13 accounting for calculating manufacturing costs and product prices at ha noi civil electric hydraulic and industrial consultant jsc

ABSTRACT This study researched the accounting of evaluating manufacturing cost and product price in Ha Noi Civil Electric Hydraulic and Industrial Consultant JSC.. The general assessment

Accounting For Calculating Manufacturing Costs And Product Prices At Ha Noi Civil

Electric Hydraulic And Industrial Consultant Jsc

Major : English for accounting and finance Student code : 17522202010109

Supervisor : Dr Trần Thu Hoài

Hanoi – 2021

DECLARATION

I hereby undertake that this internship report was written by myself based on theactual results that I researched and collected during the actual internship at the

company

Thesis: “Accounting of evaluating manufacturing cost and product price at

Ha Noi Civil Electric Hydraulic and Industrial Consultant JSC”

Hanoi, May 20th 2021

Student Đào Thị Hoa

ABSTRACT

This study researched the accounting of evaluating manufacturing cost and product price in Ha Noi Civil Electric Hydraulic and Industrial Consultant JSC The paper aims at finding out the achievements and drawbacks in accounting activities in

Ha Noi Civil Electric Hydraulic and Industrial Consultant JSC, especially the areas of cost accounting and then suggesting main methods to improve the efficiency of

accountant in the company This graduation thesis present the process of accounting activities based the experience directly in the company point out whether it is effective

or not From received results, the study argues that student need to Students need to provide optimal solutions to solve arising problems, inadequacies in the company's accounting operations, and improve the company's business in the future

I would like to express my deep gratitude to all those who have given me the possibility to complete this graduation thesis In preparing this graduation thesis, I havehad generous help and advice from my teachers, my colleagues, my family and my friends I would like to express my great thanks to all of them

First of all, I would like to express my deepest gratitude to my supervisor, D.r Tran Thu Hoai, lecturer of Academy of Finance, for her guidance and instructions It is whole-heartedly appreciated that your great advice for my study proved monumental towards the success of this study

Second, I wish to show my sincere thanks to all my teachers at Academy of Finance, who have provided me with worthy lessons throughout 4 years of study

Moreover, I am indebted to the staffs of Ha Noi Civil Electric Hydraulic and Industrial Consultant JSC for their valuable supports during the internship I am

extremely thankful and indebted to them for sharing expertise, and sincere and valuableguidance and encouragement extended to me

Furthermore, I would like to send my loving thanks to my family whose great love and care in both spirit and health to encourage me to complete the thesis

Last but not least, I also place on record, my sense of gratitude to one and all, who directly or indirectly, have lent their hand in this thesis

LIST OF FLOWCHARTS AND TABLES List of flowcharts

Flowchart 1.1 Accounting entry for direct material costs -24Flowchart 1.2 Accounting entry for direct labor cost -25Fowchart 1.3 Accounting entry for factory of overhead costs -26Flowchart 2.1: Board of Ha Noi Civil Electric Hydraulic and Industrial Consultant JSC - 34Flowchart 2.2 Accounting apparatus -36Flowchart 2.3 Accounting process at the company -39

List of tables

Table 2.1 The main fields of activity of the company -33Table 2.2 The Company’s business result from 2018-2020 -38Table 2.3 Insurrance rate apply following to insurrance law -43

