From the lack of control and cost analysis in visual arts SMEs, plus the inefficient planning of productive resources, which affects the availability and effective delivery of important information for decision-making and plan development strategic, the development of this work became necessary. The most used cost systems in SMEs were studied, art as merchandise and the technical, human and financial resources available to the organization for its implementation were taken into account. With the preparation of this work, the intention was to state that the cost system to be applied would greatly support, with accurate and timely information, the development of strategies for sustained and competitive growth.
Key words: SMEs, costs, cost system, art.
ABSTRACT
Starting from the control lack and analysis of the costs a small and medium enterprise (SME) of arts visual, more the inefficient planning of the productive resources, what impacts in the readiness and effective delivery of important information for the taking of decisions and the elaboration of strategic plans, became necessary the development of this work. The systems of costs were studied more used in SMEs, the art as commodity, and one kept in mind the technical, human and financial resources with which it counts the organization for their implementation.. With the elaboration of this work to show that the system of costs to apply would support in great measure with truthful and opportune information that allows to develop strategies for a sustained growth and competitive.
Keywords: SME, cost, systems of costs, art.
INTRODUCTION
A premise for an efficient business organization is to have a management that periodically monitors the results and determines the factors that influence them. For this, among the most important elements, it is necessary to adequately control the resources that the entity has and the register of economic events. One of the ways to achieve this is through cost analysis.
Accounting information can be classified into two broad categories: financial accounting or external accounting and cost accounting or internal accounting.
Financial accounting shows the information that is provided to the general public, and that does not participate in the administration of the company, such as shareholders, creditors, customers, suppliers, unions and financial analysts, among others, although this Information is also of great interest to company administrators and managers. This accounting allows information to be obtained on the financial position of the company, its degree of liquidity and its profitability.
Cost accounting studies the cost-benefit-volume relations of production, the degree of efficiency and productivity, and allows the planning and control of production, decision-making on prices, budgets and capital policy. This information is not usually released to the public.
Neuner (1972) pointed out:
Cost Accounting is, therefore, an amplified phase of the General or Financial Accounting of an industrial or commercial entity, which quickly provides management with the data regarding the costs of producing or selling each item or supplying a particular service. (p. 7).
According to Sosa (2012):
Cost accounting is a branch of general accounting that synthesizes and records the costs of a company's manufacturing, service and commercial centers, so that the results of each of them can be measured, controlled and interpreted. through obtaining unit and total costs in progressive degrees of analysis and correlation. The cost accounting system deals with the classification, accumulation, control and allocation of costs. Costs can be accumulated by accounts, jobs, processes, products or other business segments, it helps to control operations and facilitates decision making (sp).
Cost accounting provides managers with the information necessary to perform management accounting. Both must exist, since a company may have excellent cost accounting, but if it does not study the future behavior of its expenses and costs and does not apply techniques to decide before, it does not have the required management accounting.
The cost has to be an instrument for the use of resources, available in any economic process, and knowing it facilitates the effect of the decisions that are presented in relation to certain programs and the assurance of a correct planning and use of material, human resources. and financial organizations have.
Having a cost system implemented in a company is one of the best business investments that an entrepreneur can have. Because the success of any organization from the smallest factory or family business to the largest multinational corporations requires the concepts and practices of cost accounting, since it provides key information to managers so that they can plan and control, as well as pay for products and services. (Horngren, Sikant and Foster, 2007).
Cuban society is in a process of updating the model of organization and operation of its economy, in order to recover the productive capacity of state companies and the entire nation, as well as incorporate other forms of economic management that allow the use of underutilized resources to make your socialist system more fair, viable and efficient.
This has required, among other decisions, the incorporation of the non-state sector of the economy, which includes: individual farmers, others grouped in credit and service cooperatives, "own-account workers", non-agricultural cooperatives, usufructuaries of land and totally foreign capital.
According to Torres (2015) cited by Perna (2018), as of the constitutional reform of 1993, self-employment as an alternative to employment begins to manifest itself in other economic activities, and to stimulate the Cuban economy, especially in the service sector.. Today self-employment provides employment to a considerable sector of the population in Cuba. Currently 27% of the total workforce in the country is located here, which includes "self-employed", agricultural cooperatives or not, and peasants.
The increase in self-employment and the authorization of hiring the labor force have led in practice to the existence of private medium, small and micro-enterprises. Such is the rise of non-state forms of management as a form of private sector management, and which constitute a source of income of high importance to the country and an alternative job for workers.
