PROCEEDINGS
OF THE TOMSK POLYTECHNIC INSTITUTE
AWARDED THE ORDER OF THE OCTOBER REVOLUTION AND THE ORDER
OF THE LABOR RED BANNER
named after S. M. Kirov

Volume 269
1976

TECHNICAL AND ECONOMIC PLAN OF A COST-ACCOUNTING WORKSHOP AT A MACHINE-BUILDING PLANT

V. S. MENDRINA

(Presented by the scientific seminar of the Department of Economics)

When enterprises shift to new methods of planning and economic incentives, the indicators of the cost-accounting activity of workshops change substantially. The profound meaning of the new system of management consists in correctly determining the share participation of each workshop in achieving plant-wide results, especially in terms of the level of profitability and profit. The share participation of each workshop in achieving plant-wide results is attained through the use of economic laws: the law of planned, proportional development, the law of value, the law of distribution according to labor, the law of increasing labor productivity, and so on.

In a socialist state, the plan is a directive mandatory for fulfillment by all machine-building enterprises and their divisions.

In accordance with the directive (approved) plan indicators received from the planning and economic department of the plant, the workshops must develop technical and economic plans.

However, as analysis has shown, machine-building enterprises in the city of Tomsk, together with the workshops subordinate to them, still underestimate the significance of this fundamental economic document, which reflects the production and economic activity of a cost-accounting workshop and, consequently, of the enterprise as a whole.

Technical and economic plans for workshops are not being developed at the Mathematical Machines Plant, the Electrical Engineering Plant, the Electromechanical Plant, and other machine-building enterprises in the city of Tomsk, while the management of the above-mentioned enterprises believes that internal plant cost accounting has been introduced at their plants.

What, then, is the main economic document of a workshop, on what is it based, and what is its content?

The technical and economic plan is a consolidated plan of the production, technical, and economic activity of a workshop, ensuring the unconditional fulfillment of directive plan indicators for the output of products and other technical and economic indicators through the fullest and most expedient use of all the resources available to the cost-accounting workshop.

The technical and economic plans of cost-accounting workshops are developed for the year with a breakdown by quarters, on the basis of which the technical and production—

the financial plan of the enterprise. Forty-five days before the beginning of the planned quarter, the quarterly technical-and-economic plan is broken down by months.

The technical-and-economic plan of a cost-accounting workshop must include the following sections:

1. The production program, including assignments for the output of products in physical and value terms (or in standard hours for auxiliary workshops), calculations of the possibilities for and utilization of production capacities.
2. A plan for increasing production efficiency.
3. Planned technical-and-economic standards and norms.
4. A labor and wage plan.
5. A plan for production costs and profitability.
6. A plan for material-incentive funds.

All sections of the technical-and-economic plan must be thoroughly substantiated by technical-and-economic calculations and by specific measures in the fields of equipment, technology and organization of production, organization of labor, material and technical supply, and production-and-economic activity; the implementation of these measures guarantees fulfillment of all quantitative and qualitative directive indicators established for the workshop, and consequently also of the indicators of the state plan.

All aspects of the activity of cost-accounting workshops are expressed in the technical-and-economic plan through a system of indicators. The system of indicators of the technical-and-economic plan consists of physical indicators, expressed in the corresponding physical units (pieces, machine sets, tons, etc.), value indicators, expressed in monetary units, and labor indicators, expressed in standard hours.

With the aid of physical indicators, the quantity of products produced is expressed, the needs and resources of production are determined, and interrelations within the workshop and between the workshops of the enterprise are established.

Value indicators make it possible to bring the entire variety of products produced to a single measure, to determine the general rates of development of production, assignments for growth of labor productivity, reduction of product cost, and growth of profitability. According to their economic content, indicators are divided into quantitative and qualitative. The former express the volume of production, the number of workers, etc. The latter characterize labor expenditures and the use of production resources (reduction of product cost, growth of labor productivity, efficiency of the use of production assets, capacities, etc.).