TABLE OF CONTENTS

DECLARATION - 3

ABSTRACT - 4

ACKNOWLEDGEMENT -5

LIST OF ABBREVIATIONS -6

LIST OF FLOWCHARTS AND TABLES -7

INTRODUCTION - 12

1 RATIONAL OF THE STUDY -12

2 AIM OF THE STUDY -13

3 SCOPE OF THE STUDY -13

4 METHODOLOGY -13

5 ORGANIZATION OF THE STUDY -14

CHAPTER 1: BASIC THEORIES ABOUT THE ACCOUNTING OF MANUFACTURING COSTS AND PRODUCT PRICING IN COMPANY. -15

1.1 Overview of accounting -15

1.1.1 Definition of accounting -15

1.1.2 Functions and responsibilites of accounting -15

1.1.3 Characteristics of accounting -16

1.2 Accounting for calculating manufacturing costs and product prices at a manufacturing enterprise. -17

1.2.1 Content of manufacturing cost -17

1.2.2 Accounting subjects for calculating maufacturing costs and product price. -20

1.2.3 Methods of accounting for calculating manufacturing costs -21

1.2.4 Accounting process for calculating manufacturing costs -22

1.2.4.1 Accounting process and accounting standards -22

1.2.4.2 Accounting for direct raw material costs -23

1.2.4.3 Accounting for direct labor cost -24

1.2.4.4 Accounting for factory overhead costs -25

1.3 Overview of accounting for product price -27

1.3.1 The definition of product price -27

1.3.2 Characteristices of product price -27

1.3.3 The accounting methods for evaluating product prices -29

1.3.3.1 Relationship between manufacturing cost and product price -29

1.3.3.2 Methods for calculating product prices -29

1.4 Accounting book used to accounting for calculating manufacturing costs and product prices. - 30

CHAPTER 2: THE ACTUAL OF MANUFACTURING COST ACCOUNTING AND PRODUCT PRICING AT HA NOI CIVIL ELECTRIC HYDRAULIC AND

INDUSTRIAL CONSULTANT JSC -32

2.1 Overview of Ha Noi Civil Electric Hydraulic and Industrial Consultant JSC -32

2.1.1 General information of Ha Noi Civil Electric Hydraulic and Industrial Consultant JSC - 32

2.1.2 Foundation and development of the company -32

2.1.3 Organization of management in Ha Noi Civil Electric Hydraulic and Industrial Consultant JSC. - 34

2.1.3.1 Organization Structure of Ha Noi Civil Electric Hydraulic and Industrial Consultant JSC. - 34

2.1.3.2 Human resource situation at the company -35

2.2 Organization of accounting works in the company -36

2.2.1 Organization of the accounting system -36

2.2.2 Accounting policies applied at the company -37

2.2.3 Accounting process -39

2.2.3.1 Accounting process of direct raw materials costs -39

2.2.3.2 The accounting process for direct labor costs -42

2.2.3.3 The accounting process of overhead -44

2.3 Organization of accounting for calculating product prices at the company. -46

2.3.1 Actual situation of the methods of evaluating product price. -46

2.3.2 Actual situation of product price calculation at the company. -47

2.4 The general assessment for accounting for calculating production cost and product price at Ha Noi Civil Electric Hydraulic and Industrial Consultant JSC. -47

2.4.1 Results and limitations at the operation process of the company -47

2.4.2 General comments on accounting for calculating manufacturing costs and evaluating products prices. -51

2.4.2.1 Advantages of accounting works and evaluating product price at the company - 51

2.4.2.2 Disadvantages of accounting works and evaluating product price at the company. - 53

CHAPTER 3: SOLUTIONS TO COMPLETE MANUFACTURING COSTS ACCOUNTING AND EVALUATING PRODUCT PRICES AT HA NOI CIVIL ELECTRIC HYDRAULIC AND INDUSTRIAL CONSULTANT JSC. -55

3.1 Orientations and recommandations for completing accounting for manufacturing costs and product price at Ha Noi Civil Electric Hydraulic And Industrial Consultant

JSC - 55

3.1.1 Orientations for the future development at Ha Noi Civil Electric Hydraulic and Industrial Consultant JSC -55

3.1.2 Objectives for the future development at Ha Noi Civil Electric Hydraulic and Industrial Consultant JSC. -56

3.2 Recommendations to improve efficiency of accounting for calculating production costs and product prices at Ha Noi Civil Electric Hydraulic and Industrial Consultant JSC - 56

3.3 Requirements to ensure solutions are implemented -61

CONCLUSION - 63

REFERENCE - 65

APPENDIX - 66

1 RATIONALE OF THE STUDY

In the context of a strongly developed market economy, competition not only determines the existence and development of enterprises, stimulates enterprises to improve production and business efficiency, but also affects reputation and position of enterprises producing and supplying domestic products and services Competition helps consumers to satisfy their needs for goods and services with increasingly high quality products, suitable to economic mobility For the national economy, competition

is the driving force for equal development of all economic sectors, creating conditions

to free up the workforce, improving scientific and technical progress and

modernization social production background

Therefore, In order to get performance operation and a stabilized position in the market, businesses need to have a financial management system that provides accurate information and make right and timely decisions in the business’ production process In financial management tools, the effective accounting tools is use to check,analyze, evaluate and process information In fact, accounting of the business has reflected the calculation of saving costs, lowering costs, and maximizing profits uponbusinesses Thus, if the enterprise does not perform well the accounting work,

especially manufacturing costs accounting and product price accounting, the businessoperation on the market is considered a reckless way There is no direction or

decision to lead to success in business

As a student of the Academy of Finance, and through practical research at Ha Noi Civil Electric Hydraulic and Industrial Consultant JSC, I was exposed as an

accountant at this company I realize that the importance of accounting for total

manufacturing costs and determining product prices, I researched and selected a topic

for my graduation thesis, the topic is “Accounting for calculating manufacturing costs and product prices at Ha Noi Civil Electric Hydraulic and Industrial

Consultant JSC”

2 AIM OF THE STUDY

The aim of this study is to understand the current situation of accounting for calculating manufacturing costs and product prices at Ha Noi Civil Electric Hydraulic and Industrial Consultant Joint Stock Company and therefore, to suggest strategies and experience to improve practical skills

In addition, the study is going to analyze the methods of accounting

management of Ha Noi Civil Electric Hydraulic and Industrial Consultant Joint Stock Company (JSC) from 2018 to 2020 Then, it will evaluate the effectiveness of

accounting activities at the company And finally, the study aims to recommend some suggestions to improve the efficiency of accounting activities at the company in the future