Some of the small companies do not have the advantages that large companies have, which prevents them from having development, growth and excel to achieve greater competitiveness. It is important to affirm that the competitiveness of the company depends fundamentally on its costs, since they directly affect prices; of its quality, which must correspond to customer expectations, the service it must provide to them and the opportunity, which is related to the response time to market demands, both in terms of delivery times and the timely development of new products (Gutiérrez, Zúñiga and González, 2015).
The author decides to approach the costs in the art market starting from considering that a merchandise is a good or service that satisfies a particular need and is exchanged for money; and also from the development of the new forms of non-state management that are introduced in Cuba, among which are artists with contracted workers, and the little empirical contrast in the international and national scope of the analysis of costs in production. artistic, and specifically in the visual arts.
COST CONTROL AND COST SYSTEMS
Cost accounting emerged in the 14th century as a result of the growth and development of the wine, coin, and book industry. In the period between the fourteenth and nineteenth centuries, records of industrial activity began to cover certain operations related to the transfer of materials from one process to another within a business, and several industries adopted elementary accounting systems. Already in the 80s and 90s of the 20th century accelerated changes occurred in: management technologies, tools and techniques, product life cycle, strategies, business objectives, among others. These changes oriented cost accounting towards management,Thus, its fundamental purpose is to provide the company management with all the information necessary for planning and controlling business activities, as well as allowing decisions to be made that lead to the achievement of what is desired.
Among the general objectives of cost accounting, according to Romero (2012), are:
- Evaluate the efficiency in terms of the use of the material, financial and labor force resources used in the activity. Serve as a basis for determining the prices of products or services. Facilitate the assessment of possible decisions that allow the selection of those Variants that provide the greatest benefit or the minimum of expenses. Classify expenses according to their nature and origin. Analyze expenses and their behavior. Analyze the costs of each organizational level, based on the expense budgets that are prepared from it..
A cost is generally measured as the monetary amount that must be paid to acquire goods or services (Horngren, Datar and Rajan, 2012).
For his part, Davidson (1982) noted:
Cost has many different meanings, depending on whether it is used in Accounting, Economics, or Engineering. A charge to a cost account under traditional accounting theory is a charge to an asset, while the expression of a cost is an expense (p. 42).
When referring to the subject, Mieres (1984) stated that "cost is the sum of expenses of all kinds, expressed in monetary values, which is applied to a given economic activity" (Mieres, 1984, p. 175).
The author agreed with Morera (2012) when she states:
In general, it can be summarized that cost as an economic category is the sum of all kinds of expenses, expressed in monetary values that are applied to a given economic activity. It is identified with some of its parts or manifestations and is an economic indicator that allows the company to measure its economic efficiency, since it expresses the magnitude of the material, labor and monetary resources necessary for production (p. 2).
In recent years, the importance of costs has been decisive in defining a sale price that competes in the existing market.
Costs can be direct and variable, direct and fixed, indirect and variable and indirect and fixed.
There are several types of costs:
- According to the area where it is consumed: Production, distribution, administration, and financing costs. According to its identification: Direct and indirect costs. According to the moment in which it is calculated: Historical and predetermined costs. According to the moment in which they are reflected in the results: Costs of the period and of the product. According to the control that is had on its consumption: Controllable and uncontrollable costs. According to its importance in organizational decision-making: Relevant costs and Not relevant According to the type of disbursement incurred: Disbursable and opportunity costs According to their behavior: Fixed, variable and semi-variable costs (mixed and staggered).
PRODUCTION COST ASSESSMENT TECHNIQUES
Taking into account the organizational conditions and objective possibilities of the companies, techniques of valuation of production costs can be applied. In the visual arts business under study, it is necessary to select one of these techniques or to interpret them to understand the one currently being applied.
The techniques that can be applied are divided into:
Techniques based on the use of real costs: Expenses are recorded and costs are calculated in the amount in which they actually took place. The actual costs are made up of the set of expenses actually incurred by the company or organizational unit in a certain period of time, associated with production.
Techniques based on the use of predetermined costs: They are calculated before starting the process of producing an item or rendering a service; and depending on the bases used for their calculation, they are divided into estimated costs (indicates what an item or group of items with a relative degree of approximation could cost) and standard costs (requires a rigorous regulatory basis, as well as reliability and accuracy in the data). The predetermined costs are those that are calculated on the basis of knowledge and experience before starting the production process, and based on specific future conditions.
There is a form of cost where actual and predetermined costs are used: the normal cost.
In normal cost, direct costs (direct material and direct labor) are calculated at real cost, due to the possibility of easily identifying through the primary documentation the amount consumed of these resources, while indirect costs are applied to the product. at a predetermined rate. This way of paying for production facilitates the delivery of finished production or concluded services, before the end of the period of operations (Horngren, Datar and Rajan, 2012).
