Direct costs: are costs directly related to the production process of a product or a certain job, including construction materials, production worker salaries, and depreciation of construction machinery and equipment.
Indirect costs: are production costs related to the production of many types of products, many jobs often arise in the management department. Therefore, accountants must allocate related objects according to an appropriate criterion.
This cost classification is important for determining the method of collecting and allocating costs to objects accurately and reasonably.
1.2.2.1.5 Classification of production costs according to cost composition
Single cost: is the cost composed of a single cost element such as the cost of main raw materials used in production, wages of production workers.
General costs: are costs that include many different factors but have the same function as general production costs.
1.2.2.2 Classification of product costs in construction enterprises
1.2.2.2.5 Considered by time and data source
Planned cost: is the product cost determined based on planned production costs and planned quantity. Cost calculation is performed by the enterprise's planning department and is conducted before starting production and manufacturing of the product.
The planned cost is determined by the formula:
Construction work plan cost
= Estimated cost of construction work
_ Planned cost reduction level
(calculated for each project, project item)
Estimated cost: determined before starting to manufacture the product. It is the highest cost limit that the unit can spend to ensure profit, is the standard for the construction unit to strive to reduce the actual cost and is the basis for the investor to pay the enterprise for the completed volume that has been accepted.
Estimated cost of each project - category
project item
=
Estimated cost of each project - category
project item
_
Rate of interest
In which : The standard profit is the percentage of the construction cost regulated by the State for each different type of construction and each specific construction product.
Actual cost: Construction products are the monetary expression of all actual production costs that the construction enterprise has spent to complete a certain amount of construction. It is determined according to the accounting data provided.
1.2.2.2.6 Considered by the scope of cost occurrence
Production cost is the cost calculated based on all costs related to production and manufacturing of products, including: raw material costs, labor costs, construction machinery costs, and general production costs.
Total cost is the cost calculated based on all costs related to the production and consumption of products, including: raw material costs, labor costs, construction machinery costs, general production costs, sales costs and business management costs.
1.2.3 Relationship between production costs and product prices
There is a close relationship between production costs and product prices in the production process to create products. They are both limited to collect costs for management, analysis and cost control.
- Similarities: Both are similar in quality, both are expressed in money of living labor and materialized labor.
- Different: They differ in quantity. Production costs are associated with a certain period. Product costs are associated with a certain type of product, job, or service.
1.2.4 Tasks of production cost accounting and construction product pricing
Implementing standards for documents, account systems, and accounting books must comply with State regulations, standards, and accounting regimes.
Determine the objects, cost accounting methods and calculate the cost of construction and installation products based on the characteristics of production and business organization and technological process of construction and installation product production.
Organize the collection and allocation of production costs according to the correct production cost collection objects. Accurately calculate the actual cost of the cost calculation objects and regularly check the implementation of the cost calculation work of the enterprise.
Guide and inspect relevant departments in calculating and classifying costs to collect production costs and calculate product costs quickly, honestly and reasonably. Prepare reports on production costs and calculate construction product costs.
1.3 Contents of production cost accounting and construction product pricing
1.3.1 Accounting object of production cost collection
The object of cost collection is the place where costs arise and are incurred. Depending on management requirements and cost calculation requirements, the object of cost collection can be determined as each product, each order, each production workshop or each stage of product manufacturing technology.
Determining cost aggregation objects is to serve the purpose of checking and analyzing production costs and product prices. Determining cost aggregation objects must be based on:
- Production characteristics and product manufacturing technology process: simple production, complex production.
- Production type: single production, mass production.
- Characteristics of production organization: with or without workshops, production teams.
- Requirements and management level of the business.
- Unit price applied in the enterprise.
Therefore, for construction enterprises, the object of production cost accounting can be each project - project item or work stages of a project item or group of project items... from which to determine the appropriate production cost accounting method.
1.3.2 Method of collecting production costs
Cost accounting method is a method or system of methods used to collect and classify costs within the limited scope of cost accounting objects. The essence of the cost accounting method is to open detailed cost accounting books (cards) corresponding to the selected cost accounting objects, and at the end of the period, summarize costs according to each object. Therefore, based on the cost objects in construction enterprises, accountants determine the following cost accounting methods: cost accounting method for each project - project item, according to project phases or groups of project items, etc.
There are two methods of collecting production costs:
Direct aggregation method: is a method applied to costs directly related to separate production cost accounting objects, the production costs incurred are calculated directly for each cost-bearing object.
Indirect allocation method: is a method applied when a type of cost is related to many cost-bearing objects and cannot be collected separately for each object.
object. Therefore, it is necessary to make an allocation for each relevant object. The allocation goes through 2 steps:
- Step 1: Calculate the allocation coefficient
H = C T
In there :
C: total cost of the allocated collection T: total standard used for allocation
- Step 2: Allocate costs to each related object
x H
In there :
: Cost allocation for each object
: Allocation criteria of object n
There are two methods for accounting: the regular declaration method and the periodic inventory method. Particularly for the construction industry, only the regular declaration method can be applied to inventory accounting, not the periodic inventory method. The portion of the cost of raw materials, labor costs, and costs of using equipment that exceeds the normal level and the portion of fixed production costs that are not allocated are not included in the construction cost but are included in the cost of goods sold in the period.
1.3.3 Accounting for production costs
1.3.3.1 Accounting for direct material costs
Concept: Raw material costs are the costs of main materials, auxiliary materials, structural materials... used to make up construction products.
