Production costs are the sum of direct and indirect costs incurred in the production of products over a period of time。
Direct costs refer to costs that can be directly factored into a given costing object when production costs are incurred。
Indirect costs are those that cannot be directly accounted for in a given costing object when production costs are incurred and need to be aggregated and then distributed to each costing object according to a certain method。
Manufacturing costs are the indirect costs incurred by enterprises for the production of products and the provision of services。
Cost account setting and accounting process
“property costs” subject
This subject accounts for the production costs incurred by small businesses in industrial production. These include the production of various products (finished, semi-finished, etc.), home-made materials, home-made tools, home-made equipment, etc。
This subject can be accounted for in detail according to the two secondary subjects “basic production costs” and “auxiliary production costs”. The debit balance at the end of the period reflects the ongoing cost of products that have not yet been processed by small enterprises。
“construction costs”
Accounting for indirect costs incurred by small business production workshops (sectors) for the production of products and the provision of labour. The borrowing costs incurred by small businesses for products that have been manufactured for more than one year to reach their intended marketable status are also accounted for in this line. This subject should be accounted for in detail according to different production workshops, sectors and cost items。
With the exception of small, productive and seasonal businesses, the “manufacturing costs” subject should end with no balance。
The direct production costs incurred by small enterprises are credited to the “materials”, “cash on hand”, “bank deposits”, “payables for employees” by debiting the “production costs” (basic production costs, ancillary production costs)。
The manufacturing costs to be borne by the production workshops are credited to the “production costs” subject (basic production costs, ancillary production costs)。
At the end of the month, the services and products provided by the auxiliary production workshops for basic production workshops, management and other sectors may be distributed among the beneficiaries according to certain distribution criteria, and the items “production costs” (basic production costs), “sale costs”, “management costs”, “other operating costs” and “work in progress” are credited to the subject “production costs” (auxiliary production costs)。
The “production costs”, “sale costs”, “management costs”, “other operating costs”, “construction work in progress” etc. May also be credited to “raw materials”, “cash on hand”, “bank deposits” and “payable employees” when providing related services and products。
At the end of the month, small enterprises that have produced finished and tested their income banks, as well as self-made semi-finished products, may be credited to the “production cost” subject (basic production cost) by crediting such items as “inventory goods”。
Indirect costs incurred by small enterprises should be aggregated as manufacturing costs. Specifically:
Material consumption and fixed asset repairs incurred at production workshops, debited to “manufacturing costs” and credited to “raw materials” and “bank deposits”。
The employee's remuneration incurred, such as the salary of the manager of the production workshop, depreciation of fixed assets charged at the production workshop, debited to the “manufacture costs” line, is credited to the “worker's remuneration due”, “cumulative depreciation”。
Office fees, utilities, etc. Paid by production workshops are debited to “manufacturing costs” and credited to “bank deposits”, “interest payable” etc。
Loss of work during seasonal periods and repairs, debited to “manufacturing costs” and credited to “raw materials”, “payable employees”, “bank deposits”。
Interest on loans incurred by a small enterprise prior to completion of the manufacture of a product that has been manufactured for more than one year to reach its intended marketable status is credited to “interest payable” on the interest due date at the interest rate of the borrowing contract. Interest costs incurred after completion of manufacture are debited to the “financial costs” line and credited to “interest payable”。
At the end of the month, the distribution of manufacturing costs is included in the relevant cost-accounting objects according to certain distribution criteria, and the items “production costs — basic production costs, ancillary production costs” are credited to “manufacture costs”。
With regard to the distribution of manufacturing costs, the main methods include the law on the proportion of working hours of production, the law on the proportion of wages of productive workers, the law on the budget allocation rate, etc。
The difference between the actual annual costs incurred for manufacturing small-scale seasonal production and the amount allocated, except for those that are reserved for the following year when production is prepared for the following year, is more than the difference in the allocation, which is credited to this subject by crediting the “production costs — basic production costs”; the difference actually incurred is less than the amount allocated, with the opposite accounting entry。
The indirect costs common to the production of both acet and ab products during the month of the production of the basic manufacturing workshop at starfish are as follows: the equipment was consumed at $1,000, the salaries of the plant managers at $2,000, the depreciation of the fixed assets charged at the production workshop at $5,000 and the office and utility costs incurred at the production workshop at $1,500. The cost of manufacturing is allocated according to the production time scale, with a total of 200 hours spent on the a product and 300 hours spent on the b product。
Its accounts are maintained as follows:
(1) attribution of manufacturing costs
Borrowed: manufacturing costs 9500
Loan: raw materials 1000
Payable to employees 2000
Cumulative depreciation
Bank deposits 1500
(2) distribution of manufacturing costs:
This topic is distributed according to the method of the proportion of hours worked in production。
The manufacturing cost of the a product should be allocated at 9500/(200+300)*200 = 3800。
The manufacturing cost of the product should be allocated to 9500/(200+300)*300 = 5,700 yuan。
Leverage: production costs - basic production costs - a product 3800
Credit: manufacturing costs 3800
Leverage: production costs - basic production costs - b 5700
Credit: manufacturing costs 5700
The material, labour and fuel costs incurred by the auxiliary production workshops for the production of the product should be aggregated as ancillary production costs and then allocated to the basic production costs in a reasonable manner。
The method of allocation includes, inter alia, the direct distribution method, the one-time interactive allocation method, the plan cost allocation method, the algebra allocation method and the sequential distribution method。
Auxiliary production workshops distribute ancillary production costs among different products in a reasonable manner, crediting “production costs — basic production costs” to “production costs — ancillary production costs”。
Starfish has also set up an auxiliary production workshop for the production of both acetate products to provide hot water for the production of acetate products in basic production workshops. This month, the auxiliary workshop provided 500 tons of hot water, of which 200 tons were consumed by the ace and 300 tons by the b. Auxiliary workshops consume a total of $500 for raw materials and $1,500 for labour and $3,000 for fuel this month。
Its accounts are maintained as follows:
(1) accounting for the costs of ancillary production:
Leverage: production cost - auxiliary production cost 5000
Lending: raw materials 500
Remuneration due to employees 1500
3000 payable
(2) allocation of production support costs:
A product should be allocated a supplementary production cost of 5000/500*200 = 2000 yen
Auxiliary production cost of 500/500*300 = 3,000 yuan for the product b
Leverage: production cost - basic production cost - a product 2000
Lending: production costs — ancillary production costs 2000
Leverage: production cost - basic production cost - b 3000
Lending: production costs - ancillary production costs 3000
Borrowed: inventory goods - a-products
Borrowed: production costs - basic production costs - a product
Borrowed: commodity in stock - b
Leverage: production costs - basic production costs - b
In order to identify current main operating costs and other operating costs based on the sale of goods achieved by the enterprise during the current period, the item “main operating costs” or “other operating costs” is debited and credited to the item “inventory commodities” or “labour costs”。
