www.kinhtehoc.net
Cost accounting and product pricing at 720 Construction Materials Joint Stock Company
The above analysis table shows:
+ For PCB.40 cement product, the total cost in 2007 increased by 301,400,281 VND, equivalent to 37.98% in 2008 compared to 2007, an increase of 264,432,595 VND, equivalent to 24.15%.
+ For PCB.30 cement product, the total cost in 2007 increased by 955,292,820 VND, equivalent to 31.96% in 2008 compared to 2007, an increase of 1,608,187,030 VND, equivalent to 40.78%.
After analysis we can make the following conclusions:
The total cost price has increased at a high rate. Thus, the company has not effectively reduced the cost price, reducing its competitiveness in the market. However, we need to analyze the fluctuation of the adjusted total cost price to understand more clearly:
b/ Analysis of the fluctuation of adjusted total cost
Supervisor: MSc. DAM THI PHONG BA 80 Student: NGUYEN PHUONG THAO
www.kinhtehoc.net
Cost accounting and product pricing at 720 Construction Materials Joint Stock Company
Table 16: ANALYSIS OF FLUCTUATIONS IN ADJUSTED TOTAL COSTS OF CEMENT PRODUCTS PCB.40 AND PCB.30 IN 2006, 2007, 2008
Unit: VND
Product
SL 2008 | Total Z according to Q 08 | 2007/2006 | 2007/2006 | |||||
2.006 | 2.007 | 2.008 | Level | % | Level | % | ||
1 | 2 | 3 | 4 | 5=3-2 | 6=5×100/2 | 7=4-3 | 11=7×100/3 | |
PCB.40 Cement | 1,892 | 964,921,892 | 1,137,653,924 | 1,359,394,432 | 172,732,032 | 17.90 | 221,740,508 | 19.49 |
PCB.30 Cement | 8,240 | 4,056,988,720 | 4,665,834,080 | 5,552,062,560 | 608.845.360 | 15.01 | 886,228,480 | 18.99 |
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(Source: Accounting Department of Construction Materials Joint Stock Company 720)
Supervisor: MSc. DAM THI PHONG BA 81 Student: NGUYEN PHUONG THAO
The above analysis table shows:
+ For PCB.40 cement products, the total adjusted cost price in 2007 increased by 172,732,032 VND, equivalent to 17.90% in 2008 compared to 2007, an increase of 221,740,508 VND, equivalent to 19.49%.
+ For PCB.30 cement product, the total adjusted cost price in 2007 increased by 608,845,360 VND, equivalent to 15.01% in 2008 compared to 2007, an increase of 886,228,480 VND, equivalent to 18.99%.
After analysis we can make the following conclusions:
The adjusted total cost price still increased, but the increase rate decreased compared to the increase rate of the unadjusted total cost price. Thus, the company has not effectively implemented the cost reduction policy, reducing its competitiveness in the market. However, we cannot stop here and conclude that the company has not implemented the cost reduction policy well. We need to analyze the cause of the problem, which cost item, the level and the ratio. Only by analyzing in depth can we find the real cause and have an appropriate solution.
4.3.1.3 Analysis of cost fluctuations by item in cost price
The purpose of analyzing the fluctuations in cost items is to generally evaluate the difference and difference ratio of cost items in Q4/06, Q4/07 and Q4/08. From there, clarify the level of savings or overspending of each item on product cost.
a/ Direct material costs.
