Production costs and their impact on profitability.

Globalization and the effects it causes worldwide have generated greater demands within organizations, making it necessary to emerge with new actions and strategies that promote and maintain financial equilibrium.

In view of this, financial accounting is a factor that allows the analysis of management indicators, opportunities, weaknesses and economic threats of organizations in order to project better performance.

Under the aforementioned approach, production costs are always present in companies, especially because they are part of the expenditures that are made every day to obtain goods and services that in turn contribute to keep organizations operational, being transcendental the analysis of costs to improve the use of resources, maintain the profitability margin and promote an adequate management.

However, in Venezuela, due to the hyperinflation faced by the nation, cost analysis has been reduced in profitability, especially due to the constant variation of prices, resulting in higher risks, uncertainty, inadequate decision making and even the closure of many companies.

Cost accounting serves as a mechanism of assistance and supervision within the companies and as a primary support to management in the valuation and determination of policies, controls and decision making, it is of utmost importance for productive companies, when the products produced are independent from the rest of the production, using equally the technical resources, as well as the human resources for their production.

The production costs are mainly involved in materials and labor, emphasizing that every company today needs to take into account the production costs because from there we can determine the impact on the profitability of production of any product. Likewise, it can be said that the costs determine in a professional and methodical way, the cost of production.