7. LECTURES ON THE TOPIC “PRODUCTION COSTS AND PRODUCT COST CALCULATOR”

3.Calculation of product costs

Product cost calculation(works, services) is the calculation of the amount of costs per unit (output) of production. The statement in which calculations are made per unit of production is called costing.

Calculation also includes other work on calculating costs:

Products, works, services of auxiliary production, consumed by the main production;

Intermediate products (semi-finished products) of main production units used at subsequent stages of production;

Products of enterprise divisions to identify the results of their activities;

Total commodity output of the enterprise;

Output and, accordingly, units of a type of finished product and semi-finished products of own production (work performed or services provided, etc.), sold externally.

Each enterprise can set the nomenclature of articles for itself independently, taking into account its specific needs. Their approximate list is established by industry instructions for accounting and calculating product costs.

In the most general form, the nomenclature of costing items is as follows:

1. “Raw materials and basic materials.”

2. “Semi-finished products of our own production.”

3. “Returnable waste” (subtracted).

4. "Supporting materials."

5. “Fuel and energy for technological purposes.”

6. “Costs for remuneration of production workers.”

7. “Deductions for social needs.”

8. “Costs for preparation and development of production.”

9. “Operation costs of production machines and equipment.”

10. “Shop (general production) expenses.”

11. “General business expenses.”

12. “Losses from marriage.”

13. “Other production costs.”

14. "Business expenses."

The result of the first ten articles allows us to obtain workshop cost, the total of the first thirteen articles forms production cost, and the result of all fourteen articles is full cost products.

Part general production expenses include:

Expenses for maintenance and operation of equipment (RSEO);

Shop management costs.

In its turn RSEO include: depreciation of equipment and vehicles (in-plant transport); costs of operating equipment in the form of lubricants, cleaning, cooling and other materials; wages of workers servicing equipment and contributions for social needs; costs of all types of energy, steam, compressed air, auxiliary production services; expenses for equipment repairs, technical inspections; expenses for intra-plant movement of materials and semi-finished products.

Shop expenses management costs consist of the following expenses: salaries of the workshop management staff with deductions for social needs; costs for depreciation of buildings, structures, equipment, maintenance and repair of buildings, structures; ensuring normal working conditions and safety precautions; for clothing and safety shoes and other similar costs.

General economic costs are associated with management functions throughout the enterprise. These expenses include several groups:

Administrative and managerial (salaries of employees of the enterprise management apparatus, contributions for social needs, logistics and transport services for their activities, business travel costs; maintenance of fire, paramilitary, and security guards);

General economic (depreciation of fixed assets and intangible assets of a general plant nature; repair of buildings, structures; maintenance and servicing of technical controls, for example, computer centers, communication centers; lighting, heating; payment for consulting, information and auditing services, payment for bank services);

Training and retraining of personnel, recruitment costs;

Environmental protection (current costs associated with the maintenance of treatment facilities, destruction of environmentally hazardous waste, environmental payments);

Taxes and mandatory payments (property insurance, transport tax, land tax).

Calculation method involves a production accounting system in which the actual cost of production, as well as costs per unit of production, are determined.

Under the production cost accounting and costing method production is usually understood as a set of techniques for organizing documentation and reflection of production costs, ensuring the determination of the actual cost of production and the necessary information to control this process.

The choice of method for calculating the cost of production is associated with production technology, its organization, and the characteristics of the products being manufactured.

Classification of calculation methods.

1. By cost accounting objects There are usually two main costing methods:

Custom method;

Process method.

These methods are the main methods of cost accounting and calculation of product costs; other costing systems, as a rule, are variations of these methods. In management accounting, domestic simple (process-by-process) and cross-distribution methods are combined into one process-by-process method.

2. According to the efficiency of control There are methods for accounting for costs in the production process (these include the standard cost accounting method) and methods for accounting and calculating past costs (simple method).

Simple method. It is used in enterprises that produce homogeneous products and do not have semi-finished products or work in progress. In this case, all production costs for the reporting period constitute the cost of manufactured products. The unit cost of production is calculated by dividing the sum of all expenses by the number of units of production.

Normative method. It is used where there is repetition of operations during production. The standard cost is calculated for workshops and the enterprise as a whole, when assessing defects and work in progress balances. For each quarter and year, compliance with the planned and standard costs is checked, analyzed and the necessary adjustments are made to their methodology in order to increase the validity of planned calculations.

Cost standards are established either based on actual data from past periods assessing the use of labor and materials or on the basis of technical analysis. The essence of the latter is to study each operation based on an accurate accounting of materials, labor and equipment, and then a control survey of the operations.

The normative method is used in enterprises with mass and serial production.

The objective of the normative method of accounting for production costs is to timely prevent the irrational use of material, labor and financial resources. Basically, it contains technically sound estimates of the costs of working time, material and monetary resources per unit of production, work, and services. Production cost standards reflect the technical and organizational level of development of the enterprise, affect its economy and the final result of its activities.

A prerequisite for using this method is the systematic identification of deviations from the norm at the end of the month in the current order. Deviations from the norms show how the manufacturing technology of the product, the consumption standards of raw materials, materials, labor costs, etc. are observed. They are divided into positive, meaning savings in costs, and negative, causing them to increase.