3 SCOPE OF THE STUDY

The study is performed at Ha Noi Civil Electric Hydraulic and Industrial

Consultant JSC The address is no 155, Nguyen Khang Street, Cau Giay District, Hanoicity, Vietnam The study is based on data provided by the company from 2018 to 2020 The object of the study is accounting for calculating manufacturing costs and product price in the enterprise at Ha Noi Civil Electric Hydraulic and Industrial Consultant Joint Stock Company

4 METHODOLOGY

Based on knowledge at university, books and self-accumulation and to these above objectives, there are three methods of studying the thesis are used as follow:

The first, the methods of figure or data collection include investigating,

collecting and synthesizing data and books at the company In addition, this method is used to collect documents, books, circulars, legal documents, promulgated accounting regimes and company regulations

The second, accounting method includes document method, account method which take accounting steps as figure comparison, evaluation, judgment and

conclusion for all information of accounting activities recorded in the studying of thesis.

The third, the analytical method, which focuses on analysis to clarify the

problem of researching the set of costs and evaluating product prices.

In conclusion, these three methods are used during the research and completion

of the thesis

5 ORGANIZATION OF THE STUDY

The structure of the thesis consists of 3 chapters:

Chapter 1: Basic theories about the accounting of manufacturing costs and product prices in the enterprise

Chapter 2: Actual accounting for manufacturing costs and product prices at Ha Noi Civil Electric Hydraulic and Industrial Consultant JSC

Chapter 3: Solutions to complete manufacturing costs accounting and

evaluating product prices at Ha Noi Civil Electric Hydraulic and Industrial

Consultant JSC

CHAPTER 1: BASIC THEORIES ABOUT THE ACCOUNTING OF

MANUFACTURING COSTS AND PRODUCT PRICING IN COMPANY 1.1 Overview of accounting

1.1.1 Definition of accounting

Accounting is the process of recording financial transactions pertaining to a business The accounting process includes summarizing, analyzing and reporting these transactions to oversight agencies, regulators and tax collection entities The financial statements used in accounting are a concise summary of financial transactions over an accounting period, summarizing a company's operations, financial position and cash

flows (Source: Bui Nu Thanh Ha, 2017).

1.1.2 Functions and responsibilites of accounting

Accounting functions deriving from the above accounting definition, accountinghas two functions related to management: the reflection function (also known as the information function) and the director function (also known as the inspection function)

First, the reflection function is the function shown in accounting, monitoring all economic and financial phenomena arising during the operation of the unit through calculating, recording, and classifying the process and summarize data related to the use of capital and assets of the entity

Second, the function of director (inspection function is a function shown

through reflected data, accounting the year systematically the whole process and operating results of the unit The accountant performs the correct assessment and strictly controls the law observance of the units in accounting management This function is to help the company's operations become more and more efficient

With the above functions, accounting has become a very important tool in the management of each business, and at the same time accounting information is also

essential for objects such as the owner of the company, credit providers and goods and services, investors, and other financial institutions.

Based on legal documents, it is possible to analyze the accounting tasks for eachtype of accounting work Accounting management requirements are divided into 2 categories: financial accounting and management accounting

Firstly, the financial accounting is responsible for monitoring, calculating, and reflecting the situation of assets, capital resources as well as the performance and business results of the enterprise, at the same time providing accounting information based on Practical documentary basis to provide users with information such as

investors, shareholders and other financial institutions

Secondly, management accounting responsibility that they rely on the data of financial accounting to make economic decisions and decisions

In short, the task of accounting is to provide cross-cutting information to reflect information and economic events that have happened, are happening, and imminent of

an entity to the interested parties

1.1.3 Characteristics of accounting

An accounting apparatus divided into many different parts at a business

However, there are some common accounting system that need to be in a

manufacturing organization in Vietnam includes:

First, general accounting principles, generally accepted accounting

principles (GAAP) refer to a common set of accounting principles, standards, and procedures issued by the Financial Accounting Standards Board (FASB) GAAP aims

to improve the clarity, consistency, and comparability of the communication of

financial information These 10 general concepts that is the main mission of GAAP such as regularity, consistency, sincerity, permanence of methods, non-compensation, prudence, continuity, periodicity, materiality, and utmost good faith

Second, requirements of finance accounting at a business

Third, types of accounting forms,

Fourth, accounting books rules

Fifth, types of accounting, there are 8 types as

General accounting, tax accounting, payable accounting, paymaster accounting, receivable accounting, sale accounting, warehouse accounting One of the most

important factors is manufacturing cost and evaluating product price that a

manufacturing enterprise must concern about, and make business process more

effective

1.2 Accounting for calculating manufacturing costs and product prices at a

manufacturing enterprise.

