Accounting For Manufacturing Costs And Products Pricing At Bac Ky Investment Joint Stock Company.docx

NATIONAL ECONOMICS UNIVERSITY ADVANCED EDUCATIONAL PROGRAMS BACHELOR THESIS Accounting TOPIC ACCOUNTING FOR MANUFACTURING COSTS AND PRODUCTS PRICING AT BAC KY INVESTMENT JOINT STOCK COMPANY NGUYEN THA[.]

NATIONAL ECONOMICS UNIVERSITY

ADVANCED EDUCATIONAL PROGRAMS

BACHELOR THESIS

Accounting

TOPIC: ACCOUNTING FOR MANUFACTURING COSTS AND PRODUCTS PRICING AT BAC KY INVESTMENT

JOINT STOCK COMPANY

NGUYEN THANH HIEU

NATIONAL ECONOMICS UNIVERSITY

ADVANCED EDUCATIONAL PROGRAMS

BARCHELOR THESIS

TOPIC: ACCOUNTING FOR MANUFACTURING COSTS AND PRODUCTS PRICING AT BAC KY INVESTMENT

JOINT STOCK COMPANY

Student: Nguyen Thanh HieuSpeciality: Accounting

Class: Advanced Accounting 58AStudent’s ID: 11161824

Supervisor: Dr Doan Thanh Nga

in the completion of this report. 

I would like to give thanks to Mr Nguyen Tran Hieu – the CEO and hugethanks to Mr Ata Onat – CFO & Ms Nguyen Thi Tuyet Trinh – ChiefAccountant

Last but not least, I would like to give thanks to all staff in Bac Ky InvesmentJoint Stock Company, who help me a lot to understand more about company

I am aware that that this is a valuable opportunity not only for mygraduation but also for my career path in the future This is very first step, but it

is absolutely lucky for me to get this opportunity

I tried to have a completed internship report; however, because of shortpractice time and limited knowledge, this report may get inevitable errors I hopethat I can get the feedback to have a better version of myshelf

TABLE OF CONTENT

ACKNOWLEDGEMENTS

TABLE OF CONTENT

STATUTORY DECLARATION

LIST OF TABLES

LIST OF FIGURES

INTRODUCTION 1

CHAPTER 1: CHARACTERISTICS OF SERVICE, MANUFACTURING ORGANIZATION AND COST MANAGEMENT AT BAC KY INVESTMENT JOINT STOCK COMPANY 4

1.1.Characteristics of service of Bac Ky Investment Joint Stock Company 4

1.1.1.Trucking Service 4

1.1.2.Warehouse Service 5

1.1.3.Barging Service 5

1.1.4.Container Yard 6

1.1.5.Custom Brokerage 7

1.2.Manufacturing cost management of Bac Ky Investment Joint Stock Company 10

CHAPTER 2: PRATICE OF ACCOUNTING FOR MANUFACTURING COSTS AND PRODUCT PRICING AT BAC KY INVESTMENT JOINT STOCK COMPANY 12

2.1. Accounting for Transportation service costs at Bac Ky Investment Joint Stock Company 12

2.1.1 Accounting for direct material costs 12

2.1.2 Accounting for direct labor cost 24

2.1.3 Accounting for manufacturing overhead costs 39

2.2 Service pricing 48

2.2.1 Subject and method of calculating service pricing 48

2.2.2 Process of calculating overall service pricing: 50 3.1 Assessments of accounting for manufacturing costs at Bac Ky Investment

3.1.1.Strengths 523.1.2.Weakness and causes 533.2 Recommendations for improving of accounting for manufacturing costs atBac Ky Investment Joint Stock Company 543.2.2.Complete accounting for production cost from financial accountingperspective: 543.2.3.Complete accounting for production cost from management accountingperspective: 55CONCLUSION 57REFERENCES 58