Calculations of actual cost are carried out using the following formula:

Fs = Ns± He± In,

Where Fs- actual cost;

NS- standard cost;

He- deviations from norms (savings or overspending);

In- changes in norms (in the direction of increasing or decreasing them).

To calculate the actual cost per unit of production, it is necessary to calculate the indices of deviations from norms and changes in norms (%):

To calculate the actual cost, the standard cost for each costing item is multiplied by the savings index.

Thus, it is possible to determine the main elements of the standard method of accounting for production costs:

Drawing up standard cost estimates for products taking into account changes in standards at the beginning of the current month;

Separate accounting of production costs according to norms and deviations from norms;

Accounting for changes in standards, drawing up reporting calculations;

Analysis of actual costs incurred, identification and elimination of causes of deviations from standards.

The standard accounting method ensures efficiency and the possibility of preliminary control of production costs and actually satisfies all the requirements of management accounting, which indicates the purpose of accounting information and its importance. The normative method corresponds to the “standard-cost” system widely used in the West, which consists of standards (norms) for the costs of materials, labor, overhead costs and standard calculations developed on their basis.

Order-by-order method of cost calculation.

With job-by-order costing, the object of costing is a separate order, a separate job that is performed in accordance with the special requirements of the customer, and the execution time for each order is relatively short. An order passes through a series of operations as a continuously identifiable unit.

This method is applied:

In unit and small-scale production and ancillary production, where each cost unit is different from every other cost unit, and although certain orders are repeated from time to time, it is desirable to determine them anew whenever these costs arise;

In the production of complex and large products;

In production with a long technological cycle.

For example, heavy engineering, shipbuilding, aircraft manufacturing, construction, science and intellectual services (audit, consulting), printing and publishing business, furniture industry, repair work.

Costs are accumulated on an individual basis for each order processed by the plant. The main accounting document for this information is “Card/sheet for recording the costs of order fulfillment” or "Calculation card", which is completed individually for all orders and is regularly adjusted in accordance with any costs arising in connection with a particular order. The calculation card is based on the construction of a calculation account.

Materials used to fulfill each order must be accounted for according to the appropriate material issue requirements issued either by the foreman responsible for fulfilling the order or by the production control department. Issued materials are valued depending on the method used (FIFO or average cost).

The time spent on each order is recorded on shop orders or time sheets by those performing the work and estimated by the costing department, which enters the corresponding data into a cost card.

Special purchases or other direct costs incurred should also be recorded on the cost card. The corresponding amounts of such purchases are obtained based on an analysis of invoices for purchased materials.

Each order is charged its share of the plant's manufacturing overhead as the order passes through the plant's various manufacturing cost centers. Accrual is carried out on the basis of predefined distribution bases.

After the order is completed, a predetermined markup is included on the order cost sheet to cover sales and administrative costs. Accounting then compares the agreed upon sales price with the total costs of fulfilling the order to determine the profit or loss on the order.

The disadvantages of this method include:

Lack of operational control over cost levels;

The complexity and cumbersomeness of inventory of work in progress.

Per-contract calculation method costs is a continuation of the order-to-order method. This method is used in cases where the orders (contracts) in question are large-scale and where the contract requires a long period of time (usually more than one year) to complete. Examples of industries where contract costing methods are used are mechanical engineering, road construction, etc.

As with order-by-order costing, costs for each contract are accounted for separately. Large contracts typically employ labor for the entire duration of the contract, and most of the costs incurred are specific to that contract. The direct nature of most costs allows the bulk of the contract costs to be accurately calculated.

Process method.

The process method is used to establish the average cost of a batch of identical cost units over a period of time. It predominates in mass production, as well as in extractive industries (for example, coal, oil), chemical, textile, paper, and energy industries.

The most suitable for process costing are enterprises that have the following features:

Product quality is uniform;

An individual order does not affect the production process as a whole;

Fulfillment of buyer orders is ensured on the basis of manufacturer's reserves;

Production is mass-produced and carried out in-line;

Standardization of technological processes and production products is applied;

The demand for manufactured products is constant;

Controlling costs by production unit is more appropriate than accounting based on customer requirements or product characteristics;

Quality standards are checked at the level of production units; for example, technical control is carried out at the level of production units directly on the line during the production process.

When process costing is used, all units produced are allocated to inventory. All sales orders are then satisfied from this inventory of homogeneous goods. Since the goods sold are the same, there is no need to set the cost of any particular unit of output, and since the production process is continuous, it is usually impossible to determine the specific amount of material or production time allocated to each individual product. The only option is to add up all the costs of an enterprise (or the costs of the cost centers that make up the enterprise) for a certain period of time and divide these costs by the total number of items produced during that period to obtain the average production cost per unit of output.

In process costing, production costs are grouped by department or production process. Total production costs are accumulated under two main headings: direct materials and conversion costs (the sum of direct labor costs and factory overheads allocated to the cost of finished products). Unit cost is obtained by dividing the total cost attributable to a cost center by the production volume of that cost center. In this sense, the unit cost is an average indicator.

Since the unit cost in process-based costing is an average indicator, the process-based accounting system also requires fewer business transactions than the order-based system. That is why many enterprises prefer to use process-based costing.