Because the enterprise applies the method of calculating the value of unfinished products at the end of the period based on direct material costs, the value of unfinished products at the beginning and end of the period can be considered as the value of raw materials. From there, we can calculate the cost of direct materials/ton of cement according to the formula:
CPNVL
Unfinished production costs and arising raw material costs
- Unfinished production
for 1 =
beginning of period +
in the final period
SP unit
Number of products in stock
b/Direct labor costs
Because direct labor costs are calculated based on the number of products produced (piece-rate delivery). Only in the case of large orders will the company hire additional seasonal workers. However, this outsourcing cost is also allocated based on the number of products produced. Therefore, direct labor costs per unit of product are calculated using the following formula:
Direct labor costs incurred during the period
for 1 unit of product =
Number of products in stock
c/ General production costs
Because in Q4/2006, Q4/2007 and Q4/2008 the actual production level was within normal capacity. Therefore, the production cost is allocated to the processing cost for each product unit based on the normal capacity level of the production machinery. Similarly, we have the general production cost for 1 product unit:
Production costs Production costs incurred during the period
for 1 unit of product =
Number of products in stock
Supervisor: MSc. DAM THI PHONG BA 83 Student: NGUYEN PHUONG THAO
www.kinhtehoc.net
Cost accounting and product pricing at 720 Construction Materials Joint Stock Company
Table 17: TABLE OF ANALYSIS OF CHANGES IN COST ITEMS IN THE TOTAL COST OF CEMENT PCB.40 AND PCB.30 IN 2006, 2007 AND 2008.
Unit: VND
Product
Item | 2006 | 2007 | Year 2008 | Difference | |||||||
Amount | Proportion % | Amount | Proportion % | Amount | Proportion % | 2007/2006 | 2008/2007 | ||||
Level | % | Level | % | ||||||||
PCB.40 Cement | NVLTT | 697.067.957 | 87.84 | 987,933,851 | 90.23 | 1,244,012,131 | 91.51 | 290,865,894 | 41.73 | 256,078,280 | 25.92 |
NCTT | 59,562,124 | 7.51 | 72,521,325 | 6.62 | 79,520,760 | 5.85 | 12,959,201 | 21.76 | 6,999,435 | 9.65 | |
Production | 36,931,660 | 4.65 | 34,506,116 | 3.15 | 35,861,148 | 2.64 | -2,425,544 | -6.57 | 1,355,032 | 3.93 | |
Total | 793,561,741 | 100.00 | 1,094,961,292 | 100.00 | 1,359,394,039 | 100.00 | 301,399,551 | 37.98 | 264,432,747 | 24.15 | |
PCB.30 Cement | NVLTT | 2,647,206,423 | 88.58 | 3,562,032,036 | 90.32 | 5,080,019,878 | 91.50 | 914.825.613 | 34.56 | 1,517,987,842 | 42.62 |
NCTT | 210,720,050 | 7.05 | 258,735,820 | 6.56 | 328,537,040 | 5.92 | 48,015,770 | 22.79 | 69,801,220 | 26.98 | |
Production | 130,656,107 | 4.37 | 123,109,384 | 3.12 | 143,509,282 | 2.58 | -7,546,723 | -5.78 | 20,399,898 | 16.57 | |
Total | 2,988,582,580 | 100.00 | 3,943,877,240 | 100.00 | 5,552,066,200 | 100.00 | 955,294,660 | 31.96 | 1,608,188,960 | 40.78 | |
(Source: Accounting Department of 720 Construction Materials Joint Stock Company)
Supervisor: MSc. DAM THI PHONG BA 84 Student: NGUYEN PHUONG THAO
- Through the table of analysis of fluctuations in cost items of PCB.40 cement in 2006, 2007 and 2008, we see that the item with the highest increase is the cost of direct materials (in 2007 compared to 2006, it increased by 290,865,894 VND, equivalent to an increase of 41.73 %, in 2008 compared to 2007, it increased by 256,078,280 VND, equivalent to 25.92 %). The item with the highest decrease rate is the general production cost (in 2007 compared to 2006, it decreased by 2,425,544 VND, equivalent to 6.57 %, in 2008 compared to 2007, it increased by 1,355,032 VND, equivalent to 3.93 %). In addition, direct labor costs tend to increase quite high. In 2007 compared to 2006, direct labor costs increased by 12,959,201 VND, equivalent to 21.76 %; in 2008 compared to 2007, they increased to 6,999,435 VND, equivalent to 9.65 %.
Therefore, total costs in 2007 compared to 2006 increased by 301,399,551 VND, equivalent to 37.98 %, and in 2008 compared to 2007 increased by 264,432,747 VND, equivalent to 24.15%.