STATUTORY DECLARATION

I hereby declare that the presented report of internship is uniquely prepared

by me after the completion of 3 month intern at Bac Ky Investment Joint StockCompany

I also confirm that the report is only prepared for my academic requirement,not for any other purpose It might not be used with the interest of the oppositeparty of the corporation

Hanoi, 10/05/2020Signature

Nguyen Thanh Hieu

LIST OF TABLES

Table 1.1: Type of Truck service 5

Table 2.1: Accounting source – Main drivers for calculating salary 25

Table 2.2: Accounting source – Deduction of Salary 25

Table 2.3: Quota of pricing 50

LIST OF FIGURES

Figure 1.1: Barging Volume at Two River Ports 6

Figure 1.2: Providing service process 8

Figure 1.3: Management structure 10

Figure 2.1: The process of transfer materials 12

Figure 2.2: Process of recording material 13

Figure 2.3: Proposal for providing oil 14

Figure 2.4: Receipt delivery 15

Figure 2.5: Oil Invoice 17

Figure 2.6: Accounting source – Subsidiary Ledger Account 621 18

Figure 2.7: Recording Direct Material Cost 19

Figure 2.8: Accounting source - General Journal 21

Figure 2.9: Accounting source – Ledger Account 621 22

Figure 2.10: Example of calculating driver salay 26

Figure 2.11: Process of calculating driver salary 28

Figure 2.12: Driver Schedule from TRANS Department 29

Figure 2.13: Overtime wage by Accounting TRANS Department 30

Figure 2.14: Driver Salary Confirmation 31

Figure 2.15: Total Salary for Drivers 32

Figure 2.16: Accounting source – Subsidiary Ledger Account 622 33

Figure 2.17: Process of recording direct labor cost 34

Figure 2.18: Accounting source – General Jounal Account 622 36

Figure 2.19: Accounting source – Ledger Account 622 37

Figure 2.20: Invoice for manufacturing overhead cost 41

Figure 2.21: Accounting source – Subsidiary Ledger Account 627 42

Figure 2.22: Process of recording other overhead cost 43

Figure 2.23: Accounting source – General Jounal Account 627 45

Figure 2.24: Accounting source – Leger Account 627 46

Figure 2.26: Internal Quotation 51

Rationale for the research

In order to effectively manage the business activities or service production

of an enterprise in particular, the national economy of a country in general needs

to use different management tools and one of the indispensable managementtools is accounting

Businesses operating in the middle of the market are regulated andfiercely competitive, when deciding to choose a production method for acertain product, they need to consider the least amount of cost toproduce,which means businesses must gather sufficient and accurateproduction costs Product cost is an important quality indicator reflecting theresults of production activities or increasing, showing the results ofmanagement of materials, labor and cash This depends on the process ofgathering production costs of the business

Along with the renewal and general development of the economy, with theopen door policy, foreign investment and to show the career of technologydevelopment - modernize enterprises, they are increasingly diversifying products,type of business, renovating management methods, constantly developing andaffirming an important role in the national economy However, nowadays, in themanufacturing enterprises, accounting of production costs and calculatingproduct prices still do not meet the management requirements and integrationprocess Therefore, the completion of accounting in general, accounting ofproduction costs and calculation of product costs is not only in order toaccurately reflect costs but also serve as a basis for providing information foroperating, cost checking and strategic planning

Therefore, the accountant gathers the production costs and calculates theproduct costs as a continuous process, having a close relationship with eachother Through this, managers will find the reason why the cost increase and lead

to price increases and thereby find a suitable solution

Through practical research, I realized that the cost accounting and productcost in the company have some points that need to be improved Therefore, Ichose the topic: "Accounting of costs and product costs at Bac Ky InvestmentJoint Stock Company" for my graduation report

Research purpose

The thesis contributes to clarify the theoretical issues about the accounting

of product cost and product price calculation of Bac Ky Investsment Company.Based on the research, we can see the advantages and disadvantages of theaccounting of product cost and product price calculation of Bac Ky InvestsmentCompany

Then, I can propose solutions to overcome shortcomings and makerecommendations in order to contribute to perfecting the accounting of productcost and product price calculation of Bac Ky Investsment Company

Subjects, purposes and scopes of the research of the accounting on payroll and payroll deduction.