Cost accounting using the process costing method contains four main operations:

1. Summation of material units of production moving in a flow. At the first stage, the sum of units of products processed in a given department during the reporting period is determined. In this case, the inlet volume must be equal to the outlet volume. This stage allows you to identify units of production lost during the production process. Interdependence can be expressed by the formula:

Zpr + I = Zkp + T,

where Zpr – initial reserves;

I – quantity of products at the beginning of the period;

Zkp – stocks at the end of the period;

T – the number of units of completed and transferred products.

2. Determination of output products in equivalent units. In order to identify the unit cost in multi-process production, it is important to establish the full amount of work performed during the reporting period. In manufacturing industries, there is a specific reason related to how to account for production still in progress, i.e., work at the end of the reporting period that was partially completed. For the purposes of process costing, units of partially completed output are measured on the basis of full unit equivalents. Equivalent units are a measure of how many complete units are equal to the number of fully completed units plus the number of partially completed units. For example, 100 units of a product with a 60% completion rate are equivalent to 60 fully completed units in terms of production costs.

3. Determination of the total costs taken into account and calculation of the unit cost per equivalent unit. At this stage, the total costs allocated to the production unit in the reporting period are summed up. The unit cost per equivalent will be:

Us = Pz / Ep,

where Ус – unit cost;

Pz – total costs for a period of time;

Ep – equivalent units of production over a period of time.

4. Accounting for units of completed and transferred products and units remaining in work in progress. For process-by-process costing, the so-called summary statement of production costs is used. It summarizes both total costs and unit costs allocated to a particular department, and contains the distribution of total costs between work-in-process inventories and units of completed and transferred production.

The production cost summary sheet covers all four stages of costing and serves as the source for monthly journal entries.

When the main points of costing of production by process are applied to the provision of services by an enterprise, the term used to describe the costing methods used is "operational costing". For example, consulting management, where the unit of production is hours of work. For services of this kind, a calculation of the average cost per unit of service for a specific period of time is necessary, and the procedures used will be similar to those used in calculating production costs by process.

Method batch costing costs combines elements of both order-by-order and process-by-process costing. A batch is defined as a number of identical cost units (as in process-by-process costing) considered as an order (as in job-by-process costing) separately from all other orders or processes performed by the enterprise.

Transverse method.

The incremental method of cost accounting and cost calculation is applicable if raw materials go through several completed stages of processing, and after the end of each stage, not a product, but a semi-finished product is obtained. Semi-finished products can be used both in-house and sold externally. The costs of work in progress balances are distributed according to the planned cost of a certain stage of the production process.

The incremental method of cost accounting and calculating product costs can be:

1) unsemi-finished products - control over the movement of semi-finished products is carried out by the accountant promptly in physical quantities and without recording on accounts;

2) semi-finished – the cost is calculated for each stage of production of the product.

When there are inventories or work in progress at the beginning of the period, the products completed in the production process are made up of various receipts - due to partially completed production of the previous period, due to units of new production started in the current period. Since costs can vary from period to period, each receipt can be measured at unit cost.

The cost of inventory at the beginning of the period can be accounted for in two ways: the weighted average method, the first-in, first-out (FIFO) method.

With the weighted average method, the costs of work in progress at the beginning of the period are combined with the costs of production started in a given period, and from here the average cost is determined. When determining unit equivalence, differences in costs between production partially completed in the previous period and units started and completed in the current period are not taken into account. For fully completed production there is only one cost indicator.

The equivalent units in the weighted average method are determined as follows:

Eed = Ezp + Sz * Nkp,

where Eed are equivalent units;

Ezp – units of completed production;

NKP – work in progress at the end of the period;

Сз – degree of completion (in percent).

The first-in, first-out (FIFO) method separates the cost of work in progress from the incremental costs charged to the current period. For the period, two types of unit costs are taken into account:

1) completed units of work in progress at the beginning of the period;

2) units of production, production of which was started and completed in the current period.

Under this method, work in progress is expected to be completed first. The equivalent units in the FIFO method are determined as follows:

Eed = Ezp + Nkp * Sz – Nnp * Sz,

where Wnp is work in progress at the beginning of the period.

Direct costing method– a management (production) accounting system that arose and is developing in a market economy. With the direct costing method, a limited (truncated) cost is taken into account, which includes only direct (variable) costs, and the share of fixed costs is written off directly to the sales account.

This principle has been normatively approved for use in the Russian accounting system since 1996. Cost accounting by place of origin is organized with division into constant and variable parts, and as an accounting of planned costs and their deviations from actual ones. Fixed costs are not distributed among cost carriers and only variable costs are assigned to cost carriers. Variable costs per unit are subtracted from the price of the product and, based on the difference, gross profit is calculated. Total revenue for the period is compared with the amount of variable costs, and the total amount of fixed costs for the period is attributed to the period in which it arose.

Calculation at the level of direct (variable) costs, carried out in the direct costing system, significantly increases the accuracy of calculations, since in this case they include only costs directly related to the production of a given product, and the cost of the product is not distorted as a result of the indirect distribution of a large amount of fixed expenses. This leads to a reduction in the volume of accounting and calculation work and an increase in the timing and frequency of compiling actual reporting calculations up to once a quarter or even a year.

Product cost is an important economic indicator that reflects the efficiency of production activities. Therefore, it is so important to be able to correctly carry out calculations and draw informed conclusions. Let us consider in more detail the main types and methods of calculation.

