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

Therefore, the main requirement foraccounting for manufacturing costs and cost of finished goods is to identifythe objects of manufacturing cost and the objects of finished goods costing

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

Company

CHAPTER 1: GENERAL THEORY FOR MANUFACTURING COSTS

ENTERPRISES 4

1.1 Concepts, requirements for manufacturing costs and finished goods costing accounting 4

1.1.1 Manufacturing costs and cost of finished goods 4

1.1.1.1 Manufacturing costs 4

1.1.1.2 Cost of finished goods 5

1.1.1.3 The relationship between manufacturing cost and cost of finished goods 6

1.1.2 Requirements for manufacturing costs and finished goods costing accounting 7

1.2 Manufacturing costs and finished goods costing accounting 10

1.2.1 Accounting for manufacturing costs 10

1.2.1.1 Manufacturing costs classification 10

1.2.1.2 Manufacturing costs accounting objects 15

1.2.1.3 Manufacturing costs methods 15

1.2.1.4 Accounting for manufacturing costs 17

1.2.2 Accounting for cost of finished goods 26

1.2.2.1 Cost of finished goods classification 26

1.2.2.2 Cost of finished goods objects 27

1.2.2.3 Costing methods of unfinished products 29

1.2.2.4 Finished goods costing methods 30

1.2.2.5 Accounting for manufacturing costs and finished goods costing 31

1.2.3 Accounting books used for manufacturing costs and finished goods costing accounting 35

1.2.4 Accounting for manufacturing costs and finished goods costing system in terms of information technology applications 36

CHAPTER 2: MANUFACTURING COSTS AND FINISHED CONSTRUCTION WORKS COSTING ACCOUNTING IN TUAN CUONG CONSTRUCTION JOINT STOCK COMPANY 38

2.1 Overview of the enterprise 38

2.1.1 General information of Tuan Cuong Construction Joint Stock Company 38

2.1.2 Functions and tasks of the enterprise 38

2.1.3 The characteristic of management of the enterprise 39

2.1.3.1 Management structure of the enterprise 39

2.1.3.2 Functions and tasks of each department 41

2.1.4 The accounting system in Tuan Cuong Construction Joint Stock Company 43

2.1.4.1 The organization of the accounting system at the company .43 2.1.4.2 Duties of each accounting section 43

2.1.4.3 The organization of accounting system in Tuan Cuong Construction Joint Stock Company 46

2.2 Manufacturing costs and finished construction works costing accounting in Tuan Cuong Construction Joint Stock Company 56

2.2.1 General points of manufacturing costs and finished construction works costing in the company 56

2.2.2 Accounting for manufacturing costs in Tuan Cuong Construction

Joint Stock Company 58

2.2.2.1 Accounting for direct material costs 58

2.2.2.2 Accounting for direct labor costs 71

2.2.2.3 Accounting for factory overhead costs 77

2.2.3 Accounting for finished construction works costing in Tuan Cuong Construction Joint Stock Company 85

2.2.3.1 Unfinished construction works evaluation method of the company 85

2.2.3.2 Finished construction works costing methods and finished construction works costing process in the company 85

CHAPTER 3: SUGGESTIONS TO IMPROVE MANUFACTURING COSTS AND FINISHED CONSTRUCTION WORKS COSTING ACCOUNTING IN TUAN CUONG CONSTRUCTION JOINT STOCK COMPANY 87

3.1 General evaluation of the accounting for manufacturing costs and cost of finished construction works in the enterprise 87

3.1.1 Advantages 88

3.1.2 Restrictions 92

3.2 Some suggestions to improve the efficiency of accounting for manufacturing costs and finished construction works costing accounting in Tuan Cuong Construction Joint Stock Company 93