1.2.1 Content of manufacturing cost

The business process of each business need to prepare all three basic resources: labor materials, labor object and resources force Manufacturing process is the process

of combination of these factors incurred corresponding costs as costs of labor

materials, cost of employees and costs of workforce In this respect, costs are defined

as sum of the amount of items that reduce economic benefits during the accounting period, eithers in the form of payment, reductions of assets or arising liabilities

resulting in a reduced equity These costs arise regularly in the production business process, it is always changing in the reproduction process

However, in order to manage costs effectively, accountants must be required a good grasp of the nature of costs The costs incurred in the business include two types: the costs which can create using value and not create using value This distinction needs to be made clearly for the purpose of determining the scope and content of manufacturing cost because all costs that invested in company is also manufacturing costs Costs are a unique nature, including all the costs a business spends to survive andconduct its operations, regardless of whether the cost is necessary or not On the other hand, the cost of the business is always double-sided, the first side, it shows the

company must waste costs on creating several using value (objective) On the one hand, the waste of factors in the production and business process of the enterprise depends on the calculation method, management level and specific management

requirements of each business (subjectivity)

The research and cost perception also depend on the perspective of each

different type of accounting According to the view of Financial Accounting, costs are seen as factors incurred and associated with together in the operation of the enterprise

to achieve a finished product and service The cost is determined by the money of the labor cost on the basis of documents, solid evidence The fact of view of Management Accounting represent all cost and Cost Management Accounting is to provide

appropriate, useful and timely cost information for the decision-making of business managers Costs may be actual costs associated with daily business operations when they making, examining and making decisions; Costs can also be estimated costs to implement projects, costs lost when choosing the option, ignoring business

opportunities

In conclusion, manufacturing costs are the expenses directly related to building

the product (Brian Beers 2021)

Manufacturing cost classified by content and economic nature of the stock (by

factors)

According to the current accounting regime in Vietnam, when managing and accounting manufacturing costs, businesses must keep track of their expenses are based

on the following factors:

The first is raw material costs, these costs include the purchase price, the

purchase cost of raw materials used in production activities in the period All costs are the forces which can be controlled by a company to a certain extent such as cost of main raw materials, cost of auxiliary materials, fuel cost, cost of spare parts and other

costs of raw materials As they are the forces supplied by outside, so the company has not control.

The second factor is labor cost, The labor cost is the cost of salaries payable to employees, social insurance deductions, health insurance, unemployment insurance, trade union fees according to salary of workers in the production process and

production management in workshops and production teams

The third is depreciation expenses refer to the cost factor includes the

depreciation of all fixed assets used in production activities of the company in the period

The next one is outside service cost refer to expenses for services purchased

from outside are the amounts payable for services purchased from outside for

production activities in the period of the enterprise

Other expenses refer to the expenses of activities other than production and business activities that generate revenue of the enterprise

The factor-based cost classification shows the content and structure of the proportion of each type of cost that the enterprise has used in the production process in the total manufacturing cost of the enterprise The factor-based manufacturing cost data

is the basis help company to build manufacturing cost estimates, to determine the capital needs of businesses, to make plans for labors, materials, assets It is also the basis for analyzing the implementation of manufacturing cost estimates, providing data

to make financial statements (the part of production and business costs by factor), fromwhich to calculate and national income aggregate (Financial accounting textbook)

Manufacturing Cost classified by purpose and utility of cost

According to this classification the cost of production is divided into three categories as direct raw material cost, direct labor costs and Production overhead cost, for each one have got some features

First, direct raw material costs sum of costs invested in materials and which used in primary production and manufacturing of goods Most of reason, Direct raw materials cost is the total cost incurred by the company in purchasing the raw material along with the cost of other components including packaging and storage costs, taxes, etc That are related directly to the manufacturing and production of various products

of the company Then direct raw material costs often accounted for a large proportion

of manufacturing overhead (Caroline Banton Sep 25, 2020)

Second, direct labor costs refer to the total costs that company must pay for theirworkforce related directly to the manufacture of the product of the company or for provision of the service

Third, production overhead cost refers to the costs of production management and service in the workshops, including factory staff costs, material costs, tool and instruments, fix assets depreciation, outside services and other expenses

In conclusion, according to these classification, it helps to gather manufacturing costs in accordance with the purpose and economic uses of product pricing, to provide documents for the calculation of product prices

1.2.2 Accounting subjects for calculating manufacturing costs and product price

The manufacturing cost accounting object is the scope and limit for the

aggregation of production costs according to those ranges and limits The essence of determining the object of the cost of production is to determine where the costs are incurred (workshop, production department, technology stage) and the cost bearer (product, application) Depending on the characteristics of the situation of the

enterprise, the object for the collection of production costs is not the same, they depend

on the following factors:

First, the purpose of the cost, characteristics and use of the cost in the

production process

Second, characteristics of the production organization structure of the business

Third, manufacturing technology process, product manufacturing

Fourth, feature of product

Last, requires cost control checks and internal economic accounting

requirements of the business

For enterprises that have products according to orders, the manufacturing cost accounting object is determined to be orders or according to each product or certain product category