The essence

Costing is the process of grouping all costs associated with the manufacture of products into economic elements. This is a way of calculating expenses in monetary terms. The main methods of calculation: boiler, cross-cut and custom. All other methods of calculating cost are a combination of the methods listed above. The choice of one payment method or another depends on the industry specifics of the organization’s activities.

An equally important issue is the choice of calculation object. It depends on the entire system of management and analytical accounting, for example, on dividing costs into direct and indirect. Calculation objects are expressed in:

• natural units of measurement (pieces, kg, m, etc.);
• conditionally natural parameters, which are calculated by the quantity of a product type, the properties of which are reduced to the basic parameters;
• conventional units are used to measure goods consisting of several types; one of the types for some criterion is taken as a unit, and for the rest a calculation coefficient is established;
• cost units;
• time units (for example, machine hour);
• units of work (for example, tonne-kilometre).

Calculation tasks

They are as follows:

• competent justification of calculation objects;
• accurate and reasonable accounting of all expenses;
• accounting for the volume and quality of manufactured products;
• control over the use of resources, compliance with the approved amounts of maintenance and administrative expenses;
• determining the results of departments’ work to reduce costs;
• identification of production reserves.

Principles

Methods for calculating production costs are a set of reflections on the costs of manufacturing products, which can be used to determine a specific type of work, or its unit. The choice of one or another calculation method depends on the nature of the manufacturing process. The use of calculation methods intended for single-production organizations at enterprises producing non-uniform goods distorts data on the profitability of products and “smears” costs. When calculating the costs of industrial production, costs for work in progress at the end of the year are excluded from the amount of expenses.

Cost calculation methods allow you to:

• study the process of formation of the cost of specific types of goods;
• compare actual costs with planned ones;
• compare production costs for a specific type of product with costs for competitors’ products;
• justify prices for products;
• make decisions on the manufacture of cost-effective products.

Expenditure

The total cost of manufacturing products includes costs for:

• purchase of raw materials and materials;
• purchase of fuel, including for technological purposes;
• workers' wages and social benefits;
• general production and business expenses;
• other production costs;
• business expenses.

The first five expense items are production costs. Selling expenses reflect the amount of costs for selling goods. These are the costs of packaging, advertising, storage, and transportation. The sum of all listed expense items constitutes the full cost.

Types of expenses

The classification of cost accounting methods involves dividing costs into groups. Direct costs are associated with the manufacturing process of the product itself. These are the first three expense items listed. Indirect costs are distributed to the cost of products through certain coefficients or percentages.

These two groups of expenses can differ greatly depending on the specifics of the activity. In monoproduction, direct costs include absolutely all costs, since the result is the production of one product. But in the chemical industry, where a range of other substances are obtained from one raw material, all costs are considered indirect.

Variables per unit of production are also distinguished. The second group includes expenses, the amount of which practically does not change when the volume of product output fluctuates. Most often these are general production and business expenses. All costs, the volume of which increases with production growth, are classified as variable. This includes the amount of funds allocated for the purchase of raw materials, fuel, and salaries with accruals. The specific list of cost items depends on the specifics of the activity.

Boiler (simple) method

This is not the most popular calculation method, since it allows you to display information about the amount of costs for the entire production process. This calculation method is used by single-product enterprises, for example, in the coal mining industry. In such organizations there is no need for analytical accounting. The cost is calculated by dividing the total cost by the volume of production (in the example considered, the number of tons of coal).

Custom method

In this method, the object of calculations is a specific production order. The cost of production is determined by dividing the sum of accumulated costs by the number of units of goods manufactured. The fundamental feature of this method is the calculation of costs and financial results for each order. Overhead costs are taken into account in proportion to the allocation base.

The custom costing method is used for single or small-scale production, in which the manufacturing process lasts longer than the reporting period. For example, in machine-building plants where high-power excavators are created, or in the military-industrial complex, where processing processes predominate and products that are rarely repeated are manufactured. It is acceptable to use this calculation scheme in the manufacture of complex or products with a long production cycle.

Cost accounting is carried out in the context of final products (completed orders) or intermediate products (parts, assemblies). It depends on the complexity of the order. The first option is used if the object is products with a short production cycle. Then all expenses are included in the cost. If we are talking about the manufacture of intermediate products, then the cost is determined by dividing the amount of costs for the order by the number of identical products.

Process-based costing method

This method is used at enterprises of the extractive (coal, gas, mining, oil, logging, etc.) industries, in the energy sector, and in the processing industries. All of the above organizations are characterized by a mass type of production, a short production cycle, a limited product range, one unit of measurement, and the absence or insignificant volume of work in progress. As a result, manufactured products are simultaneously objects of accounting and calculation. Cost accounting is carried out throughout the production cycle and at a specific stage. At the end of the process, all costs are divided by the number of units produced. This is how the cost is calculated.

Transverse method

Based on the name of this method, it is clear that the object of calculations is the process, the result of which is the release of intermediate or final products. This calculation method is used in mass production, where products are manufactured by processing raw materials at several successive stages. Some product elements may only pass a certain number of limits and be released as intermediate products. A prerequisite is a step-by-step production process, divided into repeating operations.

A feature of this method is the formation of expenses for each completed process or for a specific time period. The cost is calculated by dividing the amount of expenses accumulated during a process or period of time by the quantity of products manufactured. The sum of the production costs of each part is the cost of finished products. Direct costs are calculated by redistribution. To differentiate costs between semi-finished products and GP for each order, WIP balances at the end of the month are estimated.