IMPORTANCE AND NEED FOR COST
The importance of this category derives from the need to measure productive work expenses, and the starting point for setting prices, depending on the principles on which they are established, as well as for financial investment decision-making..
The decrease in cost is of extraordinary importance to the economic interests of society, companies and individual workers. When production costs decrease, profit increases.
The possibility of reducing the cost is not automatically realized; It is necessary to use ways and forms of organization, and the rules established for it must be taken into account. There are a series of factors that influence in one way or another the reduction of costs; raising productivity of work; automation of production processes; the proportional use of the means of production and a change in the structure and volume of production that avoids losses, losses and productive expenses.
With the planning, registration and calculation of the cost, different purposes are achieved, which allows to increase the effectiveness, ensure high levels of profit growth and increase the profitability of the organization. By registering, it is guaranteed the obtaining of indicators that characterize the degree of growth of the cost plan by expenditure items, types of products and areas of the company and the control of the rational use of the workforce, the use of materials raw materials and materials, fuel, energy, etc. This allows a systematic reduction of the production cost. The cost calculation is established under duly defined objectives such as: control, cost and decision making.
The fundamental purpose of costing is control. Management wants to control costs and make sure they are not excessive based on goals and plans. Another important purpose is the cost of production and services; it is the way to determine the appropriate inventory costs for the preparation of financial statements.
Purposes of cost:
- They provide cost-related reports to measure profit and assess inventory (income statement and balance sheet). They provide information for the administrative control of the operations and activities of the company (control reports). They provide information to management to support the planning and decision making (analysis and special studies).
All of the aforementioned allows it to be defined as an effective instrument for management, since through it the behavior of the economic effectiveness of companies can be measured, in a way that facilitates decision-making aimed at obtaining better results with minimum expenses.; as well as reducing the risk of making incorrect decisions.
CYCLE OF COST ACCOUNTING
The flow of production costs follows the physical movement of raw materials as they are received, stored, spent, and converted into finished goods. The flow of production costs results in income statements, cost of sales and cost of manufactured items.
Knowledge, analysis and cost control in a company are vital to its success. Although no one can doubt that the costs exist and that they are real, this does not imply that they are known and understood in all companies. Traditionally, accounting is carried out aimed firstly at the company's tax returns, and secondly, at providing more or less timely information on its financial-accounting status. It is rare that there is a good cost system, which can consist of the following components: cost estimation, standard cost determination, cost or responsibility centers, budget control and activity-based cost (ABC), between others (Olavarrieta, 1999).
COST SYSTEM
The cost system according to Poblete (1987) "… is the set of rules, criteria, procedures, guidelines and operations to be followed in determining and calculating production costs or others" (Poblete, 1987, p. 127)
A cost system is a set of rules, processes, and procedures that make it possible to accumulate accounting and administrative data to provide relevant information aimed at facilitating decision-making by company management, as well as proceeding with the assessment of the production (Duque, Osorio and Agudelo, 2010).
For the purposes of this investigation, the author assumes Sánchez's (2009) criterion that a cost system is the set of rules and procedures for planning, recording, calculating, controlling, and analyzing costs for taking decisions.
Taking into account the current conditions and making use of the definitions set forth, it can be said that the type of production activity carried out is the determining factor when deciding the cost system to be implemented.
The cost systems that are at the service of the companies are diverse, for this reason the managers before choosing any cost system must know the characteristics of each of them to determine which one is suitable for the company, depending on their needs (Rivers, 2014).
To determine the value of cost objects, the definition of three basic aspects is required, on which the reliability of the cost supplied will depend, they are: the cost base, the cost accumulation method and the cost philosophy (Duque, Osorio and Agudelo, 2010), in such a way that they constitute fundamental elements of a cost system as explained below:
Cost basis: Refers to the source or origin of costs that serve as the basis for the valuation of products or services; that is, if the costs are historical or real, predetermined, or a combination of both. (Duque, Osorio and Agudelo, 2010).
Accumulation method: Refers to the way costs are recorded or accumulated throughout the production process. The cost accumulation method is closely related to the type of products that are manufactured and the size and type of activity of the company. According to Duque, Osorio and Agudelo (2010), they can be: by manufacturing orders, by processes, by activities or by projects.
Philosophy of cost: Refers to the criteria that are taken into account when defining whether a resource consumed within the production or service provision process is considered the cost of the inventory product or service, or if it is considered the cost of the period or non-inventoryable expense (Duque, Osorio and Agudelo, 2010). Among the cost philosophies are: absorbent, variable or marginal, direct, ABC, throughput accounting, among others.