1.2.3 Methods of accounting for calculating manufacturing costs

The production cost aggregation method is the method that the accountant uses

to gather and classify production costs arising in a period according to the identified production cost aggregation objects The production cost aggregation accounting method is based on the identified production cost aggregation objects to open

accounting books to record and reflect costs incurred according to the correct subjects

to allocate the costs incurred to those objects

Normally, in today's businesses, there are two methods of aggregating costs as follows:

First of all, Direct cost aggregation method, this method is used to aggregate costs that are directly related to the identified cost-aggregate objects, that is, for costs incurred to each cost-set object Defined specifics will be gathered and inductive directly to that object

The next, indirect aggregation and allocation method, this method is used in the case where production costs arise related to many objects to collect production costs, it

is not possible to record the initial production costs incurred separately for each object

The allocation of expenses to each object is carried out in the following 2 steps: The first step, determining the allocation coefficient by the formula:

H = C / T

Of which:

H: Cost allocation coefficient

C: Is the total cost to be allocated to objects

T: Total standard quantity of distribution of objects needing to allocate cost The next step, determining the cost to be allocated to each specific collection object

Ci = H * Ti

Of which:

Ci: Costs allocated to object i

Ti: Standard allocation quantity used to allocate the cost of object i

The standard quantity used for distribution is selected depending on each

specific case The accuracy and reliability of the cost information depend very much onthe reasonableness of the allocation standard chosen

Account used at accounting process as follows:

Account 621: direct material costs

Account 622: direct labor costs

Account 627: production overhead costs

Account 154: work in progress

Account 631: production costs

1.2.4 Accounting process for calculating manufacturing costs

1.2.4.1 Accounting process and accounting standards

The company ensures compliance with the requirements of accounting standardsand Vietnamese accounting system issued in accordance with Circular No 200/2014 / TT- BTC dated 22 December 2014 or No.133/2016/ TT-BTC dated August 26, 2016 as well as circulars guiding the implementation of accounting standards of the Ministry ofFinance for making financial statements

Accounting software is very important and easy to use for companies

Accounting software is a set of programs used to automatically process

accounting information on computers, starting from the entry of original documents, classifying vouchers and conducting information processing on vouchers according to the accounting process Then, the final results are the accounting books and accountingreports The common accounting software is MISA or Excel

The process of evaluating cost and price are conducted by following steps:The first step refers to updating unfinished products at the beginning of the period (or automatically transferred from the end of the previous period)

The second one is to aggregate all costs, of course that’s automatically

The third step is to update product production in the period and work in progress

of the period

The next step is to collect data

The last one is to print reports

In conclusion, afterward accountants complete the accounting process, they need

to evaluate product price by these basis

1.2.4.2 Accounting for direct raw material costs

Direct raw materials cost is the total cost incurred by the company in purchasingthe raw material along with the cost of other components including packaging fieght and storage costs, taxes, etc Those are related directly to the manufacturing and

production of various products of the company Direct raw material costs often

accounted for a large proportion of manufacturing overhead

There are some of accounting vouchers which used in making accounting such

as inventory delivery vouchers, good receipt note, sale invoice, value-added invoice, material delivery and receipt note In addition, many some report that accountant have

to prepare such as report on materials remaining at the end of the period, distribution bill of materials and tools, bill and other relevant documents

Materials used for Manufacturing and suppling

Ac 111,112,141

Returning unused

Materials

Ac 331 Outside costs

Tranfering the value

Of direct material costs

Ac 632

Ac 154 (Acc 631)

Ac 152(611)

Purchase of raw material

Tranfer cost of raw

Materials

In this case, account 621- Direct raw material expense are the account used to reflect the cost of raw materials used directly for production of products and service performance but this account does not have a closing balance In order to bookkeeping,Accountants must adhere the accounting standards by accounting entry following

Flowchart 1.1 Accounting entry for direct material costs

1.2.4.3 Accounting for direct labor cost

Direct labor costs are amounts of payable to workers directly who engaged in production process and directly performing services Those are including main salary, extra salary, allowances, unit budget, according to the salary of production workers

There are some of accounting vouchers which used in making accounting such

as Timesheet, payroll, overtime timesheet, ledger, salary detail book and outsourcing contract In addition, account are used by Acc 622 (direct labor cost) In order to

Salaries, wages and Allowances for direct employees

Ac 622 Ac 154(631)

Acc 338

Transfer direct Labor cost

Flowchart 1.2 Accounting entry for direct labor cost

1.2.4.4 Accounting for factory overhead costs

It refers to the costs of production management and service in the workshops, including factory staff costs, material costs, tool and instruments, fix assets,

depreciation, outside services and other expenses There are some of accounting vouchers which used in making accounting such as inventory delivery vouchers,

spreadsheet for tools, Payment vouchers, debit note In addition, account are used by

Acc 622 (direct labor cost) In order to bookkeeping, Accountants must adhere the accounting standards by accounting entry by following:

