Chapter 3
COMPLETE SOLUTIONS FOR PRODUCTION COST ACCOUNTING AND PRODUCT COSTS AT TOAN THANG JOINT STOCK COMPANY
3.1. Objectives and directions for perfecting production cost accounting and product pricing at Toan Thang Joint Stock Company
3.1.1. Objectives
Toan Thang Joint Stock Company is a prestigious enterprise in the manufacturing industry. With the motto of moving towards multi-industry and service business, constantly applying the most advanced technologies in production, always keeping credibility with customers and partners, taking product quality as the goal to strive for and building a healthy corporate culture so that from here we can reap many successes in the future.
Therefore, continuing to improve the theory and legal system on accounting related to production cost accounting and product pricing of enterprises in order to adapt to changes in practice is an objective and urgent requirement in current conditions.
The purpose of production and business is to maximize profits, but first of all, businesses need to cover their costs and make a profit, thereby maximizing profits by increasing revenue and saving costs. Therefore, the work of perfecting the organization of accounting in general, and accounting for production costs and product prices in particular, is an objective necessity.
Firstly, due to the requirements of economic development, it is necessary to have accurate, effective and reliable financial information. Accounting information is both qualitative and quantitative. This information is very important for managers or those who need it, not only serving the business itself but also being the basis for the state to conduct inspections of the implementation of policies, regimes and regulations. From there, the state can study and supplement policies and regimes to suit the characteristics of the business and the actual conditions of the country.
Second, every business when operating production and business wants to achieve high profits. Companies need to make decisions to increase revenue, save costs, and continuously bring in greater profits. To do that, economic and financial information is extremely important for business leaders. The information provided by accounting is one of the most necessary types of information, that information must be accurate, complete, timely, and effective to provide to business administrators, investors, etc. To meet the requirements of using and providing information, Toan Thang Joint Stock Company needs to improve accounting work in general, especially improving production cost accounting and product cost accounting in particular.
Third, in the context of the current Vietnamese accounting system being gradually improved to be in line with international accounting, it must also ensure that it is suitable for Vietnam's economic and social conditions. Specifically, Vietnam has now issued an accounting law, followed by a system of accounting standards based on the principle of compliance with international accounting standards. However, the innovation process is in its early stages, so it is difficult to avoid shortcomings and problems. The Vietnamese accounting system needs to be amended and supplemented to be perfected and suitable for development conditions. In which, accounting for production costs and product prices is a very important part that needs to be improved.
Based on the above objective and urgent requirements, the author predicts that the prospect of perfecting the work of accounting for production costs and product prices at Toan Thang Joint Stock Company will be focused on and implemented best.
3.1.2. Direction
To promote the role of a management tool, financial accounting in the enterprise provides accurate information for decision making, the viewpoint of perfecting cost accounting and product pricing of Toan Thang Joint Stock Company is as follows:
Suitable for the characteristics of production and business activities, characteristics of the organizational structure of the management apparatus, the management decentralization of the enterprise, the scale and scope of production and business,
Professional qualifications of accountants, facilities, equipment, and technical means currently serving the recording, calculation, processing, synthesis, and provision of information of the unit.
Ensure proper application of documents, laws, standards, regimes, accounting policies, and instructions on organizing cost accounting, production, and product pricing issued by the State to suit the current economic management characteristics of Vietnam and the characteristics of the manufacturing industry.
Completing the accounting of production costs and product prices must meet the requirements and be highly feasible. This completion requires development in accounting work, but must be simple and easy to understand, so that ultimately it can bring high-quality information to users, serving management requirements. Completion needs to solve problems arising from the actual business operations of the enterprise on the basis that the cost of implementing the completion solution must be economical and lower than the benefits from the completion. From there, it brings economic efficiency, meaning saving costs, improving capital efficiency and bringing maximum profits to the enterprise.
3.2. Some solutions to improve production cost accounting and product pricing at Toan Thang Joint Stock Company from the perspective of financial accounting
3.2.1. Perfecting the technological chain
The company uses advanced technology with high automation, choosing suitable equipment to ensure the production of diverse products. Maximum savings of raw materials and energy in production. Diversifying sources of raw materials and fuel for the production of plastic tanks and stainless steel tanks, including the use of waste and scrap from other industries, ensuring product quality and environmental protection according to prescribed standards. Converting plastic formwork technology from manual to modern automatic technology to ensure environmental hygiene and reduce labor costs is also a measure to increase profits for the company.
Currently in foreign markets such as Germany, there is an automatic formwork line using robot technology to automatically put the plastic mixture into the mold for pressing.
Currently, “Kingwell” company is a unit providing an effective solution for producing water tanks. The EN-1000x2 machine is a multi-mold machine that can produce 2 tanks of 1000 liters at the same time, or 4 tanks of 500 liters at the same time. The operation of the EN series of machines is very efficient, does not require experienced operators to operate the machine and is error-free. The tanks produced still meet high technical standards. Therefore, productivity is increased with the lowest fuel consumption cost. Therefore, the Company should study and research the above lines to use for more effective production.
3.2.2. Perfecting the cost calculation method
For each manufacturing enterprise, determining how to calculate product cost according to which method is a key issue to ensure high accuracy, promoting the effect of cost in economic management. Therefore, to help management accountants conveniently in the process of planning to reduce product cost, facilitate the monitoring of costs of each item in product cost, thereby having appropriate measures to improve management efficiency in the company's production. In the future, the company plans to expand the production of refrigeration and household appliances, at which time the company can export semi-finished products of the production process. Based on the above reasons, the company should apply the step-by-step method of calculating the cost of semi-finished products.