LIST OF SAMPLES, PICTURES AND FIGURES

Sample 2.1: Request for materials 60

Sample 2.2: Goods dispatches note 62

Sample 2.3: Material dispatches list 63

Sample 2.4: Details book of materials 67

Sample 2.5: Details book of direct materials costs 68

Sample 2.6: General ledgers of Account 621 71

Sample 2.7: List of allocation of salary and payment withheld from salary 75

Sample 2.8: Timesheets 76

Sample 2.9: Payment table 77

Sample 2.10: List of allocation for tools 79

Sample 2.11: Detail book of account 627 82

Sample 2.12: Detail book of account 154 83

Sample 2.13: General ledger of account 154 85

Sample 2.14: Detail report on cost of finished construction works 87

Picture 2.1: FAST accounting software interface at the Company 55

Picture 2.2: Initial screen for inventory 61

Figure 1.1: Computerized accounting form 39

Figure 2.2: Model of management structure of the enterprise 42

Figure 2.3: Accounting system in Tuan Cuong Construction Joint Stock Company 45

Figure 2.4: Diagram of accounting process in the company: 54

CHAPTER 1: GENERAL THEORY FOR MANUFACTURING COSTS

AND FINISHED GOODS COSTING ACCOUNTING IN

Manufacturing cost is the total cost of living labor, physical labor and

other necessary expenses that the enterprise has spent in the process ofmanufacturing, 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 theproduct, such as the aluminum in beverage cans

- Direct labor, which are the wages or salaries and fringe benefits earned bythe individuals who are physically involved in converting raw materials into afinished product

- Manufacturing overhead, which includes all of the other costs incurred inthe manufacturing activities These indirect costs include repairs andmaintenance, depreciation of the manufacturing equipment, utilities, salaries

of manufacturing supervisors, etc

Therefore, manufacturing cost are costs (wastages) on inputs in theproduction process associated with business purposes The amount of costdepends on the volume of production factors consumed during the period andthe price of a unit of production factor has been wasted Manufacturing cost

is measured by a monetary ruler and determined within a specified timeperiod

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 laborand 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-sidedmanifestations of the production and business process, which are allexpressed in the amount of the loss of living and materialized labor thatbusinesses have spent

However, manufacturing cost and cost of finished goods are different insome aspects Referring to manufacturing cost is considering the costs in acertain period (month, quarter, year), regardless of the type of products,

regardless of whether the product is completed or unfinished In contrast,reffering to the cost of finished goods is to determine a certain amount ofproduction costs that are calculated for a certain amount of completedproducts, the cost of finished goods relates to the cost of the previous periodtransferred and the amount of this period going to the next period Forexample: prepaid expenses are expenses spent in the period, only a part ofthese expenses is included in the cost of finished goods, the remaining must

be allocated for the next periods; or the expenses have not been actuallyincurred in this period but still partially deducted in the cost of finished goodsduring the period

The difference in quantity and the relationship between manufacturingcosts and cost of finished goods is reflected in the following formula forcalculating the overall product price:

+

Manufacturingcost incurred

in the period

-Endingwork inprogressThus, manufacturing costs are the basis for building the cost of finishedgoods 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 offinished goods, which will affect the profitability of the business Thereforesaving costs and lowering finished goods cost is an important and regular task

of economic management It helps the businesses compete effectively in themarket

1.1.2 Requirements for manufacturing costs and finished goods costing accounting

Accounting is an effective management tool in business managementand specifically, cost accounting is a key tool in managing manufacturingcosts and cost of finished goods Therefore, the main requirement foraccounting for manufacturing costs and cost of finished goods is to identifythe objects of manufacturing cost and the objects of finished goods costing inaccordance with the certain conditions of the business and at the same time,apply the most reasonable cost accounting methods, organize accounting in alogical, accurate, complete and timely manner Specifically, the followingrequirements should be well implemented:

- Checking the implementation of production plans in each part of theenterprise

- 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 finishedgoods

- Organizing the collection and allocation of each type of manufacturing costsaccording to the identified objects by appropriate methods to calculate theactual cost for each object and each product unit in accordance withregulations, terms, method and ensure accuracy

- Checking the implementation of technical material consumption norms, costestimates for production management in order to promote economical and

reasonable use of all expenses, in service of business accountingrequirements.