The specific selection of the cost base, the philosophy of cost and the form of accumulation of costs constitute a cost model from which each organization defines what to assign, what to assign to it and how to determine the value of cost objects., so that they define how the profitability objectives are going to be measured and affect the behavior and management of the organization at its strategic, tactical and operational levels.
TYPES OF COST SYSTEMS
- Order cost system
It is used where the products are different according to the needs of materials and conversion and respond to customer requests, based on previously established specifications and specific needs.
The cost-per-order system is typical in companies, such as: the clothing industry, the furniture industry, the manufacture of spare parts, the printing industry, auditing and consulting services, construction, repair services, hotel services and gastronomic services.
In this system, the costs of materials, direct labor, index or proportion of indirect expenses, are recorded in each work order and by the production cost centers involved.
Another feature is that the unit cost is not determined until the complete manufacturing of the order is completed.
This system attempts to apply costs to specific jobs, which may consist of a single physical unit or some equal units that make up a batch or a specific job.
For the system to be applied properly it is important to be able to identify each order requested with a number or page that will allow the costs associated with it to be separated.
In relation to the prime costs, the primary documents carry the folio or number that identifies the specific lot or order, while in the case of indirect manufacturing costs they are generally applied to the orders corresponding to an application rate (Horngren, Datar and Rajan, 2012).
- Process cost system
It is a system of accumulation of production costs by departments or cost centers. It is used in companies that have continuous or mass production; production is uniform; units go through the same processes and are assumed to receive equal costs.
Its main characteristic is the accumulation of expenses by departments, cost center or process, in such a way that the costs are transferred from one to the other together with the units produced. Each department has its own work in process inventory account in the general ledger. The unit cost is determined in each department and is transferred from one department to another together with the units.
- Activity-based cost system (ABC) (Ríos, 2014)
The cost of the product or service is based on the activities (processes, tasks of the organization).
Direct costs (raw materials and direct labor) are sent to cost objects directly, while indirect costs are reorganized into appropriate cost drivers.
Identify and assign costs to specific activities in obtaining products and services.
Analyze profitability, efficiency and cost control. In its implementation it is necessary to create a dictionary of activities (description of the activities and their map).
It is a current cost methodology that considers financial and non-financial measures.
It is an objective valuation methodology of cost allocation. Activities that generate or not value to the product or service can be determined. The information you provide is considered reliable for making decisions.
- Cost System SMP Method (Raw Materials Only)
Derived from the Just In Time manufacturing philosophy, due to the impact it has on costs. The methodology for carrying out this accounting method can be summarized as follows:
- Cost sheet of the content of matter of each product, valued at its last price or market value and its corresponding total cost SMP.Valuation of the outputs of the warehouse of raw materials (consumption of each production order or each process) at cost SMP. of each product, payment to this warehouse charged to the production in process account. Valuation of the finished production totally at its SMP cost. Charge to the warehouse of finished articles with a subscription to production in process. Valuation of sales at SMP cost. Charge to the production cost account of the sold with credit to the finished items warehouse.
The production in process account is automatically valued at the SMP cost, for production that has not yet been completed. If you want to verify your balance, a physical count is made and it is valued at the SMP cost.
For this research work, only the characteristics of the work order cost systems, ABC based on activities, by processes and SMP were considered, precisely because they are among the most used in SMEs.
The classification of Ríos (2014) and that studied in the literature are taken, and the cost systems analyzed are shown in Table 1.
Table 1 . Characteristics of the most used cost systems in SMEs.
| BY WORK ORDERS | BY PROCESSES | ABC
(by activities) |
SMP (Raw materials only) |
| The product or batch of products accumulates its cost. | The cost of the product or service is based on the processes and / or tasks of the organization. | The cost of the product or service is based on the activities of the organization. | Cost of raw material for each product. Total cost SMP. |
| A worksheet is opened for each batch of products, either to satisfy customer orders or to replenish stocks of the finished goods warehouse. | Accumulate the indirect costs of the processes and divide such value between the units produced in the period. | Direct costs are sent to cost objects directly, while indirect costs are reorganized into suitable cost drivers. | Material content cost sheet for each product |
| Unit cost is not determined until complete manufacturing is complete. | Analyze profitability, efficiency and cost control.
The information you provide is reliable for making decisions. |
Charge to production cost account | |
| It is used where the products are different according to material and conversion needs and respond to requests from customers, services or heterogeneous products. | . | The information will be expressed in an income statement by product or batch of products. |
THE DECISION MAKING. INDICATORS FOR YOUR STUDY
Decision-making has become an essential function for the life of any organization, which prepare to be more flexible and establish strategies with the aim of adapting to the highly turbulent environment in which they carry out their actions.
