GRADUATION THESIS ACCOUNTING FOR PRODUCTION COSTS AND PRODUCT COSTING AT 492 ONEMEMBER LIMITED LIABILITY COMPANY2020 and 2021 were the years of difficulties with the world economy in general and Vietnams economy in particular when heavily affected by the pandemic. In todays volatile market economy, businesses that want to survive and develop must have an appropriate and effective business method. An inevitable rule in the market economy is competition, so businesses must find a way to stand firm in the market; build a brand and develop the business further to be able to bring its products to a large number of consumers; constantly improve product quality to meet the increasing needs of users. Grasping the context that the country is transforming on the road of industrialization and modernization, all products from small to large have marked changes in both form and quality, even research and development launched many new products applied in life. In the construction business, expenses account for a fairly large proportion (especially the cost of materials), which is an important indicator on the income statement. Just a small change in cost can change the products price and profit of the business. Therefore, businesses must pay attention to the preservation and use of cost savings but still have to ensure product quality. To do that, the immediate problem is to make full and accurate accounting in the business process. Accounting as a management tool must calculate and manage how to meet that requirement. Therefore, I have chosen the research topic “Accounting for production costs and calculating product costs at 491 OneMember Limited Liability Company” as the topic for my graduation thesis so that I can better understand reality.
MINISTRY OF FINANCE ACADEMY OF FINANCE - - GRADUATION THESIS TOPIC: “ACCOUNTING FOR PRODUCTION COSTS AND PRODUCT COSTING AT 492 ONE-MEMBER LIMITED LIABILITY COMPANY” Major : Corporate Accounting Mentor : PhD Thai Ba Cong MSc Nguyen Ba Linh Hanoi – 2022 DECLARATION I hereby declare that this thesis is my own work and effort and that has not been submitted anywhere for any awards Where other sources of information have been used, they have been acknowledged The data and results described in the thesis are deried from the actual position of the internship company Thesis: “Accounting for production costs and product costing at 492 OneMember Limited Liability Company” Ha Noi, February 21st, 2022 Student ACKNOWLEDGEMENT Firstly, I would like to express my vey great thankfulness to all lectures in Accounting Faculty at Academy of Finance for their professional guidance and valuable support Especially, I would like to show my deep gratitude to my supervisor, PhD Thai Ba Cong and MSc Nguyen Ba Linh, for their patient guidance, enthusiastic encouragement and useful critiques during the planning and development of my Graduation Thesis and for thier assistance in keeping my progress on schedule I also want to thank 492 One Member Limited Company for giving me permission to commence this thesis in the first instance, to the necessary research work and to use departmental data I have furthermore to thank the Director and Chief Accountant as well as all seniors at the company who gave and confirmed this permission and encouraged me to go ahead with my thesis Finally, because of the limitation of time and knowledge, mistakes are advoidable, so I wish ro receive more contribution and suggestions to make my thesis better TABLE OF CONTENTS Contents ACKNOWLEDGEMENT LIST OF DIAGRAMS LIST OF TABLES IN THE DISSERTATION LIST OF ABBREVIATIONS .6 PREFACE Urgency of the topic Research purpose Object and scope of the research The research method of the topic .8 Thesis structure CHAPTER 1: BASIC THEORIES ON ACCOUNTING FOR PRODUCTION COST AND PRODUCT COSTING IN CONSTRUCTION ENTERPRISES .9 1.1 Necessity of accounting for production cost and product costing in enterprises 1.1.1 Concept, nature of production cost and product cost 10 1.1.2 Tasks of production cost accounting and product costing .12 1.2 Classification of production costs and product costs 13 1.2.1 Classification of production costs 13 1.2.2 Product cost classification 14 1.2.2.1 Classification of product costs according to data and time of cost calculation 14 1.2.2.2 Classification of product cost based on scope and component costs 15 1.3 Objects of production cost accounting and product costing 15 1.3.1 Objects of production cost accounting 15 1.3.2 Objects of Product costing .16 1.3.3 The relationship between objects of production cost accounting and objects of product costing 16 1.4 Accounting for production costs according to the utility purpose of costs 17 1.4.1 Accounting for direct raw material costs 17 1.4.2 Accounting for direct labor costs .19 1.4.3 Accounting for construction machine usage costs 21 1.4.4 Accounting for production overhead costs 24 1.4.5 Accounting for production cost for the whole enterprise .25 1.5 Methods of valuing closing work in progress 27 1.5.1 Valuing closing work in progress according to the estimated cost .27 1.5.2 Valuing closing work in progress