Instruction

1

Suppose a small family company produces shelving for books. Expenditure for the month of January (excluding for balance) let it be 150 thousand earned for the same month let will be 250 thousand. Then the economic impact of furniture production in January will be 250 – 150 = 100 thousand.

Product in the value terms exceed costs – such economic effect is called a profit.

Product in the value terms exceed costs – such economic effect is called a profit.

2

Let now a small family business wanted to produce, in addition to shelving, built-in wardrobes. For this the company needs to buy the machines (250 thousand rubles), to purchase material (100 thousand) and hire another person (30 thousand rubles./month.) Accordingly, the amount of spending in the first month of implementation (February) will be 150 + 250 +100 + 30 = 530 thousand rubles. At the end of sales of new products total revenue increased by 70 thousand RUB. and made up 250 +70 = 320 thousand. Therefore, the economic effect of the activities for the month of February amounted to 320 – 530 = (–) 210 thousand RUB Costs exceeded the costs, so the economic effect is called loss.

3

Next month (March) the costs of the work amounted to, with regard to the maintenance of new equipment (30 thousand), additional materials (100 thousand) and salaries of new employee (30 thousand) 150 + 100 + 30 + 30 = 310 thousand RUB.

With the expansion of the range of sales increased and income was 410 thousand. Thus, economic efficiency March was 410 – 310 = 100 thousand rubles (again profit).

With the expansion of the range of sales increased and income was 410 thousand. Thus, economic efficiency March was 410 – 310 = 100 thousand rubles (again profit).

4

Suppose now that before the end of the calendar year, no new installations and extensions production is not provided. Calculate income and expenses for the year.

Income: 250 (January) + 320 (February) + 410 (March) + 410*9 (April to December) = 4.3 million RUB.

Costs: 150 + 530 + 310 + 310*9 = 3,78 million.

Income: 250 (January) + 320 (February) + 410 (March) + 410*9 (April to December) = 4.3 million RUB.

Costs: 150 + 530 + 310 + 310*9 = 3,78 million.

5

The annual economic effect is calculated by the formula:

Eg = DG – (NCRE * RG), where

Eg – the annual economic effect

DG – income for the year

RG – expenditures for the year

NCRE – normative coefficient of efficiency (quantity, equal to the ratio of profits to the cap attachment set for specific areas; typically 0.1–0.2, which corresponds to the payback period of capital investment 5-10 years).

For our family business let it be NCRE 0.12, then the annual economic effect will amount to: 4,3 – (0.12*3,78) = 3.85 million rubles, that is, the enterprise extremely profitable.

Eg = DG – (NCRE * RG), where

Eg – the annual economic effect

DG – income for the year

RG – expenditures for the year

NCRE – normative coefficient of efficiency (quantity, equal to the ratio of profits to the cap attachment set for specific areas; typically 0.1–0.2, which corresponds to the payback period of capital investment 5-10 years).

For our family business let it be NCRE 0.12, then the annual economic effect will amount to: 4,3 – (0.12*3,78) = 3.85 million rubles, that is, the enterprise extremely profitable.