Fowchart 1.3 Accounting entry for factory of overhead costs

costs not allocated Depreciation

cost

Ac 111, 112,

331,141 Outside services costs

Ac 133

Tranfer of factory overhead costInput taxes

1.3 Overview of accounting for product price

1.3.1 The definition of product price

Product price is always an indicator that any accountant and business are very preoccupied with costs determined by the quality of the product to determine how much raw materials, tools, and types of equipment should invest in, the cost of

manufacturing the product, and the cost of business management Moreover, the

product cost is also the basis for determining the selling price of the product, the basis for determining business results This is also the central stage of the entire accounting work in the enterprise, influencing the quality of other accounting operations as well asthe quality and efficiency of the economic and financial management of the business

Product price is a limited and definite indicator that is both objective and

subjective In the system of enterprise management indicators, product prices are general economic indicators, reflecting the results of using assets in the production and business process, as well as the correctness of the solutions Management laws that businesses have implemented aim to lower costs and increase profits

In Conclusion, Product prices are determined to include manufacturing costs like labor costs, materiality and other costs used to reflect a real quantity of final

products then the company can make profits

1.3.2 Characteristics of product price

The object of evaluating product price types of products, jobs and labor that the enterprise has completed and need to calculate the total cost and unit cost In the small business, the price-evaluating object is just the finished goods In the big one, the price-evaluating object are both the semi-finished goods and finished good at the end of production period In short, Accounting requires to devide product price into many kinds of price depending on the criteria used to classify prices

Product prices classifed by the data base and the period of time that including,

In this way, the cost is divided into 3 categories such as the planned price, the rated price and the actual price

First, the planned price refers to which determined before entering the business

on the basis of the actual cost in the previous period and the norms and cost estimates

of the planning period

Second, the norm price refers to which determined before starting product production, but it is built on the basis of advanced average norms and remains constant throughout the planning period

Last, the actual price refers to which determined after finishing the production

of the product on the basis of actual costs incurred in the production of the product

The above types of prices have a close relationship, they complement each other

in the management of manufacturing costs and the pricing process Business managers need to manage so that the actual price is less than or equal to the planned price (or the norm price)

Product prices classified by scope of cost incurred, according to this

classification way, the price devided into the price of production and the price of

consumption

The first is production price (factory cost) reflecting total of incurred costs related to the production department, including the cost of materials, direct raw

materials, direct labor and general manufacturing costs

The second is overall price which reflecting all costs incurred related to the production and sale of a product

In summary, there are many different costs that incur at the manufacturing process and they are initial material basis to calculating the product price

1.3.3 Accounting methods for evaluating product prices

1.3.3.1 Relationship between manufacturing cost and product price

Manufacturing costs and prices have a close relationship with each other Those indicators play important role in the management of business production in order to help business to cut costs and increase profits

From an operational view, the production process is a continuous process while the cost of product is calculated at a period of time to compare costs with volume of finished products and services

Manufacturing costs include costs incurred in that period while product cost may comprise part of costs incurred in the previous period (prepayment) and part of costs incurred in the next period but recognized during this period (accrued expenses)

On the other hand, product costs do not include closing work in progress and all costs but include opening work in progress (part of manufacturing costs incurred in the previous period is transferred) Therefore, the product cost may be equal to or larger than the manufacturing cost in the period The relationship between them is represented

by the following formula (Ngo The Chi and Truong Thi Thuy (2010))

Cost of manufacturing = opening work in progress+ Sum of prodution cost + Closing work in progress

In conclusion, the company has got management activities that have been the basis of unit price management

1.3.3.2 Methods for calculating product prices

In order to calculating product price at a manufacturing enterprise, account ca beapplied by following ways:

First, according to job method, when each order is put into production, the accountancy must open a pricing table They base on the accumuted manufacturing costs in each part of the company, each order in the accounting books to convert to the

pricing table at the end of each month When the order is completes, the accountant synthesizes the cost and calculates the price according to the order The manufacturing costs associate with unfinished orders are all work in progress.

Second, production process method applied evaluate product price as follows:

Coefficient of distribution of manufacturing costs for each type of product also presented by the following fomula:

Coefficients of distribution = Product-converted output / Total output

+ Total currency

of manufacturin

g costs

of work

in progres s

1.4 Accounting book used to accounting for calculating manufacturing costs and product prices.

Accounting book is a group of books scientifically designed, between them have

an intimate relationship, used to record economic transactions arising in accordance with accounting methods on the basis of accounting vouchers On the other hand, technology is developing increasingly, requiring the company have to get an

accounting software system that helps the accounting department improve

performance

According to the current accounting regime, there are four types of accounting books that businesses apply:

The first form is General Journal entry form in which include some

characteristics following by the general journal is the journal of the company in which initial record keeping of all the transaction relating to adjustment entries, opening

stock, depreciation and accounting errors is done which are not recorded in any of the specialty journal maintained by the company like purchase journal, sale journal, Cash

journal, etc In addition, accounts are Ledger of account 621-direct raw material cost,

622- direct labor cost, 627-factory overhead cost, 154- cost for worrk in

progress And finally, the related detailed books such as Acc 621, Acc 622, Acc 627