- Periodically checking the implementation of the production plan and thetask of lowering the cost of finished goods Potential possibilities should beexploited 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 effectiveway On the other hand, it facilitates lowering the cost of finished goods,which is one of the important conditions to create a competitive advantage forenterprises Cost of finished goods is also a basis for determining the sellingprice of internal economic accounting products, cost analysis and businessresults determination, providing information for management accounting,serving business management requirements Since the above meanings,accounting for manufacturing costs and cost of finished goods is reallyimportant and plays a key role in accounting and business management

Accounting for manufacturing costs and cost of finished goods needs toperform the following major tasks:

Firstly, it is necessary to properly recognize the role of accounting formanufacturing costs and costs of finished goods in the entire enterpriseaccounting system, the relationship with the relevant accounting departments

in which accounting for cost factors are the premise for accounting formanufacturing costs and costs of finished goods

Secondly, based on the characteristics of production and businessorganization, production technology process, type of productioncharacteristics of the product, the ability to account as well as specificmanagement requirements to determine the correct objects of manufacturingcost accounting, select methods of gathering manufacturing costs according toplans suitable to the conditions of enterprises Based on the characteristics ofproduction and business organization, characteristics of products, capabilitiesand specific management requirements of enterprises to determine the objectsfor finished goods costing

In addition, it’s essential to organize the accounting apparatusscientifically and reasonably on the basis of clearly assigning responsibilities

to each employee, each relevant accounting department, especially theaccounting 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 accordancewith the accounting principles, standards and regimes to ensure therequirements of collecting and processing information system about themanufacturing cost, the cost of finished goods of the business in the best way

Finally, it’s required to organize the preparation and analysis ofaccounting reports on manufacturing cost, the cost of finished goods, providenecessary information on manufacturing cost, the cost of finished goods tohelp the managers make decisions quickly and reasonably

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 includesmany types of costs with different economic contents, purposes and uses inthe production process Therefore management requirements for each type ofcosts are different

Production management and production costs management cannot bebased solely on the data reflecting the total production costs, but must also bebased on specific data for each type of separate costs to serve therequirements that check and analyze all manufacturing costs or each of theirinitial cost factors according to each product, each place where the costs areincurred

Therefore, manufacturing costs classification is an indispensablerequirement for accurate manufacturing costs accounting and product costcalculation Classifying manufacturing costs in a scientific and unified way isnot only important for manufacturing cost accounting and finished goodscosting but also an important prerequisite for manufacturing costs planning,inspection and analysis, continuously promoting economical and reasonableuse of manufacturing costs, lowering costs of finished goods, furtherpromoting 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

According to this classification, based on the economic content of costs, types

of cost with the same content are sorted into one category and each is called acost factor Manufacturing costs include the following cost factors:

- Cost of raw materials and fuel: Including all expenses for the types of labor

objects that are main materials, auxiliary materials and fuels

- Labor costs: Including the entire salary, wages, and allowances with the

nature of salary that are included in the cost which the business must pay tothe employee during the period

- Expenses for social insurance, health insurance, unemployment insurance, trade union fees: These amounts are deducted according to the salaries of

officials and employees, calculated into expenses according to currentregulations: 25.5% of social insurance, 4.5% of health insurance, 2% of tradeunion funds, 2% unemployment insurance

- Fixed asset depreciation expense: In the course of use, fixed assets are

depreciated and depreciation value that gradually shifts into product value iscalled depreciation of fixed assets The fixed asset depreciation cost factormust be deducted for all fixed assets used for production and business in theperiod

- Costs of other services: Including the total amount paid for services used in

production and business activities provided by other units such as: payment ofelectricity, water, telephone…

- Other costs: They are the cash costs in addition to the above paid expenses

such as license tax, land tax…

 Characteristics of this classification are based on the original form ofall costs spent on production and business activities, regardless of where thecost is used, for which product, if the enterprise is possible to produce a part

of the material and then use that material in production, then the costs tocreate that material must be accounted for in the relevant factors

