Summary accounting of production costs: main aspects and methods

Such a document, as a summary record of production costs, is designed to generalize, classify and analyze information on production costs. In this account, information is grouped according to the types of expenditures, the sources of their formation, the places of formation, the object of calculation. In the organization of such accounting, in addition, the algorithm of the sequence of this grouping is important, since this ensures the possibility of correlating the obtained results.

The aspects in which a consolidated accounting of production costs can be considered is as follows:

• Firstly, this accounting can be manifested as a kind of aggregate accounting of all costs of an enterprise or company for the output of final commodity output, in other words, as a certain sequence of operations for summing up the costs of manufacturing products;
• Secondly, as a system, a methodology for summarizing data on the costs of production of an enterprise or a company as a whole.

There are two leading methods of carrying out the considered accounting: semi-finished and semi-finished. In accordance with which method is used, the cost price of the goods produced by the enterprise is also determined in two ways. At the first the prime cost is calculated on a final subject (product) of manufacture, by consecutive addition of expenses from its raw material kind to an issuing stage. At the second the account is conducted at each stage of manufacture, thus the real cost price of each of half-finished products is separately estimated. The cost price of the final goods with this method of accounting is determined by summing the costs of used semi-finished products produced by the enterprise itself, the costs of processing and assembly at future stages of production. This also includes management accounting of production costs.

Generalization of information is made on account 21, which reflects, for example, such indicators as the cost of raw rubber, pig iron, chemical raw materials, yarn, and so on, depending on the industry. The distribution of semi-finished products, as provided by the consolidated accounting of production costs, occurs on the basis of appropriate invoices, as well as other given primary documentation. Documented also is the subsequent transfer of the semi-finished product to the next workshop or to the next production site. Reflection of motion occurs at cost. In some cases, in accordance with the profile of the enterprise and its industry affiliation, the movement of the semi-finished products produced by the enterprise is accounted for according to the price-list (estimated) price values. The resulting difference in value is attributed to the balance of the reporting period.

The main feature of the semi-finished option, which realizes the consolidated accounting of production costs, is the accounting of the costs of previous production stages in the structural subdivisions of the enterprise or the company. Advantages of this option are that:

• The ability to display costs by items is formed, and this, in turn, allows you to quickly and accurately determine your own production costs for the production of semi-finished products. This is especially valuable if the enterprise realizes the results of the work in progress (semi-finished products) during the production process;
• Guaranteed effective control over the production process in the shops of the enterprise and its production sites that produce these same semi-finished products. Accounting in this case, not only has information on costs, but also can determine the gross volume of production products for these units of the enterprise. Comparison of revenue from sales with the cost of internal costs, gives the accounting department the opportunity to record the final results of these structural units;
• Systemic accounting of production costs, movement of semi-finished products is carried out, which practically excludes (at least significantly reduces) the risks of theft and irrational use;
• The accounting procedure itself is greatly simplified, because the values of the quantities decrease.

The disadvantage of this technique is that it is a fairly routine work requiring elemental accounting, then classification and grouping of indicators by product. With such accounting, the total amount of expenses is calculated in a non-system way, and the intrafactory movement of items of work in process in accounting is not reflected.