Manufacturing (part Three)

Today I’m going to tell you about financial report for factories. It keeps all information about expenses of your enterprise for the last week of production, so you can use this information to analyze prime cost structure and to optimize your production of the factory. To see that information go to financial report page. There you will find this numbers:

• Revenues – total value of goods sold.
• Expenses – enterprise’s total expenses

All enterprise expenses are divided into variable and fixed expenses:

• Variable: these expenses depend on production volume. If production volume changes, the expenses volume will change too. For example: cost of raw material, energy etc.
• Fixed: these expenses don’t depend on production volume. Even if you stop all your production, the enterprise will still have fixed expenses.

Main expenses are: fuel, energy, losses, management expenses, salary, etc. Energy costs depends on production volume, technology and one unit of energy cost (depending on the level of city development) and production power intensity (steel production requires much more energy than bread production).

Management expenses are connected with total salary expenses and main office efficiency. Minimal possible value is 10% of the fund.

• Salary = wages of one employee X total number of employees.

General production expenses depend on city average salary, your enterprise size, equipment quantity and enterprise efficiency.

• Prime cost = variable + fixed expenses (per 1 unit of produced goods)
• Profit = revenues – (expenses+taxes)

I hope this will help you a little to understand the production.