Adapting the factor-analysis model of production, costs and profits to its application in management accounting of bakeries
Subject The efficiency of commercial organizations operating in various industries, including the baking industry, depends largely on the economic mechanism adequate for current economic conditions, with economic analysis being its element. The methodological tools to analyze economic and financial indicators that are available in the economic literature are rarely adapted to the specifics of bakeries, which are characterized by a wide range of products and diversity of direct cost of production. Objectives The study aims to adapt the factor-analysis model of production, costs and profits to be used in management accounting of bakeries. Results The said model is characterized by the grouping of fixed and variable costs subject to sector-specific issues, and distinguishing the intermediate objects of calculation (baking loss, surplus). The model extends and further develops the CVP model, which serves to calculate critical values of all components of enterprise's net profit, economic efficiency of investment projects to justify management decisions so as to optimize the combination of fixed and variable production resources. The model can be used for operational analysis of business activity of bakeries. It enables to perform the analysis of net profit sensitivity by each factor, and the comprehensive factor analysis of financial results. Conclusions The paper describes the economic feasibility of developments in management practices of baking companies, presents the sharing of fixed and variable costs with respect to a change in the production volume by different methods, and analyzes the product mix policy under the proposed methodology.