according to equivalent units 28 1.5.3 Valuing closing work in progress based on direct materials cost 29 1.6 Product costing methods in enterprises 29 1.7 Organization of production cost accounting and product costing in terms of information technology application 31 CONCLUSION OF CHAPTER 31 CHAPTER 2: ACTUAL SITUATION OF ACCOUNTING FOR PRODUCTION COSTS AND PRODUCT COSTING AT 492 ONE-MEMBER LIMITED LIABILITY COMPANY 32 2.1 General overview of 492 One-Member Limited Liability Company 32 2.1.1 General introduction of 492 One-Member Limited Liability Company .32 2.1.2 Functions, duties, and business sectors 35 2.1.3 Organizational characteristics of the company's management apparatus 37 2.1.4 Organizational characteristics of the company's accounting work 41 2.2 Actual situation of production cost accounting and product cost calculation at the company 50 2.2.1 Cost Aggregation Objects and Cost object 50 2.2.2 Contents of production cost accounting and product costing at the company .52 2.2.3 Product costing at 492 One Member Limited Liability Company .160 2.3 General assessment of the current state of cost accounting and product costing at the company .194 2.3.1 Advantages .194 2.3.2 Disadvantages 196 CONCLUSION OF CHAPTER 198 CHAPTER 3: SOME SOLUTIONS TO IMPROVE ACCOUNTING FOR PRODUCTION COST ACCOUNTING AND PRODUCT COSTING AT 492 ONE-MEMBER LIMITED COMPANY 199 3.1 Development orientation of the company; principles and requirements for improvement 199 3.1.1 Development orientation of the company 199 3.1.2 Principles and requirements for improvement 200 3.2 Solutions to improve production cost accounting and product costing at 492 One Member Limited Company 202 CONCLUSION OF CHAPTER 207 CONCLUSION 208 LIST OF DIAGRAMS No 1.1 1.2 1.3 1.4 2.1 2.2 2.3 2.4 Name Diagram of the major accounting transaction on direct raw material cost Diagram of the major accounting transaction on direct labor cost Diagram of the major accounting transaction on production overheads Diagram of accounting of production cost of the whole enterprise according to the periodic inventory method Organizational characteristics of the company's management Diagram of the company's accounting work Form of bookkeeping applied at the Company The order of making accounting books on computer software Page LIST OF TABLES IN THE DISSERTATION No 2.1 2.2 2.3 2.4 2.5 2.6 2.7 Name December 2020 payroll at Factory 921 – Indirect department Daily checking 12/2020 at Factory 921 – Indirect department December 2020 payroll at Factory 921 – Direct department Daily checking 12/2020 at Factory 921 – Ddirect department Construction machinery's description and major repair list Summary table of production tools cost for every project Summary of payment of production and business expenses in the fourth quarter of 2020 – Team 926 2.8 Product cost calculation table 2.9 Information from the income statement Page LIST OF ABBREVIATIONS Ac Co., LTD VAT Abbreviations Full phrase Account One-Member Limited Liability Company Value added tax PREFACE Urgency of the topic 2020 and 2021 were the years of difficulties with the world economy in general and Vietnam's economy in particular when heavily affected by the pandemic In today's volatile market economy, businesses that want to survive and develop must have an appropriate and effective business method An inevitable rule in the market economy is competition, so businesses must find a way to stand firm in the market; build a brand and develop the business further to be able to bring its products to a large number of consumers; constantly improve product quality to meet the increasing needs of users Grasping the context that the country is transforming on the road of industrialization and modernization, all products from small to large have marked changes in both form and quality, even research and development launched many new products applied in life In the construction business, expenses account for a fairly large proportion (especially the cost of materials), which is an important indicator on the income statement Just a small change in cost can change the product's price and profit of the business Therefore, businesses must pay attention to the preservation and use of cost savings but still have to ensure product quality To that, the immediate problem is to make full and accurate accounting in the business process Accounting as a management tool must calculate and manage how to meet that requirement Therefore, I have chosen the research topic “Accounting for production costs and calculating product costs at 491 OneMember Limited Liability Company” as the topic for my graduation thesis so that I can better understand reality Research purpose Systematize the general theory of accounting that collects production costs and calculates product costs in enterprises - Describe and analyze the actual situation of accounting work of gathering production costs and calculating product costs at 492 One Member Limited Liability Company - Proposing several solutions to improve the accounting work of gathering production costs and calculating product costs at 492 One Member