Research subjects: Study Accounting Procedures for product cost andproduct price at Bac Ky Investment joint stock company according to accountingsystem – circulars 200/TT-BTC

Research scope: Focus on researching theoretical issues and realityaccounting procedures for product cost and product price from financialaccountant in 2019

Research methods:

To complete this report, the authors used the following research methods:

- Method of document research: collecting information from circulars,state resolutions, existing documents circulating in the enterprise

- Observation method: In order to directly approach and observeworking operations of employees in the enterprise so that they canunderstand the cost accounting process at the enterprise level

- Methods of summarizing and analyzing data: summarizing surveyresults, generalizing them into groups of issues

Main structure of the thesis

The thesis includes 3 chapters:

Chapter 1: Characteristics of service, manufacturing organization and cost management at Bac Ky investment joint stock company

Chapter 2: Practice of accounting for manufacturing costs and product pricing

at Bac Ky investment joint stock company

Chapter 3: Assessments and recommendations for improving accounting for manufacturing cost at Bac Ky investment joint stock company

The base of my thesis is not only the documents but also the accountingbooks at Bac Ky Investment Joint Stock Company in December 2019 andJanuary 2020.

Due to limited conditions and my cognitive experiences in accountingwork, it is unable to avoid mistakes

Thank you sincerely

Hanoi, May 2020

CHAPTER 1: CHARACTERISTICS OF SERVICE, MANUFACTURING ORGANIZATION AND COST MANAGEMENT AT BAC KY INVESTMENT JOINT

STOCK COMPANY1.1 Characteristics of service of Bac Ky Investment Joint Stock Company

Bac Ky Investment Joint Stock Company was established in 2005, wasformerly an investment and financial consulting company Since 2009, reflecting

to the development trend of supporting industries, the Board of Directors has

decided to invest in Logistics industry, which is considered to be the core

investment area of the company

After nearly 10 years, Bac Ky has achieved remarkable achievements: fromthe initial investment of VND 30 billion, this figure increased to 173,175 billion

by 2015 Bac Ky invested in Inland Container Depot (ICD) in Tien Son, which isthe largest and the most modern in the North of Vietnam In April 2018, Bac Kystarted to construct a river container port in Tri Phuong, Bac Ninh and put intooperation in April 2019

There are 5 business lines in Bac Ky Investment Joint Stock Company: (1)Trucking Service; (2) Warehouse Service; (3) Barging Service; (4) ContainerYard; (5) Custom Brokerage

1.1.1 Trucking Service

Bac Ky's container trucking fleet is among the top three largest in the North

of Vietnam with a total of 120 prime-mover trucks and 160 semi-trailers With alarge scale and synchronous infrastructure, Bac Ky is always available andensure runtime and the quality of service

Trucking of import & export cargo between Haiphong and other Northernprovinces (with focus on Hanoi, Bac Ninh, Bac Giang, Thai Nguyen &Vinh Phuc)

Trucking import/export to/from bonded warehouse

Trucking transfer port cargo

Trucking import/export to/from CFS warehouse

Trucking distribution cargo

Backy is currently a reliable logistics partner with large manufacturers such

as Samsung, Canon, Foxconn, due to the special advantages that only Bac Ky

Table 1.1: Type of Truck service

Short-range Trucking Drop customer’s empty

imported containers or pick

up containers for exportpurpose in ICD Tien Son

o Bac Ky offers the bestprice incentives to reducetransports cost

o With over 150 tractorsand trailers, Bac Kyensures on time delivery

o With customers that havestable outputs, Bac Kyarranges schedulevehicles in factory toserve container rotation.Long-range trucking

service/ cross-border

trucking service

Transport container betweenHai Phong – Bac Ninh –customer’s factory

Bac Ky is the firstcompany to be licensed bythe government to supplycross-border transportroutes Vietnam-China (donot transit containers atborder gate)