Therefore, through the above classification, we can see clearly the cost

of living and materialized labor in all production and business costs in aperiod of the enterprise and it also indicates the structure and density of eachcost element in product costs and labor costs, serving as a basis for buildingplans on supply of materials and plans on mobilization and use of labor inservice of statistical work by factors

* According to the function of cost (or according to finished goods cost items)

Each element of cost incurred has a certain purpose and utility forproduction and business activities Based on the purpose and economic use ofcosts to arrange them into different cost items Each expense item onlyincludes costs that have the same purpose and utility, irrespective ofeconomic content According to this classification, all production andbusiness costs in the period are divided into the following expenditure items:

- Direct materials costs: Including the costs of raw materials used to directly

create the products and services of the enterprise, it does not include the costs

of materials used for general production purposes and activities outside

production Raw materials are a major factor in the product cost structure In

the enterprise, the cost of materials is accounted for by each user, each type of

product and the form of accounting that gather the cost of raw materialsaccording to the perpetual inventory method.

- Direct labor costs: Costs of direct labor consists of accounts payables for

laborers who belong to business employees list, directly manufacturingproducts, supply services and cost of outsoured laborers in various type ofworks, such as: salary, wage, subsidiaries, appropriation from salary (socialinsurance, medical insurance, labor union fees, unemployment insurance)

- Factory overhead costs: Including the costs of maintaining the management

apparatus at the workshop, production teams and the common costs forproduction activities in the workshop, production teams These expensesinclude:

+ Labor costs of management staff in workshops, production teams

+ Cost of materials used for general production needs in workshops,production teams

+ Depreciation expense of fixed assets used for production in workshops,production teams

+ Expenses for tools and tools used in production in workshops, productionteams

+ Expenses for outsourcing services used in production in workshops, teams,production teams such as: electricity, water, telephone and rent repairexpenses

+ Amounts accrued with an agreement of the financial agency such as: fixingmajor fixed assets

+ Other cash expenses are expenses other than the above-mentioned expensesincurred in production workshops, teams: expenses for stationery, laborprotection and working expenses

Classification of manufacturing costs according to the use of expensesfor the purpose of managing production costs according to norms (rawmaterial and fuel consumption norms, wage norms ), according to estimatescost, according to the finished goods costing plan The accountant uses thisclassification to gather the costs that constitute the production cost of theproduct, the labor, as a reference to set the production cost norms and plan theproduction cost for the next period At the same time, it is possible to analyzeand evaluate the unreasonable cost items from which to find the adaptationmeasures to reduce each type of costs to lower the cost of finished goods

In addition to the above two main classification methods, for themanagement and accounting work, manufacturing costs can be classifiedaccording to other criteria such as: based on the relationship between theproduction and business costs and the volume of finished products to dividemanufacturing costs into fixed costs and variable costs; based on theaccounting method of gathering costs to divide costs into direct costs andindirect allocation costs

1.2.1.2 Manufacturing costs accounting objects

The object of manufacturing cost accounting is the scope and limit formanufacturing costs to be gathered accordingly Determining the object of

manufacturing costs gathering is the first step in organizing manufacturingcosts accounting The essence of determining the object of the production cost

is to determine where the costs are incurred (workshops, production units,technological stages, etc.) activities, objects of costs (production products,orders…)

When determining the object of manufacturing costs gathering,managers must firstly base on the characteristics and utility of manufacturingcosts, then must base on the production and business structure, the productiontechnology process, the type of product production, the ability andqualifications of business managers, accounting officers, employees, the costmanagement and finished goods costing requirements

1.2.1.3 Manufacturing costs methods

Each type of manufacturing costs usually involves many differentaccounting objects Therefore, it is necessary to correctly identify the relevantobject to organize the correct manufacturing costs gathering There areusually the following two manufacturing costs gathering methods:

- Direct method: This method is applied to costs that can be attributed,

gathered for each subject to bear the cost With the costs that are directlyrelated to each separate object of manufacturing costs (single products, series

of products), we directly account for each of them This is a common methodused in manufacturing enterprises because it facilitates the accounting forfinished goods costing and helps managers to assess the performance ofenterprises