The cross-cutting method of calculation is very material-intensive. Therefore, accounting must be organized in such a way as to control the use of raw materials in production. Most often, for these purposes, the yield of semi-finished products, defects and waste is calculated.

Normative method

This method provides for a preliminary calculation of the cost for each product based on current estimates. The latter are recalculated in each period. The costs of norms and deviations are highlighted separately, with the reasons for the latter being identified. Cost is calculated as the sum of standard costs, changes in these standards and deviations. The standard calculation method allows you to calculate the cost before the end of the month. All costs are allocated to responsibility centers and compared with actual costs.

ABC method

Calculation algorithm:

• The entire organizational process is divided into operations, for example, placing an order, operating equipment, changeover, quality control of semi-finished products, transportation, etc. The more complex the organization of work, the more functions must be allocated. Overhead costs are identified with activities.
• Each job is assigned a separate cost item and its unit of measurement. In this case, two rules must be observed: ease of obtaining data, the degree of correspondence of the obtained cost figures with their actual purpose. For example, the number of orders concluded for the supply of raw materials can be measured by the number of signed contracts.
• The cost of a cost unit is estimated by dividing the amount of expenses for an operation by the quantity of the corresponding operation.
• The cost of work is calculated. The amount of costs per unit of production is multiplied by their number by type.

That is, the object of accounting is a separate operation, and the object of calculation is the type of work.

Choice

Methods are part of the process of organizing production, accounting and document flow in an enterprise. The choice of one or another calculation method depends on the characteristics of the enterprise: industry, type of products, labor productivity, etc. In practice, all these calculation methods can be used simultaneously. You can calculate the cost of orders using the show method or the incremental method using raw material consumption rates. The chosen method should be specified in the accounting policy order.

Example

The company produces three types of products. It is necessary to develop a planned cost price if it is known that the monthly production volume is: for product A = 300 pcs., product B = 580 pcs., product C = 420 pcs.

Whatever calculation method is chosen, it is necessary to determine the amount of cost per unit of product (Table 1).

Table 2 presents indirect costs.

We will calculate the amount of expenses using various costing methods.

Option 1

Let's determine the amount of direct costs for each product based on the data in Table 1:

Product A: (1*0.5+2*0.9)*300 = 690 rub./month.

Product B: (2*0.5+4*0.9)*580 = 690 rub./month.

Product C: (3*0.5+3*0.9)*420 = 690 rub./month.

The total amount of direct costs is 4702 rubles/month.

Let's calculate the amount of labor costs for each type of product per month. To do this, you need to multiply labor intensity, tariff rate and production volume:

Product A: 3*4*300 = 3600 rub./month.

Product B: 2*3*580 = 3480 rub./month.

Product C: 1*2.5*420 = 1050 rub./month.

The total amount of expenses is 8130 rubles.

The next stage is direct costing, i.e. calculating the amount of direct expenses.

Let us determine the amount of indirect costs per unit of product:

• Production: 1270/1300 = 0.98 rub./unit.
• Sales: 1530/1300 = 1.18 rubles/unit.
• Administrative: 1186/1300 = 0.91 rub./unit.

Based on the calculations presented earlier, we determine the cost of manufacturing products:

This costing example is based on calculating costs by dividing costs into direct and indirect.

Option 2

Let's consider an example of costing in which indirect costs are distributed depending on the complexity of the production process.

The calculation of direct costs has already been carried out in the previous example. Let's calculate the total complexity of the process:

Product A: 3*300=900 hours.

Product B: 2*580=1160 hours.

Product C: 1*420=420 hours.

Let us determine the distribution rates of indirect costs by dividing the amount of costs by the volume of production:

• production: 1270/2480 = 0.51
• sales: 1530/2480 = 0.62
• administrative: 1186/2480 = 0.48

Let's determine indirect costs by multiplying the labor intensity of a unit of product by the previously calculated accrual rate.

Based on the calculations presented earlier, we determine the cost of production:

Profitability

Production profit is the income that remains from revenue after deducting all expenses. If prices for goods are set regulated, then this indicator depends on the manufacturer’s strategy.

In modern conditions, the objects of direct regulation at the legislative level are gas prices for monopolists, electricity, freight railway transport, and medicines important for life. Local authorities are subject to direct regulation of a wider range of goods. It is determined depending on social tension in the region and budgetary capabilities.

If prices are set freely, then the amount of profit is calculated according to the rate of return.

Example

Per thousand units of products includes:

1. Raw materials and materials - 3 thousand rubles.
2. Fuel, including for production purposes - 1.5 thousand rubles.
3. The workers' salary is 2 thousand rubles.
4. Charges on salaries - 40%.
5. Production expenses - 10% of salary.
6. Household expenses - 20% of salary.
7. Transportation and packaging - 5% of the cost.

At the first stage, we calculate the amount of indirect costs per 1000 units of products:

• salary accruals: 2000 * 0.04 = 800 rubles;
• production costs: 2000 * 0.01 = 200 rubles;
• business expenses: 2000*0.02 = 400 rubles.

The cost is calculated as the sum of expenses for all expense items, except for transportation costs: 3+1.5+2+0.8+0.2+0.4=7.9 (thousand rubles).