1.1.2 Warehouse Service

Bac Ky Investment Joint Stock Company is the direct investor and operator

of ICD Tien Son (Tien Du – Bac Ninh) with the total area of over 12 ha (thelargest in Northern Vietnam) ICD Tien Son is located at a strategic locationwhich is convenient for the storage and distribution of goods to Vietnam Northenprovinces Bac Ky currently provides the following services:

 Storage, lifting, counting, packing, labelling

 Consolidation and distribution

1.1.3 Barging Service

The barge frequency for two proposed routes, namely Tri Phuong – Hai

Phuong just deployed the route: Tri Phuong – Hai Phong, due to the effectmarket demand & Covid-19.

Source: BMT analysis based on interviews with Bac Ky and industrial

stakeholders Barge Capacity

 Number of barges: 4

 Number of round trips/barge/month (26 working days/month): 13

 Barge size: 120 TEUs/trip

 4 barges: 66,000 TEUs/year

Currently, cargo movements in North Vietnam predominantly rely ontrucking – due to the lack of alternative transport modes With the launch ofbarging services to link the cargo bases around Hanoi and gateway port of HaiPhong, cargo demand for barging services is expected to grow gradually BKI isone of pioneers in this type of service, which can reduce the pressure ontraditional transportation

1.1.4 Container Yard

Using ICD Tien Son depot, our clients save on average 20% ontransportation costs Instead of travelling empty half of the route between Hanoiand Haiphong, importers can drop empty containers at ICD Tien Son (afterunloading at nearby factories), while exporters can pick up those emptycontainers to load cargo for export en-route back to Haiphong

40,000 m2 of CY

Figure 1.1: Barging Volume at Two River Ports

11 shipping lines (including Maersk, CMA, SITC, Evergreen, Hyundai, etc.)

Container services: LOLO; storage; cold storage; repairs; weighing

1.1.5 Custom Brokerage

With the bill of lading's final destination set to ICD Tien Son, clients caneffectively complete customs procedures (import, export or transit clearances) atdry port, instead of doing the procedures at the congested borders (seaports orborder gates)

This is a very convenient, cost-effective and time-saving solutions for clients Bac Ky was appointed by the General Department of Vietnam Customs ascustoms supervision agent of all transport enterprise engaged in the Vietnam-China Transport Agreements

Situated a strategic location, ICD Tien Son was chosen by the Ministry ofTransport as the transit point for all vehicles from China, Thailand to Hanoi andvice versa

Customs Sub-department of ICD Tien Son is able to execute all customsprocedures for importers and exporters Our clients can complete customsprocedure, such as import, export and transit clearances instead of doing theprocedures at seaports or the Vietnamese border

This is a very convenient cost and time-saving scenario for our clients inHanoi and is surrounding area

1.2 Characteristics of service providing of Bac Ky Investment Joint Stock Company:

BKI has a various of product., which is also the general characteristics oftransportation company Additionally, transportation service requires the fastpace to keep up with the whole supply chain of customer

That means the process of receiving an order in BK has to be fast and accurate asmuch as possible The figure in the next page will show briefly the process ofreceiving an order in Bac Ky:

In general, there are 2 main parts in process of receiving an order Firstly, Sales

& Marketing will try to reach customers, and have a general contract, which has thepolicies applied for all orders in the future It’s the basement to receiver ordersbetween Bac Ky and customer, because it require to save time in supply chainmethod Second part is receiving the specific orders Customer have to send theorders to Bac Ky at least 1 day before containers arrived in Haiphong port or havingmoved to Haiphong port Then, Bac Ky will arrange the trucks, the time and otherdocument work to make sure that everything can go in line If not, Bac Ky will havethe reply immediately to customer and try to find the solution for that special case