This costing method is suitable for the production of products of companies with a production technology process through many consecutive processing technology stages according to a certain process, the semi-finished products of the previous step are the processing objects of the next step, the organization of production is large and stable, the production cycle is short and continuous.
For example : The company is expected to produce 0.5kw industrial fans, for reference and testing in workshops, the costs are collected according to table 3.1 .
By the end of the month:
+ The mechanical workshop completed 50 semi-finished products, with 20 unfinished products at 40% completion level.
Table 3.1. Fan production cost summary
Unit: VND
Item
Mechanical Workshop | Paint Workshop | Assembly workshop | Total cost of production | |
Material cost | 25,973,561 | 15,584,136 | 10,389,425 | 51,947,121 |
Labor costs | 17,181,255 | 10,308,753 | 6,872,502 | 34,362,510 |
Production cost | 10,668,450 | 6,401,070 | 4,267,380 | 21,336,900 |
Add | 53,823,266 | 32,293,959 | 21,529,307 | 107,646,531 |
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Source: Toan Thang Joint Stock Company
+ The paint workshop received 50 semi-finished products from the mechanical workshop and continued to produce 45 semi-finished products, leaving 5 unfinished products with a completion level of 30%.
+ The assembly workshop received 45 half-finished products from the painting workshop and continued to produce 40 finished products and put them in stock. The remaining 5 products were unfinished and the completion level was 20%. (All 3 workshops had no unfinished products at the beginning of the period).
Step 1 : Calculate the cost of finished products in the mechanical workshop
Evaluate unfinished products against equivalent finished products
NVLTT = 25,973,561 x 20 = 7,421,017
50 + 20
NCTT = 17,181,255 x 20 x 40% = 2,369,828
50 + 20 x 40%
Production = 10,668,450 x 20 x 40% = 1,471,510
50 + 20 x 40%
Step 2 : Calculate the cost of finished products sold in the paint workshop
Evaluate unfinished products against equivalent finished products
15,584,136
NVLTT =
45 + 5
x 5 = 1,558,414
10,308,753
NCTT =
45 + 5x30%
6,401,070
SXC = 45 + 5x30%
x 5 x 30% = 332,540
x 5 x 30% = 206,486
Step 3 : Calculate the cost of semi-finished products in the assembly workshop
Evaluate unfinished products against equivalent finished products
10,389,425
NVLTT =
40 + 5
6,872,502
NCTT =
40 + 5x20%
4,267,380
SXC = 40 + 5x20%
x 5 = 1,154,381
x 5 x 20% = 167,622
x 5 x 20% = 104,082
From the above methods of calculating the cost of semi-finished products in each workshop, the enterprise creates a table to calculate the selling price of semi-finished products for each workshop: Mechanical workshop (Table 3.2) , painting workshop (Table 3.3) , assembly workshop (Table 3.4) .
Table 3.2. Calculating the cost of finished products of mechanical workshop
Unit: VND
Item
DDđk | PS in the period | DDck | Total price wall | Price unit | |
Cost of raw materials | - | 25,973,561 | 7,421,017 | 18,552,543 | 371,051 |
Labor costs | - | 17,181,255 | 2,369,828 | 14,811,427 | 296,229 |
General manufacturing costs | - | 10,668,450 | 1,471,510 | 9,196,940 | 183,939 |
Add | - | 53,823,266 | 11,262,356 | 42,560,910 | 851,218 |
Source: Toan Thang Joint Stock Company
Table 3.3. Calculating the cost of finished products sold in the paint workshop
Unit: VND
Item
DDđk | Work in progress cost for the month | Work in progress cost at end of month | Total cost | Unit price | |||||
PX1 CS | PX2 | Add | PX1 CS | PX2 | Add | ||||
Original Cost material | - | 18,552,543 | 15,584,136 | 34,136,679 | 7,421,017 | 1,558,414 | 8,979,431 | 25,157,248 | 559,050 |
Expense labor | - | 14,811,427 | 10,308,753 | 25,120,180 | 2,369,828 | 332,540 | 2,702,369 | 22,417,811 | 498,174 |
Expense general production | - | 9,196,940 | 6,401,070 | 15,598,010 | 1,471,510 | 206,486 | 1,677,996 | 13,920,013 | 309,334 |
Add | - | 42,560,910 | 32,293,959 | 74,854,869 | 11,262,356 | 2,097,440 | 13,359,796 | 61,495,073 | 1,366,557 |
Source: Toan Thang Joint Stock Company
Table 3.4. Calculating the cost of finished products in the assembly workshop
Unit: VND
Item
DD ok | Work in progress cost for the month | Work in progress cost at end of month | Total cost | Unit price | |||||
PX2 CS | PX3 | Add | PX2 CS | PX3 | Add | ||||
Raw Material Cost whether | - | 25,157,248 | 10,389,425 | 35,546,673 | 8,979,431 | 1,154,381 | 10,133,811 | 25,412,862 | 635,322 |
Human cost labour | - | 22,417,811 | 6,872,502 | 29,290,313 | 2,702,369 | 167,622 | 2,869,991 | 26,420,322 | 660,508 |
Production cost general export | - | 13,920,013 | 4,267,380 | 18,187,393 | 1,677,996 | 104,082 | 1,782,079 | 16,405,314 | 410,133 |
Add | - | 61,495,073 | 21,529,307 | 83,024,379 | 13,359,796 | 1,426,085 | 14,785,881 | 68,238,498 | 1,705,962 |
Source: Toan Thang Joint Stock Company