Packaging costs: 7.9*0.05/100 = 0.395 thousand rubles.

Total cost: 7.9 + 0.395 = 8.295 thousand rubles; including per unit of product: 8.3 rubles.

Let's assume that the profit per unit of product is set at 15%. Then the price is: 8.3 * 1.15 = 9.55 rubles.

Margin method

An equally important indicator of production efficiency is marginal profit. It is calculated by enterprises in order to optimize production - selecting an assortment with greater profitability. When the equipment is fully loaded, costing should be done with profit maximization in mind.

The essence of the method is to divide costs into production and sales costs, constant and variable. Direct costs are those that change in proportion to the growth in the volume of services provided. Therefore, the cost is calculated only within the limits of variable costs. The main advantage of this method is that the limited cost simplifies the accounting and control of expenses.

Marginal income is the excess of sales income over indirect costs:

MD = Price - Variable costs.

Example

Let's calculate the marginal profit for the manufacture of product A, the price of which is 160 thousand rubles, variable costs - 120 thousand rubles. For simplicity of calculations, we accept the condition that when demand changes, the amount of fixed costs is equal to 1 million rubles.

The change in marginal profit is calculated as follows:

Increase in production volume by 5 tons: (55-50)*(160-120) = 200 thousand rubles;

Reducing production volume by 10 tons: (40-50)*(160-120) = -400 thousand rubles.

For enterprises that use semi-finished products in production, it is necessary to take into account that the cost of materials and manufacturing work in the cost of the final product is determined by all costs. All contingent costs are recognized in the reporting period and remain outside of marginal costs.

It is also necessary to take into account the limitations in the use of this method. This will avoid mistakes in planning. The decision to increase the production of profitable products and reduce the production of unprofitable types of products should be based not only on calculations. Plans for the development of the product range in the future, increasing production capacity in order to meet demand, improving the cost management system - all these factors in assessing the business are no less important.

Exist? What is the essence of the basic principles of costing? What costing methods currently exist in management accounting?

Calculation and its economic essence

Calculation

At this stage:

Calculation allows you to:

• study the formation of the cost of specific types of products obtained in the production process;
• compare actual cost values ​​with planned values;
• compare the company’s costs for a specific type of product with the costs of similar products from competitors;
• formulate reasonable prices for each type of product (take into account the real costs of production and sales, use value of products, etc.);
• make informed decisions on the production of new types of products and discontinuation of products that are not in demand, etc.

Object calculations are individual types of products (work performed, services provided) as a result of the production activities of the enterprise, for which the cost is calculated. In multi-industry industries that produce certain models and modifications, the object of calculation is homogeneous groups of products.

The nomenclature of calculation objects is the prerogative of the enterprise. When forming a nomenclature of objects, it is necessary to take into account the requirements of the relevant industry instructions.

Costing units

Conditionally natural units are used when calculating intermediate products.

Of the many calculation units, one meter is used for calculation, which is considered as the main one.

Main goals calculation:

• the economic justification for establishing costing objects is the release of certain types of products (work performed, services provided) as a result of the production activities of the enterprise, for which the cost is calculated;
• accurate and economically sound accounting of production costs;
• accounting for the volume and quality of products produced (work performed, services provided);
• control of the use of resources (material, labor, etc.), compliance with established cost estimates for production maintenance and management;
• determining the results of the activities of the structural divisions of the enterprise to reduce the cost of production;
• identifying reserves for reducing production costs.

Types of calculation

Let's consider the types calculations

Types of calculation depending on the time and order of calculation: planned, project (estimate), normative, expected (provisional) and reporting calculations.

Planned costing

Project (budget) costing

Standard calculation

Unlike planned calculation, standard costing takes into account changes in standards during the production process, changes are made to standards, and deviations are determined during the reporting period.

Expected (provisional) costing

Reporting (actual) costing

Types of costing depending on the location of expenses and the amount of costs included in the cost of production: self-supporting, production, full (commercial) costing.

Self-supporting costing

Production costing At industrial enterprises, the following components are taken into account when determining cost:

• raw materials and materials;
• returnable waste;
• purchased products, semi-finished products and production services of third-party organizations and enterprises;
• fuel and energy for technological purposes;
• wages of production workers;
• contributions for social needs;
• expenses for preparation and development of production;
• general production expenses;
• losses from marriage;
• other production costs;
• business expenses.

Contract costing

By calculation we mean the calculation of the cost of a unit of production (work, services), and costing is a document in which this calculation is drawn up. The object of calculation is the type of product (work, service), per unit of which the cost is determined. Objects can be finished products, an order, services, a unit, a part, etc. A costing unit is a measure of the object being calculated (tons, pieces, meters, etc.). Costing for a product (work, services) is compiled according to cost items.

Costing is aimed at:

Ensure the determination of the cost of the product (work, service) and all commercial products;

Create a basis for determining prices;

Promote the implementation of the savings regime, the opening and use of reserves.

Calculation presupposes the presence of well-established regulatory management and accounting.

Basic calculation methods:

1. Direct account (simple) - the cost of a unit of production is determined by dividing the cost of all products by the number of products.

2. Calculation and analytical - based on the standard calculation of homogeneous costs and indirect distribution of complex costs.

