E- Global Congress 
Hosted online from Dubai, U. A. E., E - Conference. 

Date: 29th October 2024 

Website: https://eglobalcongress.com/index.php/egc 

ISSN (E): 2836-3612 

26 | P a g e  
 

THE ESSENCE OF THE COSTS OF BUSINESS ENTITIES 

Baxramov Abdulaziz Baxtiyorovich 

Independent student of Tashkent State University of Economics 

 

Abstract 

The concepts of "production costs" and "production outputs" do not mean 

the same thing. The second of these concepts is broader than the first, and 

from the point of view of society, it includes the entire volume of living and 

commodified labor and is equal to the value of the product. The concept of 

"production output" is, in most cases, associated with a certain sector of the 

economy (for example, production output, transaction output, etc.). 

Production outputs can initially be divided into two groups: tangible or 

actual outputs; imprecise outputs. 

Exact or actual costs consist of specific costs incurred by - wages, costs of 

raw materials and materials, payment for rent, etc. Implicit, exchanged 

outputs or missed, missed opportunity outputs are related to the fact that uses 

capital to produce a product, and therefore misses out on its alternative use. 

Limited funds force to use options of available opportunities depending on 

their level of usefulness. There will always be elements of forgone benefits, 

hence elements of uncertain outputs. Any management decision to continue 

production of a particular product or to further expand it is based on the 

calculation of tangible and intangible costs. The choice between one or 

another economic decision always characterizes consciously lost or rejected 

opportunities to achieve other goals. 

The cost of the product (work and service) consists of the value of raw 

materials, materials, fuel, energy, fixed assets, labor resources and other 

costs of their production and realization used in the production process of 

the product (work and service). In practice, the concepts of "total product 

cost" and "product unit cost" are widely used. 

Different sectors of the economy (industry, agriculture, trade, catering, 

construction, etc.) have their own characteristics of reflecting expenses in 

the cost structure of the manufactured product. The composition of costs 

included in the cost depends, on the one hand, on the implemented tax policy 

and on the other hand, on the state and structural structure of the economy. 

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E- Global Congress 
Hosted online from Dubai, U. A. E., E - Conference. 

Date: 29th October 2024 

Website: https://eglobalcongress.com/index.php/egc 

ISSN (E): 2836-3612 

27 | P a g e  
 

Depending on the conditions and directions of the economic entity's activity, 

expenses are divided into the following two large groups: expenses related 

to production and sale; non-realization costs; 

The costs related to production and realization usually include the following: 

production, storage and delivery of products, execution of work, service, 

purchase and sale of goods (work, service, property rights); the costs of 

maintaining and operating, repairing and maintaining fixed assets and other 

assets, as well as maintaining them in a corrected state; costs of development 

of natural resources; expenses related to research and development; 

mandatory and voluntary insurance costs; other costs associated with 

production and sales. 

The cost of production, which consists of the total costs of an economic 

entity, includes the following: material costs; depreciation allowances; labor 

costs; allocations to social needs; changes in work in progress and other 

costs; future period costs; reserves for future expenses and payments, etc. 

Non-realization costs will not be related to the production and sale of the 

product. In order to ensure effective management of resources, the cost of 

the product is calculated according to the separate units of the business 

entity. It includes the expenses of this department and becomes the basis for 

drawing up a planned calculation of the expenses of the economic entity, i.e. 

budget (estimate) for a certain period. 

All expenses of an economic entity can be classified in different directions 

(depending on the basis of this or that classification). Usually, the 

classification of costs includes their division into groups according to the 

following characteristics: in relation to the volume of production; according 

to economic elements; on calculation items; according to the method of 

transfer to the product cost; depending on the level of state regulation; and 

others. 

Costs in relation to the volume of production are classified into the following 

groups: fixed costs; variable costs. Fixed costs will not depend on the volume 

of production. These expenses will be available even in cases where the 

activity of the economic entity is stopped or during its establishment. Such 

expenses include depreciation of its fixed assets, rent of buildings, salaries 

of administrative and service personnel, some forms of taxes, etc. 

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