Limited Liability Company Object and scope of the research -Object: Accounting for production costs and product costing at 491 OneMember Limited Liability Company - Research scope: + The accounting work collects costs, calculates the cost of products in the enterprise +Scope of space: 492 One-Member Limited Liability Company +Time range: from the 4th quarter of 2020 to the 4th quarter of 2021 The research method of the topic In the thesis, a combination of research methods is used to apply the knowledge learned in school to solve specific business and production tasks in practice, which are: + Economic statistical method: Collecting data according to reference sources and survey collected at 492 One-Member Limited Liability Company + Methods of analyzing production and business activities + Accounting method: Through professional methods of accounting to collect data and documents, collect production costs and calculate product costs of the bridge project Military Hospital 175 + Method of consulting experts: Consult with teachers in the accounting department of the Academy of Finance on the contents related to accounting for production costs and product costing, and sharing by the cost accountant at 492 One-Member Limited Liability Company Thesis structure -Chapter 1: Basic theories on accounting for production cost and product costing in construction enterprises -Chapter 2: Actual situation of accounting for production costs and product costing at 492 One-Member Limited Liability Company -Chapter 3: Some solutions to improve accounting for production cost accounting and product costing at 492 One-Member Limited Liability Company CHAPTER 1: BASIC THEORIES ON ACCOUNTING FOR PRODUCTION COST AND PRODUCT COSTING IN CONSTRUCTION ENTERPRISES 1.1 Necessity of accounting for production cost and product costing in enterprises In the market economy, businesses that want to survive and develop must know how to compete and take it as a driving force to gradually assert their position One of the most effective measures that businesses apply is to minimize production costs and reduce production costs without reducing product quality The process of production and business activities is the process of combining basic factors of production (labor, means of labor, and objects of labor) to create necessary products to serve human needs In the process of that combination, the basic elements are consumed creating the cost of doing business Attached to the cost of production and business is the cost of the product Product cost is a monetary expression of the costs that enterprises have spent regardless of the period related to the volume of products, which are important economic indicators, reflecting the quality of production activities business, so they are always the top concern of managers Clear and accurate accounting of production costs will help managers clearly understand the costs to be spent on production and business activities From there, compare with the obtained results to determine the profit or loss of the production and business activities In addition, accounting for production and business costs also helps managers be more proactive in production management and discover unreasonable expenses, wasteful expenses, and ineffectiveness results in production and business Recognizing the importance of collecting production costs and calculating costs is the central stage of the entire accounting work of an enterprise Therefore, I decided to choose the topic: “Accounting for production costs and product costing at 492 One-Member Limited Liability Company” as the topic of my graduation thesis 1.1.1 Concept, nature of production cost and product cost a Production cost Every enterprise, no matter what field it operates in, must have all the necessary elements: labor, labor materials, and labor objects To ensure all these factors, enterprises must spend corresponding expenses called production and business costs The process of production activities in construction enterprises is a combination of factors of labor, labor materials, labor objects of the production process into corresponding costs: corresponding to the use of fixed assets is the depreciation expense of fixed assets, with the use of raw materials is the cost of raw materials, with the use of labor is the cost of wages, wages… In a commodity economy, all of the above costs are expressed in money Thus, the production and business costs of construction enterprises can be understood as follows: 10 ... topic: ? ?Accounting for production costs and product costing at 492 One-Member Limited Liability Company? ?? as the topic of my graduation thesis 1.1.1 Concept, nature of production cost and product. .. production costs and product costing at 492 One-Member Limited Liability Company -Chapter 3: Some solutions to improve accounting for production cost accounting and product costing at 492 One-Member Limited. .. product costs at 492 One Member Limited Liability Company Object and scope of the research -Object: Accounting for production costs and product costing at 491 OneMember Limited Liability Company