Ways of development and cost price

Production efficiency means reaching the best result with the least spending. There are two ways to develop production. In the extensive way production grows by adding more shops, sown areas and workers and gathering more material. In the intensive way the same result is reached by using better technology and equipment, organising work better, strengthening discipline and saving resources; today the main attention goes to the intensive way. Every enterprise operates on a plan: the plan includes the volume and time of output, the introduction of new equipment, raising labour productivity and improving staff skills. The cost price of a product is all expenses of making and selling one unit: raw material, wages, energy, wear of equipment (amortisation), repair, rent and others; cost price = total expenses : number of products. If an enterprise is profitable, that is, its revenue exceeds its expenses, part of the profit goes to the state budget as tax and the rest is used for the enterprise’s development (new equipment, wages, bonuses).