A COMMON METHODOLOGY FOR ANALYSIS OF PROFIT FROM SALE OF PRODUCTS

This publication studies the profit from sale of products. It is aimed at developing and suggesting a methodology for analysis and assessment of the impact of individual direct factors on the dynamics of this indicator.Profit from sale of products is formed under the impact of direct and indirect factors. Direct factors have immediate effect on the formation of profit dynamics as a resultative indicator and such effect may be quantified. This is due to the fact that there is precisely determined mathematical dependence between the direct factors and the profit as an object of the analysis. Direct factors comprise the amount, the range structure, the cost and the prices of products. By increasing the amount of products (at specific rate of return) and the prices, the profit increases, and upon their decrease, it also decreases. Any cost increase results in the respective profit decrease, and vice versa. With regard to the product range structure, profit increases upon increase of the relative share of more profitable items, and decreases upon increase of the less profitable items.Indirect factors refer to introduction of new technologies and items, increase of production capacities of fixed tangible assets and improvement of the level of their extensive and intensive use, increase of efficiency of labor, etc. The impact of indirect factors is expressed through the direct factors.We suggest an approach for differentiation of changes in the amount and range structure of products.The determination of the three factors – elements of the cost of sold products – expenses for principal activity, expenses for sale of products, and administrative expenses, is in accordance with the modern organization for creation of information by accounting means.The updated methodology developed and suggested in this publication enables the identification and assessment of the impact of direct factors on the deviation between the actual and benchmark value of profit from sale of products. These factors are:1) changes in the amount of production;2) changes in the expenses for principal activity;3) changes in the expenses for sale of products;4) changes in the administrative expenses;5) changes in the sales prices;6) changes in the product range structure.The feasibility of this methodology is illustrated by using specific numerical information.