The adoption of proactive positions and their practice currently involve the analysis of the characteristics, both of the environment and of the internal conditions of the organization with the aim of reducing uncertainty in decision-making and planning with a greater degree of certainty..
The solid growth and development of any economy, from that of a small organization to that of an entire country, will undoubtedly depend on decisions based on knowledge.
Among the obligations imposed by the managerial function is that of making decisions. Frequently, there are few individuals who really stop to consider the sequential and systematic process involved in making a decision, in order to really obtain the necessary effectiveness from the decision made. As Emily (2001) stated for a decision to be effective, it must be the result of a systematic process, with defined elements that are managed in a sequence of precise steps.
Regarding the concept of decision-making, Schein (1988) stated: «(…) decision-making is the process of identifying a problem or opportunity and the selection of an alternative action among several existing ones, is a diligent, key activity in all kinds of organization ”(Schein, 1988, p. 81)
The decision-maker must identify all the available alternatives, forecast their consequences and evaluate them according to the objectives and goals set.
Choo (1999) stated that this requires:
(…) First, updated information on what alternatives are currently available or which should be considered. Second, information is needed about the future: what are the consequences of acting on each of the various options. Third, it is essential to know how to move from the present to the future: what are the values and preferences that should be used to select among the alternatives that, according to the established criteria, best lead to the desired results (p. 194).
Decision making can then be defined as an essential activity in organizations, with a special meaning for all levels, because it is a fundamental part inherent in all other activities of the company.
Among the relevant qualities of any decision maker, good judgment, experience and creativity cannot be lacking.
Good judgment is determined by the decision maker's common sense, maturity, and reasoning ability; therefore, judgment is assumed to improve with age and experience.
Experience is vital for every decision maker as a manager's ability to make decisions grows with it. Past successes or mistakes form the basis for future action. Previous errors are assumed to be potential for fewer future errors. Consequently, the successes achieved in earlier times will be repeated.
Creativity designates the ability of the decision maker to combine or associate ideas in an original way, so that he can achieve a new and useful result.
On the other hand, it is also necessary to consider that for people who make decisions (decision-makers) there are preferences, prejudices, predispositions, likes and dislikes, which - without wishing to lecture on the psychology of the human being - it is essential to recognize that they are part of the intrinsic characteristics of the individual, so the person who really wants to make the right decision requires that he be well informed, know all the alternatives and be objective.
When an organization is unable to carry out its management functions effectively and efficiently, it is impossible - whatever its mission and objectives to be achieved in the short and long term - to have a successful development.
According to Olivé and Arango (1997, p. 3): “Efficiency is a normative measure of the achievement of the objectives. It refers to the ability of the company to satisfy a need of society through the supply of goods and services. ”
Efficiency, according to these same authors:
It is a normative measure of the use of resources in this process, a technical relationship between inputs and outputs; it is the relation between costs and benefits; represents the relationship between applied resources and the final product obtained; is the ratio between effort and result, between expenses and income, between cost and the resulting benefit (p. 3)
Making a decision constitutes the adoption of an alternative that will not necessarily allow the complete or perfect achievement of the intended objectives; but it will represent the best solution found in certain circumstances. The hierarchy of alternatives is also a decisive element in correct decision-making, according to the most appropriate alternatives that lead to the achievement of said objectives.
ROLE OF COSTS AND THE DECISION-MAKING PROCESS
Cost accounting owes its utility, efficiency and effectiveness, to the extent that appropriate communication is established between management and accounting; where the data helps to think and to make decisions.
According to González (2017):
Accounting helps decision-making, since it shows the origin and destination of money and the ability to pay to cover obligations. It also allows performance evaluation as it facilitates the knowledge of the result of the company and each of its areas. In this way, management accounting contributes decisively to the decision-making process and has among its plans continuous improvement and the development of new cost systems, tools that play a decisive role in information (p. 92).
Costs can be used on:
Measurement of work execution:
When the actual cost of manufacturing a product, service, or function is compared to a predetermined cost.
Inventory valuation and control:
Inventory control consists of keeping adequate quantities of the different products in stock in due proportion to sales, production or the provision of services.
Determination of the production cost of what is sold:
The cost of production of what is sold is the most important deduction item in the income statement, so it is essential that it be well determined, since it affects profits or losses.
