Basic salary, additional salary, allowances and deductions based on the salary of direct production workers.
*/ Detailed accounting
Documents and books used: Timesheet, Salary payment sheet, Salary allocation sheet and salary deductions, production and business cost book account 622...
Direct labor costs are usually calculated on the relevant cost object. In case direct labor costs are related to many cost objects, use the indirect allocation method to calculate the cost amount allocated to each cost object. Allocation criteria can be standard wages, standard working hours, actual production working hours, etc.
*/ General accounting
+/ Books used: General ledger account 622…
+/ User account:
To track direct labor costs, accountants use account 622 – Direct labor costs. This account is opened in detail for each cost collection object. The basic structure of this account is as follows:
Debit: Direct labor costs involved in the production of products and provision of services, including: salaries, wages and deductions from salaries and wages as prescribed arising during the period.
The party with:
- Transfer direct labor costs to cost accounting account
- Transfer direct labor costs exceeding the normal level to account 632 "cost of goods sold".
Account 622 has no ending balance.
Diagram 1.2: Accounting for direct labor costs
Account 334 Account 622
Salary & Allowances for IT Production
Account 335
Actual leave allowance
paid leave
Account 338
Salary deductions
direct production workers
1.2.1.2.3. Accounting for general production costs
*/ Concept: General production costs are other necessary costs for the product manufacturing process arising within the scope of workshops and production departments in addition to direct material costs and direct labor costs.
*/ Detailed accounting
To collect general production costs incurred during the accounting period based on:
- Salary payment table to be paid to factory workers and production teams during the period; Salary allocation table and salary deductions according to regulations.
- Receipt of raw materials, tools and equipment for production activities in the workshop.
- Data in the table of depreciation and allocation of fixed assets for each workshop and production team.
- VAT invoices serve workshop management such as: electricity, water, telephone, fixed asset repair fees with small amounts.
- Documents related to general production costs such as cash disbursements, advance payment receipts, etc.
According to accounting standards issued under Decision No. 149/2001/QD - BTC and Circular No. 89/2002/TT - BTC on Inventories, general production costs are divided into 2 types:
- Fixed general production costs: These are indirect production costs that usually do not change with the quantity of products produced, such as depreciation costs of fixed assets, maintenance costs of machinery and equipment, etc. Fixed general production costs are calculated into the cost price according to the normal capacity of the machinery.
+ In case the level of produced products is higher than the normal capacity of machinery and equipment, fixed general production costs are allocated according to actual costs incurred.
+ In case the level of produced products is lower than the normal capacity of machinery and equipment, fixed general production costs are allocated according to the normal capacity level.
Total fixed CFSXC | Actual quantity produced | ||
= | Output at normal capacity | x |
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- Variable general production costs: Are indirect production costs that change directly or almost directly according to the quantity of products produced, such as indirect material costs... They are allocated to each product unit according to actual costs incurred.
In case a unit produces many types of products and many jobs, it must allocate general production costs to related products and jobs. Allocation criteria can be based on direct labor costs, direct material costs, and general production standards.
*/ General accounting
+/ Books used: ledger account 627
+/ User account:
To track general production costs, accountants use account 627 - General production costs. The basic structure of this account is as follows:
Debit : Collection of general manufacturing costs incurred during the period.
The party with:
- General production cost reductions (if any).
- Unallocated fixed manufacturing costs are transferred to cost of goods sold in the period because the actual output level is lower than normal capacity.
- Transfer production costs to debit account 154 "production and business costs in progress"
Account 627 has no ending balance.
Diagram 1.3: Accounting for general production costs
Account 334, 338 Account 627
Management staff costs
factory
Account 152, 153
Cost of materials, tools and equipment
Account 214
Fixed asset depreciation costs
Account 111, 112, 331
Cost of services purchased in other currencies
VAT
TK 133
1.2.1.2.4 Accounting for the total production costs for the entire enterprise
For businesses applying the regular declaration method to collect actual production costs incurred during the accounting period, use account 154 - Unfinished production and business costs.
This account is opened in detail for each cost collection object (production industry, cost arising location, each type of product, product group, etc.)