According to the nature of their purpose, indicators are subdivided into basic (approved) and calculated. The basic (or approved) indicators include those indicators that are established and approved for cost-accounting workshops by the head of the enterprise. These are the main indicators of the workshop’s work, which are directly connected with the assignments of the state plan.

Calculated indicators are also indicators of work, but the assignments for them are not approved by the head of the enterprise. These indicators serve as the technical-and-economic substantiation of the approved indicators and regulate important aspects of the workshop’s work.

The number of calculated indicators in the technical-and-economic plan of a workshop considerably exceeds the number of basic (approved) indicators. However, it should be remembered that calculated indicators characterize by no means secondary aspects of the work of a cost-accounting workshop (reduction of product cost, growth of labor productivity, etc.).

Technical and economic plans developed by the workshops on the basis of the directives and limits of the plant management are a component part of the plant’s technical, industrial, and financial plan and, after their approval by the director of the enterprise, become mandatory for execution by all the collectives of the enterprise’s workshops. Leading workers, engineers and employees, and Party and trade-union organizations must be broadly involved in the development of the workshop technical and economic plan. Guidance in developing the technical and economic plans of the workshops must be provided by the head of the enterprise’s planning and economic department.

Each section of the technical and economic plan must necessarily be developed on the basis of a thorough technical and economic analysis of the workshop’s work over the past period, with the aim of identifying and eliminating all existing unproductive losses, unused reserves, and of introducing advanced experience as fully as possible for the better use of all resources at the workshop’s disposal. The production reserves identified in the course of the analysis must be put into effect through the implementation of appropriate organizational and technical measures and must be reflected in the technical and economic norms.

Having received the approved planned indicators, in the workshops and at the sections, at production and technical meetings with the participation of production innovators, leading workers, technologists, planners, economists, and norm-setters, these indicators are discussed and the main measures are outlined, directed:

a) toward increasing the output of products and mastering new items;

b) toward better use of equipment and production floor space;

c) toward improving product quality and reducing rejects;

d) toward increasing labor productivity and reducing the labor input of the manufactured items;

e) toward saving basic and auxiliary materials;

f) toward saving fuel, energy, steam, compressed air, and other types of energy;

g) toward better use of tools and the introduction of the most improved types of tools and fixtures;

h) toward improving the organization of workplaces and the operational preparation of production;

i) toward introducing into production the latest achievements of science and technology;

j) toward reducing the cost of production and increasing the profitability of production.

After the systematization and calculation of the effectiveness of the organizational and technical measures planned for introduction, the existing norms and standards are revised, on the basis of which the technical and economic plan of the cost-accounting workshop is compiled.

In the technical and economic plans of the workshops, all parts of the complex production process are linked into a single whole by norms and standards, thereby ensuring the coordinated operation of all links in time and space. In developing the technical and economic plan, norms and standards must be used for means of labor, objects of labor, and expenditures of living labor. The standards and norms must be scientifically substantiated and have a progressive character. Progressive standards and norms are those in which the following are most fully reflected:

a) the modern level of development of technology, production organization, and labor;

b) the influence of measures carried out to improve production efficiency and product quality;

c) utilization of design capacities;

d) the experience of leading production workers.

The degree to which standards and norms are progressive is characterized by the additional effect that can be obtained when they are introduced. The normative materials needed for calculating the technical-and-economic plan should also include price lists—wholesale price lists for the basic and auxiliary materials consumed by the shop, tools, fuel, semifinished products, and finished articles received through cooperation from other shops. These price lists are needed in order to calculate the cost of the material and technical assets consumed by the shop, both per unit of product (machine set) for preparing planned cost estimates and for the entire output when drawing up the production cost budget. Cost-accounting shops must also have price lists of planned settlement prices for the products of the plant’s auxiliary and service shops and for individual types of services they provide. These include the following price lists:

a) for the manufacture of special tools and fixtures produced in the plant’s tool shops, and also for the manufacture of special tooling for hot shops (dies, patterns, etc.);

b) for all types of equipment repair, per unit of repair complexity;

c) for all types of energy generated by power shops (compressor shops, boiler houses, etc.);

d) for transport services: per ton-kilometer, per ton of freight, per machine-hour of operation of a motor vehicle, motorized cart, etc. These price lists are used to calculate the budget of shop expenses and for inter-shop settlements.