To set sales prices and competitiveness:
If the unit cost is known, according to company policies, this is the basis for competition, convenience, and to impose the sale price. In some moments, setting the sale price basically depends on supply and demand, but when they allow it. Also with the unit costs it is known if in this aspect it is in competition or out of it, which can lead to produce or stop doing so.
To formulate budgets:
The costs are essential to make the budgets, since without them the figures could not emerge, which in currency is how they can be added, compared, understood and used in its wide range.
Product changes:
By means of costs, it can be said whether other alternative raw materials can be used, other articles can be made, some may not be produced, the presentation will change, it is fashionable, etc.
Changes in the plant:
By means of production costs, it can be said whether they are affordable, to what extent, with modern machinery or not, at what time, etc.
Changes in production methods:
Decide which productions to make, which ones to replace and which ones to innovate so that they produce the minimum of expenses, as well as the levels of activity that produce the maximum profit or the desired profit.
Changes in the workforce:
Optimize the use of the workforce and propose measures for its stimulation.
Changes in distribution:
By means of costs, it can be seen whether in relation to the benefit obtained, advertising, propaganda, their combination, with what frequency, if distribution is carried out by agents, branches, etc.
Changes in control:
By means of the costs, especially with the predetermined ones, (estimated and standard) where the variations or deviations are attention calls, the cost is the measure that indicates that it is being fulfilled, and therefore, that it is controlled.
For investment:
Make investments that result in an increase in activity levels and profits.
Comprehensive cost-benefit analysis (break-even point):
The study of the relationship between cost, volume and profits is used for purposes of profit planning, cost control and decision making, since the behavior of costs is changing in different volumes (production and sales) and, therefore, affects profits; hence the equilibrium system arises. The above refers to the analysis of the equilibrium point to understand the corresponding relationships of the income on the sale, costs and profits, as well as the different volumes of production and sales, with which alternatives of decision, planning and control can be taken.
In the visual arts SMEs, the analysis of the costs of artistic production, and specifically in the art market, makes the work of art become a product that has aesthetic and mercantile qualities.
ART
The conceptualizations that art has had from antiquity to the present day are dissimilar. Lesper (2017) reported that “(…) art is a product of human intelligence, talent and sensitivity, it is first of all creation, the artist starts from scratch or from a small idea to create an object that can communicate and participate in the sensitivity of another. "
In this sense, there are three fundamental categories that must be taken into account to properly analyze the phenomenon of art: the speculative, subjective and polysemic aspect of a work of art, where production, distribution and consumption constitute the basic rules of its marketing.. This criterion is supported and supported by the main specialist of the art gallery "Amalia" of the Fund of Cultural Assets of Camagüey, Lic. Isabel P. García Rosales when she states: From the studies on art that I have carried out I can conclude that this can be defined as the subjective action of man for purposes marked by aesthetics and his sensitive vision of the world, for which he expresses emotions, perceptions, ideas and feelings. It has an etymological root in the Latin word ars,artis that refers to the ability to perform a task, and is also innovation located in a historical context and with a very unique knowledge of man. When works are assigned a speculative function, we are revealing an underlying truth that is inaccessible to other media. Finally, art is polysemic because it is a human expression that aims to express, motivate, generate emotions, provoke ideas, revolutionize, in short, it turns out to be susceptible to multiple interpretations (García, 2018).Motivate, generate emotions, provoke ideas, revolutionize, in short, it turns out to be susceptible to multiple interpretations (García, 2018).Motivate, generate emotions, provoke ideas, revolutionize, in short, it turns out to be susceptible to multiple interpretations (García, 2018).
VISUAL ARTS.
Amílcar (2016) outlined the emergence of the term visual arts by proposing:
After World War II a new concept was introduced to name the new type of artistic production that had been developing since the irruption of new media and the breakthrough ideas of the Vanguards. A wide number of ways of making art arise, since the criteria of production and classification are more open and integrated. Around 1980 the term visual arts began to become general, as it was more appropriate for contemporary art than the name plastic arts (p.1).
This denomination is part of the terms declared by the Ministries of Culture in different countries. Amílcar (2016) reported that the concept of visual arts enunciated by the National Council of Culture and Arts of the Government of Chile tells us that visual arts is that artistic production related to the creation of works that are essentially appreciated by sight, such as painting, photography, cinema, comics, installation, video art, among many others. In Cuba, the application of the term visual arts is regulated according to Resolution No. 108 (MINCULT, 2007), which in subsection h defines the visual arts as:
“(…) Those artistic creations related to the aesthetic sense of visual perception, and the plastic and applied arts are part of them. Visual creations are also called contemporary creations that arise from the interrelation between the arts, from the mixture of different stylistic characteristics and that incorporate new material and technical resources in creation such as enviroment, performance, installations, digital art and video art ”(MINCULT, 2007, p. 7).