3. Normative - based on norms and standards for the use of all resources.

4. Parametric - applicable for calculating the cost of products of the same type, but of different quality.

5. Varietal - determines the cost of production of individual varieties, numbers (yarn), articles (shoes).

6. Transverse (phase-by-phase) - used in mass production industries in conditions of a homogeneous technological process and successive stages of processing.

Cost elimination methods, coefficient and combined are based on determining the total cost of processing the feedstock and its subsequent redistribution to the resulting products. These methods are used in complex industries, that is, in those where several different types of products are obtained from one source raw material in a single technological process. Complex industries include: oil refining, coke-chemical, processing, meat and dairy production. Here, total costs cannot be directly attributed to a specific type of product; they are distributed indirectly.

7. Cost Elimination Method consists in the fact that of all products obtained through complex processing of raw materials, one type is considered the main one, the rest are purchased (by-products). By-products are valued at the current selling prices of the enterprise, or at the prices of replaced raw materials.

This method has significant disadvantages:

The division into main and by-products is conditional.

With a large range of by-products, the costs of manufacturing the main product can be underestimated

This method stimulates the production of by-products that are sold at high prices (this is one of the reasons that you can find the entire periodic table in our dumps).

8. When coefficient method(cost distribution method) - all costs are distributed between the received products in proportion to economically justified coefficients. In this case, one of the products is taken as a conventional unit, and the rest are equated to it according to a conversion factor that takes into account any attribute.

The production costs per unit of each type of product are calculated in the following sequence:

All production output is calculated in conventional units

Costs per conventional production unit are determined by dividing all costs of production in conventional units

The production costs of each type of product are calculated by multiplying the costs per conventional unit by its corresponding conventional coefficient.

9. Combined method combines the first two.

The essence comes down to this:

Most of the products that are classified as basic are identified;

By-products are excluded from total costs as a percentage of the processing costs of all raw materials;

The remaining amount of costs is distributed according to the coefficients.

Calculation of the cost of specific types of products (works, services), accounting and control are the basis for organizing commercial calculations. There are standard, planned and reporting calculations. Standard costing is the cost of a product, calculated on the basis of technically sound norms and standards for the consumption of living and material labor on a certain date. Planned costing can be equal to, higher or lower than standard costing, because in the planning period, the consumption rates of living and embodied labor may be higher or lower than those that were taken into account at the stage of developing standard calculations. Planned costing is developed, as a rule, for a year, and in some cases for a quarter.

Reporting costing is compiled on the basis of accounting data for analysis and comparison of planned and reporting data.

Costing for the product is compiled according to cost items. In this case, direct costs (materials, wages, etc.) are determined based on standards and prices for resources. Maintenance and management costs are included in accordance with estimates and the accepted methodology for their distribution (proportional to wages, etc.). General business expenses are determined in proportion to wage costs. Social security contributions are set according to the tariff. Equipment maintenance costs are determined in proportion to wages.

Cost estimate for production: purpose, formation.

Production cost estimate- this is an internal document that allows you to control the overall level of costs and their dynamics, compare the amount of costs by department, draw conclusions and make decisions.

It represents a plan for all expenses of the enterprise for the upcoming period of production and financial activity and determines the total amount of production costs by:

1. Types of resources used

2. Stages of production activity

3. Levels of enterprise management and other areas of expenses.

The estimate includes the costs of main and auxiliary production associated with the manufacture and sale of products, goods and services, as well as the maintenance of administrative and management personnel, the performance of various works and services, including those not included in the main production activities of the enterprise. Planning of types of costs is carried out in monetary terms for the production programs, goals and objectives provided for in annual projects, selected economic resources and technological means of their implementation.

The production cost estimate includes costs, the value of which is determined on the basis of calculations for each element. Costs for raw materials, main and auxiliary materials, fuel, energy, wages are set based on the production program based on the planned volume, standards and prices. The total amount of depreciation charges is calculated on the basis of current standards for groups of fixed assets.

The basis for developing cost estimates for production and sales of products are the following settlement documents:

Calculation of costs for raw materials, materials, fuel, energy in the main production;

Calculation of wages for key workers;

Cost estimates for the development and development of new products, materials, technologies, etc.

Cost estimate for the development of new workshops, production facilities, equipment;

Estimate of other central expenses;

Estimates of general production costs for the main workshops, except for the costs of maintaining and operating equipment;

Cost estimate for the maintenance and operation of the equipment of the main workshops;

Estimate of general business expenses;

Estimate of transportation and procurement costs;

Estimate of commercial expenses, etc.

All planned targets and indicators are specified at the enterprise in the corresponding estimates, including a valuation of costs and results. For example, costings is drawn up as a plan of expected costs for various types of work performed and resources used. Cost estimate for production of products shows planned levels of inventory, volumes of output, costs of various types of resources, etc. Summary estimate links all costs and results across the main sections of the annual plan for the socio-economic development of the enterprise.

In the process of developing production cost estimates in domestic economic science and practice, three main methods are widely used:

1) estimate method - based on calculation of costs across the entire enterprise according to data from all other sections of the enterprise’s socio-economic development plan;

2) summary method- by summing up the production estimates of individual workshops, with the exception of internal turnover between them;

3) calculation method - based on planned calculations for the entire range of products, works and services with the decomposition of complex items into simple cost elements.