Diagram 1.4: Accounting for the total production costs of the entire enterprise
Account 621 Account 154
Cost transfer
direct materials
Account 622
Cost transfer
direct labor
Account 627
Carryover of general manufacturing costs
1.2.1.3 Evaluation of unfinished products at the end of the period
Unfinished products are products that have not yet completed the processing stage, but are still in the production process. To calculate the cost of the product, the enterprise needs to conduct an inventory and evaluate the unfinished products. Depending on the characteristics of the production organization, the technological process and the nature of the product, the enterprise can apply different methods of evaluating unfinished products.
1.2.1.4.1. Evaluate unfinished products based on direct material costs
*/ Method content:
According to this method, we only calculate the direct material cost for the unfinished product at the end of the period, while the direct labor cost and general manufacturing cost are also calculated for the finished product.
Calculation formula:
= | D condition + C ps | x | Q dd |
Q ht + Q dd |
In there:
D ck , D đk : direct material costs calculated for unfinished products at the end of the period and beginning of the period. C ps : direct material costs incurred during the period.
Q ht : Number of completed products. Q dd : Number of unfinished products at the end of the period.
*/ Advantages, disadvantages and scope of application
- Advantages: This method is simple, requires little calculation, thus ensuring savings and efficiency of accounting.
- Disadvantage: Only calculates the direct material cost for unfinished products at the end of the period without calculating other production costs, so the level of accuracy is not high.
- Scope of application: applies to businesses with a large proportion of direct material costs in the total production costs of the business, usually greater than 70%.
1.2.1.4.2. Evaluate unfinished products at the end of the period based on estimates of equivalent completed products
*/ Content of the method
According to this method, the enterprise must first determine the volume and completion level of unfinished products at the end of the period. Then convert the number of unfinished products at the end of the period according to the completion level into the number of converted products. Finally, the costs for the number of unfinished products at the end of the period will be calculated as follows:
- For direct material costs are calculated according to the direct materials method.
- Direct labor costs and general manufacturing costs will be calculated based on the completion level of final finished goods as follows:
= | D condition + C ps | x | Q td | |
Q ht + Q td |
In there:
D ck , Ddk : Direct labor cost, manufacturing cost calculated for unfinished products at the end of the period and beginning of the period.
C ps : Direct labor costs, production costs incurred during the period. Q ht : Number of completed products.
Q td : Number of equivalent converted products according to the completion level of unfinished products at the end of the period.
Q td = Q dd x H%
In which: H% is the completion level of unfinished products at the end of the period
To simplify the determination of the completion level of unfinished products as well as the calculation, it can be evaluated according to 50% of processing costs (unfinished products are completed at a level of 50%).
*/ Advantages, disadvantages and scope of application
- Advantage: Determine production costs for unfinished products at the end of the period more fully and accurately.
- Disadvantages: The calculation volume is complicated and it is required to determine the completion level of unfinished products at the end of the period.
- Scope of application: Applicable to enterprises with complex technological processes, continuous processing, direct material costs are added from the beginning and other costs are gradually added according to the level of processing in the following technological stages. At the same time, NCTT costs and production costs account for a large proportion of the total production costs of the enterprise.
1.2.1.4.3. Evaluation of unfinished products at the end of the period based on standard production costs
*/ Method content:
According to this method, the direct material costs, direct labor costs, and production costs of unfinished products are determined based on the consumption standards of the completed stages and the completion rate.
Formula to determine:
D ck = Cp dm(KH) x Q dd x H%
(Cp dm(KH) : planned standard cost)
*/ Advantages, disadvantages and scope of application
-Advantages: Calculation is simpler and more convenient if the business has already created a spreadsheet.
-Disadvantage: The calculation results are not as accurate as the two methods above if the volume of unfinished products at the end of the period is unstable (both in terms of completion level and volume), the accuracy depends on the reasonableness of determining the standard cost.
-Scope of application: This method is suitable for businesses that have established production costs or standard prices and at the same time the volume of unfinished products at the end of the period is quite stable.
1.2.2. Product cost accounting
1.2.2.1. Cost calculation object
The objects of cost calculation are the types of products, jobs, and services that the enterprise has completed and produced that need to have their total cost and unit cost calculated.
To correctly determine the object of calculating product cost, accounting must base on:
enter :
+ Characteristics of production organization and production structure
+ Technology process of production and product manufacturing
+ Product usage characteristics, semi-finished products