantiates the importance of practical implementation of cost management measures through the application of the mechanism of production leverage for domestic enterprises. The calculations of the influence of the cost management policy and price policy on profit and the reserves of financial strength are presented. The effect of the production lever (leverage) is considered. The functional dependence that characterizes the influence of the costs structure (the share of constant and variable costs in it) and the production profitability on the production leverage effect size is analyzed. The use of the production leverage as a flexible method for obtaining the necessary information for the making optimal short-term decisions on cost management is proposed.

Keywords

production leverage; production (operating) lever; industrial enterprise; cost management; constant costs; variable costs; margin revenue.

JEL classification: M110; DOI: https://doi.org/10.33987/vsed.1(65).2018.119-124

UD classification: 658.51.011.47

References

1. Adamenko, T. M. (2011). Characteristics of strategic cost management of an enterprise [Osoblyvosti stratehichnoho upravlinnia zatratamy pidpryiemstva], Ekonomika. Menedzhment. Pidpryiemnytstvo, No. 23(II), s. 100–106 [in Ukrainian]
2. Beliaieva, N. S. (2011). Reducing costs as an element of enterprise development strategy [Znyzhennia vytrat yak element stratehii rozvytku pidpryiemstva], Visnyk Kyivskoho natsionalnoho universytetu tekhnolohiy ta dyzainu, No. 5, s. 150–156 [in Ukrainian]
3. Boiko, Ye. I. (2008). Improvement of cost management systems at enterprises [Udoskonalennia systemy upravlinnia vytratamy na pidpryiemstvakh], Naukovyi visnyk NLTU Ukrainy, No. 18.6, s. 139–143 [in Ukrainian]
4. Velykyi, Yu. M., Prokhorova, V. V., Sablina, N. V. (2009). Management of enterprise costs: monograph [Upravlinnia vytratamy pidpryiemstva: monohrafiia], INZhEK, Kharkiv, 192 s. [in Ukrainian]
5. Verbovetska, S. H. (2011). Formation of responsibility centers at the enterprise budgeting system [Formuvannia tsentriv vidpovidalnosti v systemi biudzhetuvannia pidpryiemstva], Visnyk Khmelnytskoho natsionalnoho universytetu. Ekonomichni nauky, No. 3, vol. 3, s. 46–49 [in Ukrainian]
6. Ivaniuta, P. V., Luhivska, O. P. (2009). Resource and cost management. Ed. by S. M. Ivaniuta [Upravlinnia resursamy ta vytratamy; za red. S. M. Ivaniuty], Tsentr navchalnoi literatury, Kyiv, 320 s. [in Ukrainian]
7. Nastych, V. H. (2014). Reducing of the production cost as a factor in increasing the stability of the enterprise [Znyzhennia sobivartosti produktsii yak chynnyk pidvyschennia stabilnosti pidpryiemstva], Visnyk Berdianskoho universytetu menedzhmentu i biznesu, No. 2, s. 87–91, available at: http://nbuv.gov.ua/j-pdf/vbumb_2014_2_20.pdf [in Ukrainian]