The second form is Journaling accounting form which include ledger, journal and detailed accounting books as account 621 (Acc 621), Acc 622 and Acc 627

The third form is Accounting form of Bookkeeping vouchers: The accounting books form include registration voucher book entry, ledger accounts and the detailed accounting books

The last one is Accounting form of Voucher Journal refers to the accounting

books used and include journal of voucher, ledger accounts, detailed accounting books and allocation tables

In Circular No 200/2014/TT-BTC (dated 22 December 2014) The Ministry of Finance

CHAPTER 2: THE ACTUAL OF MANUFACTURING COST ACCOUNTING AND PRODUCT PRICING AT HA NOI CIVIL ELECTRIC HYDRAULIC AND

INDUSTRIAL CONSULTANT JSC 2.1 Overview of Ha Noi Civil Electric Hydraulic and Industrial Consultant JSC

2.1.1 General information of Ha Noi Civil Electric Hydraulic and Industrial

 The number of staff at December, 31th 2020 was 31

 Yearly accounting period: From January 1st to December 31th of fiscal year

2.1.2 Foundation and development of the company

From June 2, 2008 to 2015, Ha Noi Civil Electric Hydraulic and Industrial

Consultant Joint Stock Company JSC is a business that has main activities in providingdesign and consulting services for electricity and water construction for civil and industrial projects First of all, the company has a team of masters, engineers, and bachelors in economics who get a lot of practical experience Also, they have

participated in the design and construction of many electricity and water projects such

as high-rise buildings, office buildings, high-rise apartment buildings, hotels,

restaurants, villas, townhouses, and urban planning, etc

The main fields of activity of the company are listed below:

Table 2.1 The main fields of activity of the company Code Description

26400 Producing civil electronic products

26510 Producing measuring equipment, testing equipment, navigation

equipment

2710 Producing measuring equipment, testing equipment, navigation

27900 Producing motors, generators, electric transformers, and electrical

distribution and control equipment

28140 Producing others electric equipment

32900 Producing ball, gears, gearbox, control parts

33120 Producing others not allocated

33190 Fixing instruments and tools

43210 Installing electric systems

4322 Installing water supply systems, drainage systems, heating and air

conditioning systems

4530 Supplying others assesories of motobike and car

4610 Agent, broker, auction

46520 Wholesale of equipment and electronic components

4633 wholesale of other household appliances

4649 Wholesale of foods

46520 Wholesale of drinks

(Source: Certificate of Business registration)

From 2015 to now, the company has developed in producing and distributing some service that aims to expand it’s business, especially on providing more services and electric equipment products The company expands its business to import and export the electronic equipment that the company is doing business and others include real estate activities such as office lease

Planning department Technical department

Vice Director 

2.1.3 Organization of management in Ha Noi Civil Electric Hydraulic and Industrial Consultant JSC.

2.1.3.1 Organization Structure of Ha Noi Civil Electric Hydraulic and Industrial

Consultant JSC.

Flowchart 2.1 Board of Ha Noi Civil Electric Hydraulic and Industrial Consultant JSC

(Source: Administration department)

The above diagram describes the current organizational structure of Ha Noi Civil Electric Hydraulic and Industrial Consultant JSC At the highest position is the Director who represents the company before the law and responsible for production, business, management, and the use of capital The company has a Vice Director and there are four different divisions and each division has its departments Moreover, every department has Manager or Team Leader This person performs professional

work; plan and coordinate work with the Board of Directors; propose reward and punishment.

The financial accounting department of the office division is the head of the planning and implementation department of the company's bookkeeping and branding activities The department is currently the main accountant, who is in charge of direct accounting for transactions occurring in the company, the planning department is in charge of overall marketing, marketing and sales planning, and a curator of digital communications Besides, the technical department is responsible for the production of the company's output products

2.1.3.2 Human resource situation at the company

The labor statistics at the end of 2017, 2018 and 2019 are as follows:

● 2018: 20 people

● 2019: 24 people

● 2020: 31 people

(Source: Administration Department)

According to this, the number of staffs has increased over the last 3 years The number of total labor in 2019 increased by 4 people compared to 2018; in 2020, the number go up for 7 people compared to 2019 Overall, this information shows that the Company's labor force is tend to increase, however the company are active with small scope At the present, the company's total labor force is 31 people This is due to the fact that the company trades in providing service; thereby facilitating the management

of female workers in general But this labor structure also greatly affects the operation

of the company in the case of a series of male employees taking maternity leave or giving birth, requiring the company to have a reasonable policy to overcome its

situation

2.2 Organization of accounting works in the company

2.2.1 Organization of the accounting system

Flowchart 2.2 Accounting apparatus

(Source: Administration department)