Here are the Functions & Duties of each departement, which to make sure

that every department will be in responsible for their job and the job goes smoothly:

 Marketing & Sales:

o Be in charge of finding targeted customers and maintain active ones

o Build sales price & negotiate with customers

o Be in charge of after-sale-service (receive feedback & spread out to otherdepartments, give out some policies for loyal customers…)

 Operation Planning

o Receive specific orders, arrange suitable route & service

o Investigate & improve service

o Corporate with direct operation departments

 Direct Operation Departments: includes: Trucking, Warehousing, Barging,Container Yard, Customer Brokerage

o Receive & perform services

 Accounting

o Issue invoices & receive payment

o Keep track with account receivable & payable

o Collect invoices from other departments to record cost

o Follow cash flow & record revenue

o Prepare monthly reports & financial statements at the end of the year

Figure 1.2: Providing service process

1.2 Manufacturing cost management of Bac Ky Investment Joint Stock Company

Bac Ky is still in the process of complete the management system, so below is the diagram of whole management structure atthis moment

Figure 1.3: Management structure

BOD: Board of Direction

CCO: Chief Customer Officer

COO: Chief Operation Officer

CFO: Chief Financial Officer

According to Cost Management, there are some main departments that are in charge of For more details, here are the duties of these departments:

Firstly, it is BOD (Board of direction) With the help of CEO, BOD will

establish, approve plans, budgets & production norms In Bac Ky, BOD candirect manage and give comment all work Additional, BOD often raise newideas, new projects and figure out the issues, especially about Cost & Pricing

Secondly, CEO (Chief Enterprise Officer) is in responsibility with whole

company & BOD Otherwise, in Bac Ky, CEO have to control some specificdepartments, such as: marketing, operation planning… because either it isextremely important part in the business structure or they are quite stable tohandle Cost & Pricing is one of the main duty of CEO Monthly, AccountingDepartment has to submit the financial reports, profit and lost report to CEObefore public through the company

Thirdly, Finance & Accounting are the keys of process From very first

step, Accounting will collect & record the actual product cost, managementcost… and have report monthly, quarterly, yearly Base on that, Finance is incharge of building up the beginning plan, the main factors and estimate theprices This pricing will help sales deal with customers, help BOD & CEO havethe effective internal control Then, CFO (Chief Financial Officer) is the one thatcontrol 2 departments in both costs & pricing Besides, CFO will measuremanage cost structure for whole company & also cash flow issue, which is quitecomplicated in a manufacturing company

Additionally, CCO (Chief Customer Officer) is directly in charge of dealing

price with customers in all products COO (Chief Operation Officer) is the one

who directly control trucking & barging business lines since they are both

complex in reality In accordinating with COO, other direct manufacturing

departments (Barging, Trucking, Warehousing…) will provide actual costrelated-information, the trend of market, That will help the work: costmanagement & pricing more accurate and competitive with market

CHAPTER 2: PRATICE OF ACCOUNTING FOR MANUFACTURING COSTS AND PRODUCT PRICING AT BAC KY INVESTMENT JOINT

STOCK COMPANY2.1. Accounting for Transportation service costs at Bac Ky Investment Joint Stock Company

2.1.1 Accounting for direct material costs

2.1.1.1 Characteristics of direct material costs

 Feature of direct materials

BKI use International USA Tractors in Transportation Service that

transport container between Hai Phong – Bac Ninh – customer’s factory Inaverage, a tractor (with the combination with trailers) is able to carry about 38tons of goods This kind of transportation contribute a lot to economy in general.Recent research shows that tractors travel about 272 billion km, providing up to68% of the freight volume each year

These tractors use Diesel Oil as direct material Fuel consumption oftractors in the 8-s was usually about 40 liters/100km, due to low enginemanufacturing technology Nowadays, fuel consumption is significantly reduced,about 26 litters/100km