Calculate the cost of raw materials:
Calculating the price of raw materials depends on the unit price of each type of raw materials in different periods, fluctuations in market prices, and purchasing costs related to raw materials. This requires businesses to manage purchasing prices and purchasing costs to not only ensure the quality of raw materials but also save costs. Depending on the scale, organizational structure, and business sector, each business can use one of the following four methods to calculate the price of raw materials:
- Specific fact method
- Weighted average method
- First in, first out (FIFO) method
- Last in, first out (LIFO) method
Specific fact method
This method is applied to units with few types of items, stable items and identifiable inventory types. When issuing materials, the enterprise specifies the selling price. Therefore, the enterprise must know which purchases the materials in stock and the materials issued belong to and use the unit prices of those purchases to determine the value of the inventory at the end of the period.
Weighted average method
Under this method, the value of each type of raw material is calculated based on the average value of each type of inventory at the beginning of the period and the value of each type of inventory purchased or produced during the period. The average method can be calculated by period or when a shipment is received.
- According to the average weighted price at the end of the period
According to this method, the cost of goods sold in the period is calculated at the end of the period. Depending on the reserve period applied by the enterprise, the inventory accountant bases on the import price, the quantity of goods in stock at the beginning of the period and imported during the period to calculate the average unit price for each item.
Actual unit price
NVL's military power =
Value of raw materials inventory at the beginning of the period
Number of raw materials in inventory at the beginning of the period
+
+
Value of imported raw materials during the period
Number of imported raw materials during the period
Actual value of raw materials issued = Quantity of raw materials issued during the period x Average unit price. Value of raw materials in inventory at the end of the period = Quantity of raw materials in inventory x Average unit price.
- According to the weighted average price after each import (average at the time)
After each time importing raw materials, the accountant must re-determine the actual value of the inventory and the average unit price for each type of inventory according to the following formula:
Unit price of the first time of delivery
= | Value of raw materials inventory at the beginning of the period | + | Material value input before output a |
Number of raw materials in inventory at the beginning of the period | + | Quantity of imported raw materials before the ath export |
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First in - first out (FIFO) method
According to this method, the value of materials used is calculated based on the previous import price, then calculated based on the next import price. The value of materials at the end of the period is the materials purchased or produced near the end of the period.
Last in, first out (LIFO) method
According to this method, the value of materials used is calculated based on the price of the last import and the remaining materials at the end of the period are those purchased or produced earlier.
Documents used: Sales invoice, VAT invoice, warehouse receipt, warehouse delivery note, advance payment request, payment voucher...
Account used: 621 “Direct material costs” Content and structure of this account:
Debit: Actual value of raw materials used directly for construction, industrial production, and service business activities during the accounting period.
Credit side: - The value of unused raw materials is returned to the warehouse.
- Transfer raw material costs to unfinished production costs.
Account 621 has no ending balance and is opened in detail for each project and project item.
Accounting method:
Exporting raw materials for production, based on the warehouse delivery note, the accountant records: Debit account 621 - Direct material costs
Credit account 152 - Raw materials
Directly export raw materials, tools, and equipment for production, accountant records: Debit account 621 - Direct material costs
Debit account 133 - Deductible VAT (if any) Credit account 331, 111, 112
At the end of the period, the accountant transfers the cost of raw materials and records: Debit account 154 - Cost of unfinished production and business
Debit account 632 - Cost of goods sold (part of raw material costs exceeding normal level)
Credit account 621 - Direct material costs
Raw materials not fully used in construction activities, returned to warehouse at the end of the period, recorded:
Debit account 152 - Raw materials
Credit account 621 - Direct material costs
Diagram 1.1: Diagram of accounting for direct material costs using the regular declaration method
Account 152
Account 621
Account 152
(1)
(4)
TK 111, 112,
141, 331
Account 632
(5)
(2)
Account 154
(6)
Account 133
(3)
Note :
(1): Export raw materials to manufacture products
(2): Purchase raw materials for direct export to produce products (3): Deductible VAT
(4): Excess raw materials returned to warehouse
(5): Material costs exceed normal levels
(6): Transfer direct material costs to unfinished production costs
1.3.3.2 Accounting for the collection and allocation of direct labor costs
Concept: Are expenses for main salary - additional salary, salary allowance for workers directly participating in construction works, including amounts payable to employees under the management of the enterprise and to outsourced workers according to each type of work.
Documents used: Salary payment table, salary allocation table.
Account used: 622 “Direct labor costs” Content and structure of this account:
Debit: NCTT costs involved in the production process.
Credit side: Transferring NCTT costs to unfinished production and business expenses.
Account 622 has no ending balance and is opened in detail for each project and project item.
Note: for construction and installation activities, this account does not include salaries, wages and allowances of a salary nature paid to IT drivers, construction machines, and construction machine service personnel, social insurance, health insurance, and union funds calculated on the salary fund payable to IT for construction and installation activities, construction machine drivers, and construction machine service personnel.
Accounting method:
Salary payable to production IT, accountant records: Debit account 622 - Direct labor costs
Credit account 334 - Payable to employees
Advance deduction of leave salary for production IT staff, record: Debit account 622 - Direct labor costs
Credit account 335 - Expenses payable
At the end of the period, transfer production NCTT costs, record: Debit account 154 - Unfinished production and business costs
Debit account 632 - Cost of goods sold (Part of direct labor costs exceeding normal level) Credit account 622 - Direct labor costs
Diagram 1.2: Diagram of accounting for direct labor costs using the regular declaration method
Account 334
Account 622
Account 632
(1)
(3)
Account 154
Account 335
(4)
(2)
Note :
(1): Salary costs for direct production workers
(2): Deduction of production workers' leave pay (3): Direct labor costs exceeding normal levels (4): Transfer of direct labor costs