219. Accounting for manufacturing costs and finished construction works costing in Tuan Cuong Construction Joint Stock Company

Graduation thesis Mentor: Ph.D Nguyen Dao Tung Accounting for manufacturing costs and finished construction works costing in Tuan Cuong Construction Joint Stock Company Nguyen Thuy Trinh CQ54/21CL01 Graduation thesis Mentor: Ph.D Nguyen Dao Tung LIST OF SAMPLES, PICTURES AND FIGURES Nguyen Thuy Trinh CQ54/21CL01 Graduation thesis Nguyen Thuy Trinh CQ54/21CL01 Mentor: Ph.D Nguyen Dao Tung Graduation thesis Mentor: Ph.D Nguyen Dao Tung CHAPTER 1: GENERAL THEORY FOR MANUFACTURING COSTS AND FINISHED GOODS COSTING ACCOUNTING IN ENTERPRISES 1.1 Concepts, requirements for manufacturing costs and finished goods costing accounting 1.1.1 Manufacturing costs and cost of finished goods 1.1.1.1 Manufacturing costs In an enterprise, in order to conduct production and business activities, there must be three basic elements: labor materials, labor objects and labor forces The production and business process is the process of consuming those factors to create labor and service products The consumption of these factors in the production and business process creates the corresponding costs Manufacturing cost is the total cost of living labor, physical labor and other necessary expenses that the enterprise has spent in the process of manufacturing, creating or supplying labor, service in a certain period Manufacturing costs are typically divided into three categories: - Direct materials, which is the cost of the materials that are traceable to the product, such as the aluminum in beverage cans - Direct labor, which are the wages or salaries and fringe benefits earned by the individuals who are physically involved in converting raw materials into a finished product Nguyen Thuy Trinh CQ54/21CL01 Graduation thesis Mentor: Ph.D Nguyen Dao Tung - Manufacturing overhead, which includes all of the other costs incurred in the manufacturing activities These indirect costs include repairs and maintenance, depreciation of the manufacturing equipment, utilities, salaries of manufacturing supervisors, etc Therefore, manufacturing cost are costs (wastages) on inputs in the production process associated with business purposes The amount of cost depends on the volume of production factors consumed during the period and the price of a unit of production factor has been wasted Manufacturing cost is measured by a monetary ruler and determined within a specified time period 1.1.1.2 Cost of finished goods The cost of finished goods is expressed in terms of all the costs of living labor, physical labor and other costs calculated on a certain volume of labor and services completed Thus, the cost of finished good is the determination of the value of the cost factors that are transferred into finished products 1.1.1.3 The relationship between manufacturing cost and cost of finished goods Basically, manufacturing cost and cost of finished goods are two-sided manifestations of the production and business process, which are all expressed in the amount of the loss of living and materialized labor that businesses have spent However, manufacturing cost and cost of finished goods are different in some aspects Referring to manufacturing cost is considering the costs in a certain period (month, quarter, year), regardless of the type of products, Nguyen Thuy Trinh CQ54/21CL01 Graduation thesis Mentor: Ph.D Nguyen Dao Tung regardless of whether the product is completed or unfinished In contrast, reffering to the cost of finished goods is to determine a certain amount of production costs that are calculated for a certain amount of completed products, the cost of finished goods relates to the cost of the previous period transferred and the amount of this period going to the next period For example: prepaid expenses are expenses spent in the period, only a part of these expenses is included in the cost of finished goods, the remaining must be allocated for the next periods; or the expenses have not been actually incurred in this period but still partially deducted in the cost of finished goods during the period The difference in quantity and the relationship between manufacturing costs and cost of finished goods is reflected in the following formula for calculating the overall product price: Cost of finished goods Opening = work in progress Manufacturing + cost incurred in the period Ending - work in progress Thus, manufacturing costs are the basis for building the cost of finished goods while cost of finished goods is the basis for building the selling prices In the condition that the selling price does not change, the enterprise's savings or waste of manufacturing costs have a direct impact on low or high cost of finished goods, which will affect the profitability of the business Therefore saving costs and lowering finished goods cost is an important and regular task of economic management It helps the businesses compete effectively in the market Nguyen Thuy Trinh CQ54/21CL01 Graduation thesis Mentor: Ph.D Nguyen Dao Tung 1.1.2 Requirements for manufacturing costs and finished goods costing accounting Accounting is an effective management tool in business management and specifically, cost accounting is a key tool in managing manufacturing costs and cost of finished goods Therefore, the main requirement for accounting for manufacturing costs and cost of finished goods is to identify the objects of manufacturing cost and the objects of finished goods costing in accordance with the certain conditions of the business and at the same time, apply the most reasonable cost accounting methods, organize accounting in a logical, accurate, complete and timely manner Specifically, the following requirements should be well implemented: - Checking the implementation of production plans in each part of the enterprise - Based on the characteristics, production situation of the enterprise, production characteristics and technological process to determine