- Indirect method: This method is applied to indirect costs (related to many

objects) Therefore, it is necessary to select the reasonable criteria for costallocation for related objects by the following formula:

H =

C T

In which: H: cost allocation coefficient

      C: total cost to allocate for the objects

      T: total quantity allocated by the objects that need to allocate costs

Then, determine the cost to allocate for each object of manufacturing costsgathering

Ci = H x Ti

 In which: Ci: the expenses allocated for the object i

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

1.2.1.4 Accounting for manufacturing costs

1.2.1.4.1 Accounting for direct raw materials costs

Direct material costs include expenses for main materials, auxiliarymaterials, semi-finished products used directly for production, productmanufacturing or direct implementation of labor, service

Direct material costs actually incurred in the period are determined according

+

value of raw materials used in the period

-value of raw materials at the end of the period

-value of recovered scrap (if any)

Direct raw materials costs are mainly direct costs, so they are oftengathered directly for each object In the case of raw materials costs directlyrelated to multiple cost aggregation objects that cannot be directly gathered,use the method of indirect collection and allocation  

Accounting vouchers mainly used in direct cost accounting of raw materialsare: good dispatches notes, the record of materials that have not beencompletely used has been re-entered to the warehouse, vouchers reflecting thequantity, unit price of recovered scrap…

To account for direct raw materials costs, accountants use account 621 Direct materials costs

-Below flowchart shows major accounting operations on direct materials costs:

(1) When delivering raw materials, materials used for manufacturing products

or rendering services during the period

(2) In case raw materials, materials are used directly (not stored) formanufacturing products or rendering services and VAT is deductible

(3a): In case value of raw materials, materials delivered for use is redundantfrom manufacturing products or rendering final services, and these redundantmaterials are restored

(3b) At the end of the period, materials that are not used up, are put in place

of production, recorded negative numbers (next period, recorded as operation(1))

(4): Scrap recovered

(5) At end of account period, accountants base on table of materials allocationcomputed for every object using raw materials, materials (Factories, types ofproducts, projects, construction sections of construction activity, types ofservices ) under direct method or allocating methods

(6) In case the cost of direct materials is beyond normal levels or losses areincluded immediately in cost price of goods sold

1.2.1.4.2 Accounting for direct labor costs

  Direct labor costs are the amounts payable to workers directlyproducing products or directly performing labor and services including: mainsalary, supplementary salary, allowances, deductible social insurance, healthinsurance, trade union fees according to the salary of production workers

 Direct labor costs are often direct costs, so they are directly gatheredinto related cost collection objects In the case of not directly gathering, thedirect labor cost is gathered together then the accountant will allocate to eachobject according to a reasonable allocation standard

Accounting vouchers commonly used in direct labor cost accountingare: timesheets, salary allocation tables, payroll slip, list of allocation ofsalary and social insurance…

Acc 334 Acc 622 Acc 154 (631)

(3) When advancing vacation salaries of production workers

(4) At the end of accounting period, allocating and transferring costs of directlabors to Debit of Account 154, according to costs objects

(5) Portion of direct labor costs in excess of normal rate

1.2.1.4.3 Accounting for factory overhead costs

Factory overhead costs include costs for production, and tradingincurred in factories, departments, teams, constructions, served manufacturingproductions, rendering services, including: Salaries of managerial employees

in factories, departments, and teams, depreciation of fixed assets used directly

to produce, appropriation of social insurance, medical insurance, labor unionfees, unemployment insurance calculated as percentage of salaries payablesfor employees in factories, departments, production teams, costs directlyrelated to other factories

Manufacturing overhead costs can be accounted for in detail under twocategories: Fixed overhead and variable overhead, in which:

- Fixed manufacturing overhead expenses are indirect production costs,usually do not depend on volume of products, such as costs of maintenancemachinery and equipment, plants , and General administration expenses infactories, departments, production teams and groups Fixed manufacturingoverhead expenses are allocated in manufacturing costs of each unit ofproduction, it is based on normal capacity of machinery Normal capacity isvolume of products achieved averagely in normal conditions of production