THE WORK OF ART AS A MERCHANDISE
One of the significant and controversial differences between the art world and the art market is money, translated into the economic and financial quality that works of art acquire when exposed to the forces of supply and demand.
The quality of a contemporary work of art cannot be measured according to standard criteria such as its material, durability or brush handling. This is based on the qualification made by accredited market participants.
In the professional world, the quality of a work of art remains a mystery to potential consumers, and this misunderstanding and lack of conviction of much of society regarding their own taste explains why the art market continues to have a unique character. Basically, because the professionals designed a type of private code that the art consumer cannot decipher, creating insecurity. On the other hand, the consumer does not usually trust his own taste. Observe what others do and copy it. However, uncertainty and its unusual nature make the art market a playground for millionaires.
In the literature consulted, the author investigated that among the most widely used criteria for determining the economic value of a work of art was the analysis of the following requirements: artist's history, intrinsic characteristics of the work, market behavior, Valuation of what has been paid in the market recently (two years), and comparing it with other similar characteristics such as theme or size, constitutes the rational component.
Each element of the value chain participates in the production process of the artistic work and in turn has characteristics that provide added value to each part of the chain. Table 2 explains each of them:
Table 2. Value chain in the visual arts market.
| Value chain in the visual arts market | |
| Artist | It is he who adds material and aesthetic value to the raw material to turn it into a work of art. Adds aesthetic creation. |
| Gallery | The added value includes: discovering and disseminating the artist's work by creating his image and exposing it on the market. |
| Museums | Take custody of works of art. He is the one who treasures them and spreads them to the general public. When a work reaches a museum, its meaning changes because the value increases, since it is a more prestigious context. |
| Curator | He is in charge of investigating, guiding and organizing the elements of the works of art and the artist |
| Marcher | He supports artists and markets their works, he has to deal with museums, collectors who finance his galleries, and collectors who finance artists. Creators see how to make art look and impress, and dealers see how to sell it. |
| Collector | Carry out a search for those works that will add to your collections and that may have the following objectives: that the collection be worth more than the sum of the parts, buy by addiction or make a contribution to society and culture. |
| Investor | It provides the market value to complete the transactions, specifies the price and intervenes in the commercial flow of goods and money. |
| Auction houses | They constitute the platform where the organized art market is achieved. |
| Art fairs | They bring to the market not only works of art to be bought and sold, but also the dissemination of information, the spread of contact with art, globalization and the generation of collateral businesses. They are marketing companies par excellence. |
Source: Amílcar (2016).
DETERMINATION OF THE COSTS AND ALLOCATION OF PRICES OF THE WORKS OF VISUAL ARTS.
Art prices are not a new phenomenon, they are a new dimension because art has long been of great value and has been commercialized. In the Renaissance, through patrons who commissioned art, there were wealthy families who paid to create their art; They wanted to pay for good art, take it to the city and make it last (…) At some point in the 20th century, art became abstract, it was not necessarily beautiful but it had to be found meaning, for the first time art became popular (Lesper, 2017).
In his doctoral thesis, De la Poza (2008), he proposed variables that can explain the market value of a work of art, and these are classified into four groups or factors: the market, time, work and artist. These variables are part of the conformation of a work of art that can go through speculative and marketing nuances.
De la Poza (2008) gives the following example:
(…) when analyzing a work of art in sculpture, the explanatory variables considered are: age of the work (those that were made before 1800 are considered ancient; those that were made between 1801-1930 are modern; and contemporary are the made after 1930), nationality of the sculptor, material used, city where the work has been auctioned; number of copies of each work, size of the work, shape of the sculpture (round, flat, bust, etc.) and year of sale.
Assigning a price to any good in a given market is a complex process, since not only the costs of raw material, labor, other indirect expenses and the expenses of the distribution channel must be considered, but external variables, such as such as: prices at which competitors sell similar products, advantages and disadvantages that our products have compared to those of the competition, if it is a new productIt must be promoted with greater intensity, consuming time and financial resources and, thus, many other particular variables for each case, making defining an exit price a difficult task. If pricing is not easy for any product or service, it is much more difficult when it comes to the visual arts.
Modern art appraisal is a very recent profession, and is considered a hybrid profession. As a science it is far from complete and as an art it is subject to the vagaries of art. The Association of Appraisers of America (AAA) provides a guide to the appraisal process that is recognized worldwide.
