Sale of Products
Sale of Products
(realizatsiia produktsii), the entry of manufactured products into national economic circulation, with payment at existing prices. Products are considered sold when they have been shipped from an industrial enterprise and paid for by the consumer or by a marketing or trade organization. The actual sale of products is evidence that the output produced is needed by the national economy to satisfy certain social needs. The volume of product sales indicates the degree of participation of enterprises and sectors of the national economy in socialist expanded reproduction. The sale of products is a major economic indicator that characterizes the economic and financial activity of industrial enterprises, production associations, ministries, and departments.
The sale of the basic assortment of products is approved for production enterprises by their superior organizations in physical and in value terms, including quality indexes. The quantitative targets for product sales are established on the basis of the corresponding material balances, which are elaborated by the planning bodies and ministries. A number of considerations are involved in assessing the quality of the products sold, including the volume and proportion of products equal in quality to the best Soviet and foreign goods of that type, the volume and proportion of articles bearing the state seal of quality, and grade indicators.
The planned volume of product sales includes the value of finished and semifinished items that are to be delivered to consumers and paid for during the period covered by the plan, as well as industrial work, including major repairs on the enterprise’s equipment and means of transportation and the sale of products for internal capital construction and for nonindustrial systems entered on the balance sheet of an enterprise. In determining the planned volume of product sales, consideration is also given to changes in the inventories of unsold output at the beginning and end of the plan period, finished articles in the warehouse, and shipped goods for which payment has not been received. The volume of product sales does not include receipts from the nonindustrial activities of an enterprise (construction, housing and utilities, and subsidiary agricultural enterprises).
The volume of product sales is usually calculated according to the factory method—that is, the value of the finished and semifinished articles to be sold under the plan does not include the value of goods used in internal plant turnover or for needs within the enterprise. In determining the volume of product sales at production associations, combines, and firms consisting of several plants and factories that do not have independent balance sheets, the internal plant turnover is excluded from the aggregate volume of product sales of all the enterprises in a particular association. The total volume of product sales for a sector is defined as the total volume of products sold from all the enterprises in the sector.
The planned volume of product sales is defined in terms of the enterprise wholesale prices established in the plan (minus the turnover tax), taking into account the surcharges and rebates established in the price lists. In certain cases, the planned volume of product sales is defined in terms of fixed prices used to calculate the volume of commodity output.
The actual volume of product sales is determined either in prices actually in effect during the period covered by the report or in terms of the enterprise wholesale prices adopted in the plan. The first method is used to determine the actual profits from sales, and the second, to assess fulfillment of the plan and the growth rate of production in comparable prices and to determine the level of economic incentive funds at a particular level of fulfillment of the plan.
At the national economic level, a product is considered sold after payment for it has been received from the purchaser or customer by the current payments or special loans account of the supplier enterprise. When payment is made by means of the offsetting of claims, the product is considered sold after the results of the offsetting appear in the accounts of the supplier enterprise. Output dispatched for internal capital construction is entered in the sales account as the bank pays for it from corresponding accounts for financing capital investments. All other types of industrial work are counted in the volume of product sales from the day the enterprise shows their value in the sales account.
The basic methods for increasing the volume of product sales include producing a higher quality product that generates increased demand among consumers; increasing the quantity of output produced; improving the supply, marketing, and financial services of enterprises; improving credit and payment relations; and establishing an economically sound price policy.
As a major economic indicator, the volume of product sales is established for enterprises in conformity with the decisions of the September (1965) Plenum of the Central Committee of the CPSU. The sale of products differs substantially as an indicator from the gross output of an industrial enterprise, an indicator that was approved before 1965. With the sale of products as an indicator, it is possible to use commodity-money relations more effectively in substantiating plans for industrial enterprises and in establishing the rates and proportions of sector development.
The use of product sales as an indicator also promotes improved product quality and encourages planning bodies, economic organizations, and enterprises to study national economic needs and public demand. The fulfillment and the overfulfillment of the state product sales plan by an enterprise have a direct effect on profitability and on the magnitude of deductions from profits in the enterprise’s economic incentive funds.
REFERENCESKotov, V. F. Planirovanie realizatsii produktsii, pribyli i rentabel’nosti v promyshlennosti. Moscow, 1969.
Osnovy i praktika khoziaistvennoi reformy v SSSR. Edited by N. E. Drogichinskii and V. G. Starodubrovskii. Moscow, 1971.
Planirovanie narodnogo khoziaistva SSSR, 2nd ed. Edited by L. Ia. Berri. Moscow, 1973.
V. F. PARKHOMENKO