In case actual volume of products is higher than that of normal capacity, thenfixed overhead will be allocated for each unit of product with actual costsincurred

In case actual volume of products is lower than that of normal capacity, thenfixed overhead will be allocated to manufacturing costs for each unit ofproduct in normal capacity Unallocated part of costs will be recorded in cost

of goods sold in the period

- Variable manufacturing overheads are indirect production costs usuallydirectly or almost directly volume of product units, such as costs of rawmaterials, indirect materials, indirect labor costs Variable manufacturingoverhead are allocated to manufacturing costs of each product unit according

to actually incurred costs

To collect and allocate factory overheads, accountants use account 627 factory overhead costs

-Acc 334,338 Acc 627 Acc 154 (631)

Acc 632 Acc 152, 153, 142, 242

Below flowchart shows major accounting operations on factory overheads:

Flowchart 1.3: Major accounting operations on factory overhead costs

Explainations:

(1a) When calculating salaries, wages, subsidiaries payables for employees infactory, inter shift meal costs of managerial employees in factory, department,team and group of production

(1b) When appropriations of social insurance, medical insurance, labor unionfees, unemployment insurance, support for workers (life insurance, voluntarypension insurance) which are calculated with stipulated rate on salarypayables for employees in factory, production department.

(2) (3): Cost Accounting of raw materials, materials delivered for use infactory (in case business implements perpetual inventory method)

When delivering materials used in common for factories, such as repairing,maintenance of fixed assets used in administrating activities of factory,record:

Dr 627 – Manufacturing overhead cost (6272)

Cr 152 - Raw materials, materials

- When delivering instruments, tools for production with small total valueused for factory, departments, team and group of production, accountants willbase on delivery order, record:

Dr 627 – Manufacturing overhead cost (6273)

- When allocating value of instrument, tools to overhead costs, record:

Dr 627 – Manufacturing overhead cost (6273)

- In case business applies perpetual inventory method when closing outoverhead cost at end of period, record:

Dr 154 – unfinished production, business cost

Dr 632 - Cost of goods sold (fixed manufacturing overhead cost unallocated)

Cr 627 – Manufacturing overhead cost

- In case business applies perpetual inventory method when closing outoverhead cost at end of period, record:

Dr 631 - Cost of production

Dr 632 - Cost of goods sold (fixed manufacturing overhead cost unallocated)

Cr 627 – Manufacturing overhead costs

1.2.2 Accounting for cost of finished goods

1.2.2.1 Cost of finished goods classification

In order to meet the requirements of management, cost accounting andplanning as well as the requirement to build prices, cost of finished goods areclassified under many angles, many different calculation areas There are thefollowing classification methods:

* According to finished goods costing range:

 + Total production cost: includes all the fixed and variable costs of directmaterials costs, direct labor costs, factory overhead costs calculated forfinished products

 + Production cost according to variable cost: includes only variable costs ofdirect materials costs, direct labor costs, factory overhead costs calculated forfinished products

+ Production cost with a reasonable allocation of fixed costs: includes allvariable costs calculated for finished products and a part of fixed costsallocated on the basis of actual operating level compared to design capacityoperation level

+ Total production cost according to variable cost: includes all variable costs(variable production expenses, variable sales costs, variable enterprisemanagement costs) calculated for consumption products

 + Total production cost of consumed products: includes production costs andother costs in addition to production costs calculated for consumptionproducts.

1.2.2.2 Cost of finished goods objects

On the basic of the manufacturing costs that have been gathered,accountants need to calculate the total cost of finished goods and the unit costfor each object of finished goods costing In order to accurately calculate thecost of finished products, it is necessary to determine the right objects, theperiod of finished goods costing and choose the appropriate method offinished goods costing

In order to determine cost of finished goods objects, it is necessary tobase on the characteristics, the organizational structure of production, thecharacteristics of the production technology process, the nature of the productand the management requirements of the enterprise

Therefore, the specific objects of finished goods costing may be:

- Each complete product, work, order

- Each detail, part of products

The object of manufacturing costs gathering and the object of finishedgoods costing is the same in nature, both are certain scope and limits to gatherproduction costs, serving for the management and analysis requirement ofmanufacturing costs, finished goods costs Between them, there is a closerelationship, the reasonable determination of the object of manufacturingcosts gathering is the premise and condition for finished goods costingaccording to the objects of finished goods costing in enterprises

However, there are certain differences between these two concepts.