the objects to collect costs, the objects to appropriately calculate the cost of finished goods - Organizing the collection and allocation of each type of manufacturing costs according to the identified objects by appropriate methods to calculate the actual cost for each object and each product unit in accordance with regulations, terms, method and ensure accuracy - Checking the implementation of technical material consumption norms, cost estimates for production management in order to promote economical and Nguyen Thuy Trinh CQ54/21CL01 Graduation thesis Mentor: Ph.D Nguyen Dao Tung reasonable use of all expenses, in service of business accounting requirements - Periodically checking the implementation of the production plan and the task of lowering the cost of finished goods Potential possibilities should be exploited and the direction should be strived to continuously reduce the cost of finished goods in a reasonable way - Determining economic results in each department and the whole enterprise The organization of checking the reasonableness of expenses incurred at the enterprise contributes to enhancing cost management in an effective way On the other hand, it facilitates lowering the cost of finished goods, which is one of the important conditions to create a competitive advantage for enterprises Cost of finished goods is also a basis for determining the selling price of internal economic accounting products, cost analysis and business results determination, providing information for management accounting, serving business management requirements Since the above meanings, accounting for manufacturing costs and cost of finished goods is really important and plays a key role in accounting and business management Accounting for manufacturing costs and cost of finished goods needs to perform the following major tasks: Firstly, it is necessary to properly recognize the role of accounting for manufacturing costs and costs of finished goods in the entire enterprise accounting system, the relationship with the relevant accounting departments in which accounting for cost factors are the premise for accounting for manufacturing costs and costs of finished goods Nguyen Thuy Trinh CQ54/21CL01 Graduation thesis Mentor: Ph.D Nguyen Dao Tung Secondly, based on the characteristics of production and business organization, production technology process, type of production characteristics of the product, the ability to account as well as specific management requirements to determine the correct objects of manufacturing cost accounting, select methods of gathering manufacturing costs according to plans suitable to the conditions of enterprises Based on the characteristics of production and business organization, characteristics of products, capabilities and specific management requirements of enterprises to determine the objects for finished goods costing In addition, it’s essential to organize the accounting apparatus scientifically and reasonably on the basis of clearly assigning responsibilities to each employee, each relevant accounting department, especially the accounting department of cost factors Moreover, it’s necessary to carry out the organization of vouchers, initial accounting, the system of accounts and accounting books in accordance with the accounting principles, standards and regimes to ensure the requirements of collecting and processing information system about the manufacturing cost, the cost of finished goods of the business in the best way Finally, it’s required to organize the preparation and analysis of accounting reports on manufacturing cost, the cost of finished goods, provide necessary information on manufacturing cost, the cost of finished goods to help the managers make decisions quickly and reasonably Nguyen Thuy Trinh CQ54/21CL01 Graduation thesis Mentor: Ph.D Nguyen Dao Tung 1.2 Manufacturing costs and finished goods costing accounting 1.2.1 Accounting for manufacturing costs 1.2.1.1 Manufacturing costs classification In industrial manufacturing enterprises, manufacturing cost includes many types of costs with different economic contents, purposes and uses in the production process Therefore management requirements for each type of costs are different Production management and production costs management cannot be based solely on the data reflecting the total production costs, but must also be based on specific data for each type of separate costs to serve the requirements that check and analyze all manufacturing costs or each of their initial cost factors according to each product, each place where the costs are incurred Therefore, manufacturing costs classification is an indispensable requirement for accurate manufacturing costs accounting and product cost calculation Classifying manufacturing costs in a scientific and unified way is not only important for manufacturing cost accounting and finished goods costing but also an important prerequisite for manufacturing costs planning, inspection and analysis, continuously promoting economical and reasonable use of manufacturing costs, lowering costs of finished goods, further promoting the role of accounting work for the development of enterprises Depending on the management requirements, information providers, manufacturing cost is classified in the following ways: * According to the nature of cost Nguyen Thuy Trinh CQ54/21CL01 10 ... THEORY FOR MANUFACTURING COSTS AND FINISHED GOODS COSTING ACCOUNTING IN ENTERPRISES 1.1 Concepts, requirements for manufacturing costs and finished goods costing accounting 1.1.1 Manufacturing costs. .. 1.2 Manufacturing costs and finished goods costing accounting 1.2.1 Accounting for manufacturing costs 1.2.1.1 Manufacturing costs classification In industrial manufacturing enterprises, manufacturing. .. providing information for management accounting, serving business management requirements Since the above meanings, accounting for manufacturing costs and cost of finished goods is really important and