Above-norm Reserves

Above-norm Reserves 

a portion of the assets invested in production by a socialist enterprise (organization), not covered by established standards and not credited by a bank. Above-norm reserves usually arise as a result of the unsatisfactory operation of an enterprise.

In industrial and agricultural enterprises, as well as construction organizations, above-norm reserves may be related to the production of output that is too poor in quality to be marketed, to deferred expenses in excess of the plan, to the unplanned delivery of commodity and material values not needed by an enterprise at a particular time, or to a delay in the marketing at a particular time, or to a delay in the marketing of finished products, owing to the producer’s error. In trade organizations, above-norm reserves are formed by the delivery of commodities for which there is no buyer demand. At domestic service enterprises the main reason for above-norm reserves of finished goods is poor workmanship, which induces customers to reject the goods.

Internal economic reserves are mobilized when above-norm reserves are eliminated by the organization of continuous, timely delivery of raw materials and supplies; by prompt refusal of previously ordered objects, owing to the economical consumption of previously accepted objects of labor; by the sale of objects of labor not needed by an enterprise; and by the acceleration of the sale of finished products. Reducing above-norm reserves improves the financial condition of an enterprise and releases significant assets for national economic needs.

V. A. NOVAK