- Determining the object of manufacturing costs gathering is to determine thescope and limit of the accounting organization of production costs arising inthe period

- Determining the object of finished goods costing is to determine the scopeand limit of costs related to the finished production results of the productionprocess

- The objects of manufacturing costs gathering are the basis for openingaccounts, details books, organizing initial records, gathering detailsmanufacturing costs data for each object, helping the enterprise to enhanceinspection and savings cost

- The objects of finished goods costing are the basis for making detail tablesfor calculating costs, selecting a reasonable finished goods costing method,serving the inspection of the implementation of the price plan and efficiency

of the business activities

In fact, there are cases where a manufacturing costs gathering objectincludes many finished goods costing objects and vice versa Depending onthe relationship between the manufacturing costs gathering objects and thefinished goods costing objects, we need to choose the appropriate costingmethod

* Period of finished goods costing: is the period of time when the cost

accounting division must conduct the calculation of cost prices for finishedgoods costing objects The determination of the period of finished goodscosting must be based on the production organization characteristics of the

product and its production cycle, which may be monthly, quarterly, or the end

of the product production cycle

1.2.2.3 Costing methods of unfinished products

Unfinished products are products, jobs that are still in the process ofmanufacturing, processing of the technological process, or have beencompleted some processing but still have to be processed to become finishedproducts

The evaluation of unfinished products is the calculation anddetermination of the manufacturing cost part in the period used for thevolume of unfinished products at the end of the period according to certainprinciples

In order to determine the exact cost of finished goods, one of theimportant conditions is to accurately assess the unfinished products at the end

of the period, which means to determine the number of manufacturing costscalculated for the unfinished products at the end of the period To do this, anaccurate inventory of the volume of unfinished products in the period must beorganized and at the same time correctly determining the level of completion

of unfinished products in comparison with the completed volume in the eachstage of production

There are following unfinished products evaluating methods:

- Unfinished products evaluating methods according to norm production costs

- Unfinished products evaluating methods according to direct raw materialscosts

- Unfinished products evaluating methods according to the volume ofequivalent finished products

1.2.2.4 Finished goods costing methods

Finished goods costing method: is the method or a system of methodused to calculate the unit cost of finished goods Depending on the object ofcost accounting and the object of the finished goods costing in each specificcondition, the enterprise chooses the appropriate finished goods costingmethod Enterprises often use the following finished goods costing methods:

- Method of finished goods costing according to work

- Method of finished goods costing according to the production process

- The simple finished goods costing method

- Method of finished goods costing according to coefficient

- Method of finished goods costing according to ratio

- Method of finished goods costing eliminating the cost of producing products

by Method of finished goods costing by steps, including the costs of halffinished goods

- Method of finished goods costing by steps, excluding the costs of halffinished goods

 The simple finished goods costing method:

Formula:

The total cost of finished goods: Z = Dđk + C - Dck

The unit cost of finished goods: z= Z Qht

In which: Z: The total cost of finished goods

z: The unit cost of finished goods

Dđk: the value of unfinished products at the beginning of the period

C: manufacturing costs in the period

Dck: the value of unfinished products at the ending of the period

1.2.2.5 Accounting for manufacturing costs and finished goods costing

At the end of the accounting period, after assembling each item ofdirect materials costs, direct labor costs, factory overhead costs, accountantswill transfer these types of expenses to gather general production costs for thewhole enterprise

Depending on whether the enterprise applies inventory accounting method

by perpetual inventory method or periodic inventory method, the accountingaccount used will be different: Account 154 or Account 631