- Through the table of analysis of fluctuations in cost items of PCB.30 cement in 2006, 2007 and 2008, we see that the item with the highest increase is the cost of direct materials (in 2007 compared to 2006, it increased by 914,825,613 VND, equivalent to an increase of 34.56%; in 2008 compared to 2007, it increased by 1,517,987,842 VND, equivalent to 42.62%). The item with the highest decrease rate is the general production cost (in 2007 compared to 2006, it decreased by 7,548,032 VND, equivalent to 5.78 %). However, in 2008 compared to 2007, it increased by 20,401,207 VND, equivalent to 16.57%. Besides, the cost of direct labor tends to increase quite high. In 2007 compared to 2008, direct labor costs increased by 48,015,770 VND, equivalent to 22.79%. In 2008 compared to 2007, they continued to increase by 69,801,220 VND, equivalent to 26.98 %.
Therefore, total costs in 2007 compared to 2006 increased by 955,294,660 VND, equivalent to 31.96%, and in 2008 compared to 2007 increased by 1,608,188,960 VND, equivalent to 40.78%.
After analyzing the actual data, we see that the cost of direct materials accounts for a very large proportion of the total cost of the product - usually accounting for approximately 90%. Therefore, the fluctuation of this item will strongly affect the total cost of the product. Besides, the cost of raw materials is constantly increasing and tends to increase. Only the general production cost is decreasing with the trend.
positive direction. However, because general production costs account for a small proportion of the cost price, the total cost price still increases rapidly. Direct labor costs of PCB.40 and PCB.30 cement continue to increase. Because here we analyze the fluctuation of total costs, we cannot draw an accurate conclusion. Because the cost increase may be due to the company producing more products or because the company does not manage costs well and reduce product prices. Therefore, next, we need to analyze the fluctuation of each cost item in the unit product cost.
Supervisor: MSc. DAM THI PHONG BA 86 Student: NGUYEN PHUONG THAO
www.kinhtehoc.net
Cost accounting and product pricing at 720 Construction Materials Joint Stock Company
Table 18: TABLE OF ANALYSIS OF CHANGES IN COST ITEMS IN UNIT PRICE OF CEMENT PCB.40 AND PCB.30 IN 2006, 2007 AND 2008.
Unit: VND
Product
Item | 2006 | 2007 | Year 2008 | Difference | |||||||
Amount | Proportion % | Amount | Proportion % | Amount | Proportion % | 2007/2006 | 2008/2007 | ||||
Level | % | Level | % | ||||||||
PCB.40 Cement | NVLTT | 447,987 | 87.84 | 542,523 | 90.23 | 657,512 | 91.51 | 94,536 | 21.10 | 114,989 | 21.20 |
NCTT | 38,279 | 7.51 | 39,825 | 6.62 | 42,030 | 5.85 | 1,546 | 4.04 | 2.205 | 5.54 | |
Production | 23,735 | 4.65 | 18,949 | 3.15 | 18,954 | 2.64 | -4.786 | -20.16 | 5 | 0.03 | |
Total | 510.001 | 100.00 | 601,297 | 100.00 | 718,496 | 100.00 | 91,296 | 17.90 | 117,199 | 19.49 | |
PCB.30 Cement | NVLTT | 436,113 | 88.58 | 511,419 | 90.32 | 616,507 | 91.50 | 75,306 | 17.27 | 105,088 | 20.55 |
NCTT | 34,715 | 7.05 | 37,148 | 6.56 | 39,871 | 5.92 | 2,433 | 7.01 | 2,723 | 7.33 | |
Production | 21,525 | 4.37 | 17,675 | 3.12 | 17,416 | 2.58 | -3.850 | -17.89 | -259 | -1.47 | |
Total | 492,353 | 100.00 | 566,242 | 100.00 | 673,794 | 100.00 | 73,889 | 15.01 | 107,552 | 18.99 | |
(Source: Accounting Department of 720 Construction Materials Joint Stock Company)
Supervisor: MSc. DAM THI PHONG BA 87 Student: NGUYEN PHUONG THAO