According to the flowchart, the characteristics of organizing accounting

including chief accountant, warehouse accountant, receivable accountant, fixed assets accountant, payment accounting staff, and treasurer The first one, who directly

organizes and checks the whole accounting process in the unit under her charge:

monitoring, reflecting, synthesizing data from other accountants, accumulating costs onthe ledger, determining business results; ensuring a compact, efficient accounting system; acting as an advisor for the director to manage company’s finance The second

is the warehouse accountant who responsible for accurately monitoring input, the output of goods, open goods tracking, and build measurement of inventories, ensuring timely supply products to the market The third one is the Receivable accountant who does monitor the situation of debts, urging customers to pay debts Writing debit

advice, comparing debts to recover capital quickly to using capital effectively The nextone is fixed asset accountant is accountable for recording the cost of newly acquired

Chief accountant

TreasurerWarehouse

accountant

Receivable accountant

Fixed asset accountant

Payment accountingstaff

fixed assets (both tangible and intangible), tracking existing fixed assets, recording depreciation, and accounting for the disposition of fixed assets The fourth, Payment accounting staff who monitoring and reflecting the opening balance and the situation ofthe increase and decrease of cash funds, cash at bank, other liabilities, the situation of liabilities with suppliers The last one is Treasure who are responsible for cash

collection, payment, and fund of the company, conducting irregular or periodic

inventory

2.2.2 Accounting policies applied at the company

Currently, Ha Noi Civil Electric Hydraulic and Industrial Consultant JSC is applying the Vietnamese corporate accounting regime guided in Decision

no.48/2006/QĐ-BTC dated September 14/2006, of the Minister of Finance

The company’s financial year begins on 01 January and ends on 31 December Following the accountant department, the company have get a accounting standards and accounting systems that the company ensures compliance with the requirements of accounting standards and the Vietnamese accounting system issued under Circular No.200/2014/TT- BTC dated 22 December 2014 as well as circulars guiding the

implementation of accounting standards of the Ministry of Finance in making financial statements

The company applies the currency is Vietnamese dong (VND) and the

accounting method is applied general journal combinated with the office excel The besides, the company applied accounting principles the inventory accounting method that includes the Credit recognition principle according to the original value and the Principle of calculating the value of end-of-period bond according to the Weighted average By the VAT calculation method, the company used the deduction method An inventory accounting method is a regular declaration And by accounting method of fixed assets, fixed asset evaluation principles according to the historical cost and

residual value with fixed asset depreciation method is the straight-line method

Financial situation and business results of Ha Noi Civil Electric Hydraulic and Industrial Consultant JSC are recorded by accounting deparrtment of the company in

14 Total profits before tax 1,470,377,982 1,348,220,337 1,071,214,907

15 Enterprise income tax 294,075,596 269,644,067 214,242,981

16 Profits after tax 1,176,302,386 1,078,576,270 856,971,926

(Source: Accounting department- financial statement)

2.2.3 Accounting process

Flowchart 2.3 Accounting process at the company

(Source: Accounting department)

2.2.3.1 Accounting process of direct raw materials costs

Regarding to the method of aggregating production costs, the company applies the direct aggregation method which applies to expenses related directly to the

identified cost aggregation object, especially, this method also applies to costs that are directly attributable to individual workshops Because the direct raw material cost is the basic item, accounting for a large proportion in the product cost, the full and accurate accounting of this cost item is the most important basis for calculating the most accurate cost, the saving or wasting has a great influence on the fluctuation of product prices and the results of production and business of the Company

Direct raw material cost includes the actual value of the main, sub-material and fuel directly used for the production process First, Main raw materials include spare

Transaction incurred

NotesAccounting notes

Specific data file

Record into system

Final gatheringGather data of

each monthFINANCIAL REPORT, ACCOUNTING BOOKS

Establishing report

parts, wires and screws Second, auxiliary materials include generator, wrench, weldingmachine.

The most important thing for accounting is how to calculate direct material costs Which are aggregated by companies using a direct aggregation method for each product object Since the company's main raw materials are mainly assembled

accessories, the actual value of the raw materials stocked includes actual purchase value and shipping costs (if any) The stock value of raw materials is computed on a weighted average basis, of course

According to the accounting department, the accountant using the vouchers are following such as the good receipts, the good issue, the order, VAT invoice, the sales receipt, payment vouchers, credit notes, supplies report, general journal, the

ledger(account 621) and details book ( all are detailed in the appendix) To account for direct raw material costs, the accountant use Account 621 - "Direct raw material costs"

The next part, for the sequence of planning the cost of raw materials at the company, the departments must make a plan for their unit every month Particularly, the production department is responsible for synthesizing the number of raw materials input, output, and inventory of the whole company, from which to plan to buy goods for each period This work is responsible for the production department manager and submits to the General Director for approval The sales department will then send the order to the supplier capable of meeting the company's requirements for the execution

of the contract

When goods are purchased, the staff of the material department is responsible for checking the quantity, quality, type, and specifications of the supplies based on the documents, invoices, and documents provided by the importer The material accountant

is responsible for making a receipt for storage The stock receipt note is made into 3 trading sessions Session 1 is stored in the coupon book Session 2 is assigned to the storekeeper and finally assigned to the accountant