 Manufacturing costs gathering in the enterprise applying perpetual method:

that exceed normal

level

Direct labor costs

that exceed normal

level

Factory overheads that exceed normal level because machinery

operates under capacity

Flowchart 1.4: Manufacturing costs gathering in the enterprise applying perpetual method

 Accounting for manufacturing costs in the whole enterprise applying

periodic method:

According to the periodic inventory method, the organization of accounting ofcost items is the same as the perpetual inventory method, which is done onaccounts:

- Account 621 - Direct materials cost

- Account 622 - Direct labor cost

- Account 627 - Factory overhead cost

Manufacturing costs gathering in the enterprise applying periodic method:

Flowchart 1.5: Manufacturing costs gathering in the enterprise applying periodic

Direct materials costs in the period

Transfer direct materials costs

Transfer ending work in progress

Amounts that reduce cost of finished goods

Transfer direct labor costs

Direct labor costs

Direct labor costs in excess of normal rate

Transfer factory overheads allocated

Factory overhead

costs

Transfer factory overhead unallocated

Direct materials costs in excess

of normal rate

1.2.3 Accounting books used for manufacturing costs and finished goods costing accounting

Based on available documents such as material allocation table, salaryallocation table, lists reflecting expenses, the accountant synthesizes datainto general reports and statements, allocation table to serve as the basis foraccounting of related accounts

Accounting books used for recording, monitoring manufacturing costsand finished goods costing include general accounting books and detailaccounting books

- General accounting books: depending on each accounting form, otheraccounting books are organized differently

- Detail accounting books: depending on the requirements and subjects ofgathering manufacturing costs and calculating costs of finished goods Inaddition, businesses can open detail books according to administrativerequirements without necessarily following the prescribed regime

Enterprises shall base on the system of accounting books promulgated

by the Ministry of Finance or approved by the Ministry of Finance to apply inenterprises to supplement specific criteria and requirements in service ofmanagement accounting in enterprises The addition or design of the contents

of the accounting books must not falsify the contents of the criteria alreadyprescribed in the accounting books and must conform to the managementrequirements of the enterprises

Depending on the requirements of accounting for manufacturing costsand product costing in the enterprise, it is possible to open details accounting

books of account 621, 622, 627, 154, 631 according to each workshop,production team, each type of product, order.

1.2.4 Accounting for manufacturing costs and finished goods costing system in terms of information technology applications

The more businesses expand their production and business scale, themore operations arise In order to reduce manual writing, reduce the amount

of work at the accounting department, limit errors in data processing.Currently, most businesses apply scientific technology to serve accountingoperations The basic feature of computerized accounting forms is thataccounting work is done under a computerized accounting software program

Accounting software is designed according to the principle of one offour accounting forms the combine of them Accounting software does notfully display the process of recording accounting books, but must display allaccounting books and financial reports as prescribed Accounting softwaredesigned according to which form of accounting will have the types of books

of that accounting form but not quite the same as the manual accountingbook

Process of recording accounting books in the form of computerized accounting:

Accounting Software

CHAPTER 2: MANUFACTURING COSTS AND FINISHED

CONSTRUCTION WORKS COSTING ACCOUNTING IN TUAN CUONG CONSTRUCTION JOINT STOCK COMPANY

2.1 Overview of the enterprise

2.1.1 General information of Tuan Cuong Construction Joint Stock Company

Tuan Cuong Construction Joint Stock Company is an enterprise whichhas an independent economic accounting unit with its state status and ownstamp It has opened the main account at the Sai Gon - Ha Noi Bank in Nghe

An province

Vietnamese name Công ty Cổ phần Xây dựng Tuấn Cường

International Trading

name

Tuan Cuong Construction Joint Stock Company

Address No 17, Nguyen Du Street, Trung Do Ward - Vinh City

- Nghe An ProvincePhone number (+84) 383 855927

2.1.2 Functions and tasks of the enterprise

- Construction of civil engineering works such as housing construction,water supply and drainage systems, technical infrastructure of industrial