The concept of cost and its types

The cost of products (works, services) is the monetary expression of costs associated with the use of natural resources, raw materials, materials, fuel, energy, fixed production assets, intangible assets, specialized equipment, tools in the technological process of production (performance of work, provision of services). , inventory, labor and financial resources, as well as other costs for the production and sale of finished products, including those established by the state as mandatory deductions, taxes and payments.

The characteristics of the cost according to the composition of costs are given in table. 18.1.

Table 18.1. Types of cost according to the composition of costs and their characteristics

The identification of different types of costs is shown in Figure 18.4.

Rice. 18.4. Types of cost

The planned cost is calculated based on the specified production volume and the average costs that fall on this volume.

Accounting also uses cost indicators, which differ in the way they are formed. These are its types, such as planned, standard and actual costs.

In addition to dividing the cost according to the criteria of the composition of expenses and the method of its formation, in practice it is actually divided according to the degree of generalization. Based on the degree of generalization, individual, shared and total costs can be distinguished.

Individual cost is the cost of a specific type of product, a certain type of work, or service. Partial cost characterizes the costs of production (and sales) of a certain group of products (cereals, crop production, livestock) or the costs of individual departments. The total cost characterizes the overall level of costs for the enterprise for the production and sale of all products manufactured by the enterprise, including work and services.

Calculation of the cost of products (works, services)

Calculation method - this is a set of methods for analytical accounting of production costs for costing objects and methods for determining the cost of costing units.

Costing unit is a unit of measurement for certain types of products that are used in calculating their cost.

Costing object - this is the type of product, work, service, production, program, task, the cost of which is determined.

The calculation of cost is called costing.

c Depending on the time of compilation, calculation methods and initial data, calculations are divided into planned, normative, provisional, and actual.

Planned calculations are compiled before the start of the production process on the basis of planned cost rates and planned output and are not changed during the production process.

Standard calculations are drawn up for each subsequent working period, type or cycle of work according to standards adjusted taking into account the conditions prevailing at the moment. If production conditions change, cost standards are reviewed and clarified.

Provisional (previous) calculations are formed some time before the end of the reporting period on the basis of actual data on costs and output over time from the beginning of the period and expected costs and output until the end of the reporting period. They are used to determine expected financial results and to plan for the next period.

Reporting (actual) costing compiled after the end of the reporting period based on accounting data on actual costs and output.

For the period of economic activity, the expenses of which are included in the cost, calculations are divided into:

Daily;

Monthly, quarterly;

By periods of work (cycles, phases, repartitions, stages);

After completion of work (order).

Based on the composition of cost elements included in the cost price, calculations are:

Complete production;

Full commercial;

Incomplete (variable cost calculations).

Among the main problems of calculation are: economically justified distribution of costs of the reporting period between finished products and work in progress. At the same time, methods for calculating product costs are combined with cost accounting methods and are not clearly distinguished. Therefore, the choice of specific calculation methods depends on the needs of obtaining the necessary information for decision-making. There are two methods for calculating product costs:

Calculation based on orders;

Costing by process or individual batch of products combined in one order. The object of cost accounting in this method is a separate order. This method is used in individual and small-scale production of the engineering industry (shipbuilding, production of presses, turbines for power plants, aircraft, etc.), in construction, repair production, in printing houses, in consumer service enterprises, in the manufacture of individual products or sets of furniture, musical instruments, etc.

Costing by orders

Costing by orders is a system for calculating product costs based on cost accounting for each individual product

Costing by process

Costing by process is a system for accounting and determining product costs based on grouping costs within individual processes or stages of production. This system is typical for mass and serial production (chemical, oil refining, metallurgical, pharmaceutical and other industries). Its complexity depends on the characteristics of the technological process (number of processing steps, sequence or parallelism of processing) and the presence and size of work in progress.

In practice, combined methods of accounting for production costs and calculating production costs can be used, allowing maximum use of the advantages of individual methods for making management decisions.

Calculation methods

Among the calculation methods, the most common are:

1. Method of accumulating (summing up) costs. Its essence lies in the fact that the cost of a costing object and unit is determined by the summation of costs for parts of products or products as a whole, for processes, for redistributions. For the order-based costing method, costs are sequentially accumulated in cards from the beginning of the order to its completion.

2. Method of distribution of expenses. It is used in the processing of complex raw materials, when obtaining several types of products in one process and when it is impossible to directly account for costs for each costing object, as well as when organizing analytical costing accounting for groups of homogeneous products. This method is common in the chemical industry, non-ferrous metallurgy, and agriculture.

3. Direct calculation method. Its peculiarity lies in the fact that the generalized production costs in the context of costing objects are divided by the number of costing units for each object according to costing items or cost elements. This method is universal and, together with other calculation methods, is used in the final calculation of product costs.

4. Method of eliminating costs. It is used in the case of delineating costs and calculating the cost of main and by-products, which are obtained in one technological process, and when it is impossible to localize costs in analytical accounting. It is common in the chemical industry, agriculture, etc.

5. Regulatory method. It is used under conditions when the object of cost accounting is a group of similar products, and accounting is organized according to the normative method. In the consolidated accounting of production costs, which is maintained for each group of similar products, costs are presented according to standards, deviations from current standards and changes in standards. According to P(S)BU 16 “Expenses”, deviations are written off to the cost of commodity output only within the norms, that is, cost savings are evident. Excessive expenses, that is, overruns, are written off to the cost of products sold.