For the main products manufactured by the shop, it is necessary to have intra-plant wholesale prices for each machine set; the sum of these prices for the corresponding fractional shop machine sets must necessarily constitute the wholesale price of the corresponding article. These prices must be stable, i.e., their period of validity must be the same as that of the approved wholesale price of the article. All price lists and intra-plant wholesale prices are developed by the planning and economic department with the participation of the relevant departments and services and are approved by the plant director.

The production program includes the output of the shop’s products by nomenclature and by quantity of articles (pieces, machine sets), with the dates of manufacture indicated. The production program is the starting point for all subsequent calculations in the technical-and-economic plan. In developing this section, along with marketable output, the volume of work in progress is calculated that is necessary to ensure uninterrupted, rhythmic operation of the shop in producing the planned quantity of output; this is not included in the volume of production, but is planned in working-capital standards.

In order to determine the volume of production for the various types of products manufactured by the shop, to establish the dynamics of output by individual periods (months, quarters, years), to be able to judge the growth of labor productivity and to calculate fulfillment of the plan for the plant as a whole, the volume of production of the main shops is evaluated in stable wholesale prices.

The volume of production in the plant’s auxiliary and service shops is calculated in stable standard-hours. The production pro-

program established for the shop, proceeding from progressive economic standards and justified by calculations of the need for personnel and material and economic resources, is closely linked with the available production capacities.

The plan for increasing production efficiency. The principal content of this section is the preparation of production for fulfillment of the directive plan. It contains a list of technical, organizational, and financial measures that ensure an increase in output, growth in labor productivity, improvement in product quality, and reduction of its cost.

The plan for increasing production efficiency serves as one of the means of identifying and mobilizing internal production reserves and is a program of action for the collective in the struggle to achieve high quantitative and qualitative indicators of the shop’s performance. The initial data for developing this plan are the plant’s technical development plan, materials on identifying production reserves, the subject matter of measures, materials on advanced experience, worker invention, etc. The effectiveness of introducing one or another measure may be expressed in a reduction in the labor intensity of products, improvement of working conditions and safety engineering, reduction of cost, etc. However, in most cases the result of these measures is monetary savings, which affect the cost of production and, consequently, the results of profit and profitability.

The plan for labor and wages of the cost-accounting shop in the technical-and-economic plan consists of the following three sections:

1) the labor productivity plan;
2) the plan for the number of employees, training, and upgrading of personnel qualifications;
3) the wage-fund plan.

All sections of the plan are substantiated by calculations in supplementary forms, and the results are reflected in the consolidated plan for labor and wages.

The plan for production costs and profitability includes: the estimate of shop expenses, determination of the need for material resources, calculation of the cost of a unit product (machine set) for the entire nomenclature of the production program, the estimate of expenditures for production of the shop’s output with breakdowns by cost elements, determination of the shop’s mass of income and its distribution, and calculation of profitability.

The plan for material-incentive funds includes standards for deductions from profit to form the incentive funds of the cost-accounting shop and the estimate of the absolute material-incentive fund by areas:

a) bonuses for workers;
b) current bonuses for managerial employees, engineers and technicians, and office employees;
c) one-time incentives for distinguished employees;
d) payment of remuneration based on the results of the year.

All sections of the technical-and-economic plan are closely interconnected by progressive norms and standards through technical-and-economic calculations.

In order to improve the planning and economic work of shops, introduce cost accounting, and increase its effectiveness, we have developed, as applied to the main shops of machine-building plants, forms of the technical-and-economic plan of a cost-accounting shop with methodological—

… instructions, which are currently being introduced at the Tomsk Electrotechnical Plant.

The systematic technical-and-economic plan of a cost-accounting workshop, combined with the organization of production-and-economic work, is precisely the main link by means of which effective cost accounting is achieved, yielding the greatest economic efficiency both for an individual collective—whether a workshop or a plant—and for social production as a whole.