Rosenberg (2010) reported that:
In Cuba the most used method is that of the comparables where works and artists are analyzed with public results already obtained, comparing against their same results in other cases and / or making comparisons with similar artists in production, time, style or manifestation, and taking into account factors such as the peculiarity of the work, the dimensions, the technique and the format, always comparing them with similar works in the public sales results (p. 160).
ART MARKET
According to Amílcar (2016), the art market is the place where the work of art is traded: sold and bought to obtain a specific benefit, whether sensory or economic.
The specific peculiarities of the art market are determined by the agents that comprise it. Like any market, it depends on the ups and downs of the prices of its products (works of art), and its producers (artists), sometimes encouraged for reasons as fickle as the latest trends.
Valluguera (2014) states:
This market is a commercial exchange where the peculiarities of the product lie fundamentally in the fact that the object of exchange in question is unique or is part of a very short print run. In addition, it enjoys added values that depend on the subjectivity of the actors that operate in this market; for example: questions of taste, trends of the moment. Different elements also have a determining weight, such as: having a limited production for each artist; impossibility of demanding or planning a specific production; the fixing of the price does not depend on the usual values; and, above all, that it is a much less transparent and less regulated commercial activity than most. Furthermore, the usual economic concept of supply and demand cannot be applied to said market either.This fact becomes more evident when an artist is in fashion, since it cannot be required to produce more works for the simple fact of being recognized, but in the event that for various reasons its production increases and its dissemination becomes more widespread., will not lower the prices of his works, but will even increase (p.1).
INTERNATIONAL ART MARKET.
The international art market is made up of two fundamental markets: the primary and secondary art markets. In the primary market, the work is purchased for the first time, mostly newly produced works. Thus, between the artist and the final buyer there is only one intermediary and it is a question of not publishing the price. If the price falls, there is fear that the artist will collapse and the art will begin to be manipulated. Galleries promote their artists and try to create a brand with their name and aesthetic style in this market. On the other hand, in the secondary market the commercial platform is established to sell older works of art, concrete works of art are resold through auction houses and dealers. It also covers those transactions that involve more than one intermediary, such as auction rooms and galleries.Some dealers bring art to auctions and bid with the same money to promote the artist. Galleries focus their activity on promoting their artists and participating in fairs.
Of the two markets, the one that really has movement and on which a whole network of companies and interests has been established is the secondary one, since in it the works of the great established artists are sold and others with a good professional career are positioned who They begin to be known thanks to the increase in bids in public auctions.
The richest (oligarchs and world billionaires) have the ability, the means and the interest to collect, and they drive prices up because they want these items as quickly as possible. A contemporary work went from 14 million, in which it was bought in one day, to costing 60 million in 14 days, something exceptional that the market does not question, it accepts because it is art.
The report by ARTPrice (2018) and the Swiss bank UBS on the art market offers several encouraging data: after two years of falls, in 2017 sales increased by 12% to reach 51,539 million euros, China, in the Second, it represents 21% of acquisitions compared to 20% of the British market, the USA continues to lead with 42% of transactions and 17% corresponds to other micro-markets.
ART MARKET IN CUBA.
The international art market is primarily run by middle-class collectors. More than 90% of the sales volume of galleries and auction houses comes from this type of clientele. Only societies with a broad middle class, access to education, and wealth spread across a broad sector of society can establish a national market for contemporary art. For this reason, most countries do not have a contemporary art market and it is primarily Western societies that determine it.
Cuba does not have an art market, as Miret (2015) considers it when he exposes:
The art market in Cuba is a Study-Workshop market, sale, completely informal, it is in a primary state (…) what makes commercial development in our country impossible is the instability of the prices of works, an almost zero national collecting; lack of specialized preparation of the force that works in art galleries, among others (p.3).
Today the Cuban art system (creators, institutions, promotion, budding collecting and market) is in constant motion due to the omniscient presence of its past and the speed of changes in the present.
In the art market, each member of the value chain has a particular interest in making the work of art a commodity. Otherwise, the work of art, the product, would be confined to the limits of the art world only with its aesthetic and creative qualities, but without generating any practical benefit to the rest of society (Del Alisal, 2005).
CONCLUSIONS
- A good cost system is highly relevant for decision-making, which is why it is essential to count on determining cost and profitability at different cost levels, which will facilitate or give objectivity to decision-making. decisions. The most appropriate management and cost model in an SME is one that adjusts to its requirements and characteristics. In the visual arts SMEs, the products sold are very poorly regulated, works of art are heterogeneous merchandise and each work is Different and very difficult to legislate for a market with totally unique items.The design of the cost system for a visual arts SME allows the planning, registration, calculation, control and analysis of the costs that it constitutes, in the hands of these organizations,an important tool for decision making.
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