However, tractor’s fuel consumption is not always a specific and exactnumber, it depends on the usage conditions, roads, cargo weight… For example:

 Fuel consumption increases significantly when going up a slope anddecrease when going down a slope

 If cargo is empty, fuel consumption decrease about 10%,

 Maintenance regularly is also one way to help the engine achieve optimalperformance and durability

 The process of transfer materials:

Figure 2.1: The process of transfer materials

Buy Diesel Oil

every week

Hand over

to 2 stations (in Bac Ninh & Hai Phong)

Tractors come to station for filling fuel

 Bac Ky’s Shopping department usually buys Diesel oil every week forwholesale Based on the number of orders received in advance & predictingorders will receive in that week, BKI will know the amount of oil to consume andbuy close to that quantity.

 Oil purchased will be handed over to 2 oil stations in Bac Ninh & HaiPhong

 Tractors will be poured Diesel oil at the oil station in condition havingrequired document to confirm how much oil is taken, for about how many KMand for which order… This document is provided by a transportation accountingdepartment

2.1.1.2 Used Accounts & Accounting Treatment

To record Direct Material Cost for Transportation, BKI use Account 621- TRAN

- Debit: Record of actual direct material (oil) initial value

- Credit: Forward the actual direct material cost used for Trucks in the

period in Account 154 TRAN – Unfinished Product Cost

Figure 2.2: Process of recording material

Account 621 – Direct Material

Account 133

2.1.1.3 Detailed accounting Procedure

Direct Material (Oil) Cost takes 40% of the service cost Thus, accountingthis type of cos accurately play an important role in determining the price ofservice, as well as provide important information for manager to save cost,reduce price and increase company performance

In BKI, there is a separated accounting department for Transportation withthe aim that can keep track with Transportation Revenue & Cost; collect, store &prepare all the relevant documents Because Transportation service is quitecomplicated to manage Revenue & Cost, a separated accounting department forthis business line is necessary

Buy Material

& used directly for operation

Deductible VAT

Unfinished Product Cost

Then, transportation accounting department has to summarize periodicallyand send to General Accounting Department General Accounting Departmenttake the responsibility to check the the validity and legality of the documents andtables submitted by the transport accountant, then record in the General Journal,the ledger of related accounts and the detail book of the accounts.

Example: Purchase oil and hand over to station:

 Because of the characteristics of business and material, oil is immediatelyhanded over to 2 station for service purpose (no warehousing)

 The process of purchasing Direct material (Oil) is below:

Figure 2.3: Proposal for providing oil

When having the demand of buying oil, the department that is in charge ofhas to send the request to Shopping department with the clear information: theaim, the amount, the date request… The example is below (figure 2.3)

Station send Oil Order Request to TRAN Accounting Department every week

TRAN Accounting Department check that request and order oil with the supplier

After confirming the price & amount, supplier ship the oil tank to the station in Hai

Invoice (02) is sent to TRAN accounting

department after delivery TRAN Accounting Departmetn will record this transaction

After being checked, the invoice is sent to the General Accounting Department for payment in

2 weeks after the invoice date

Code: BM SP1Version: 001 Date: 12/1/2020 Page: 1/1

PROPOSAL FOR PROVIDING OIL

Full Name PIC: Nguyen Khanh Toan

Position: OPS Haiphong

Proposal: Providing Oil Aim: Operation

Details:

Amount

Confirmed Amount

(by Shopping Dep.)

Code: BM SP2Version: 002 Date: 13/1/2020 Page: 1/1

RECEIPT DELIVERY Sendor:

Full Name: Pham Thanh Thuy

Position: Shopping Staff

Location/Department: Shopping Department

Receiver:

Full Name: Le Quy Nam

Position: Ops Staff

Location/Department: OPS Haiphong

Specific Delivery:

NHA TRANG JOINT STOCK COMPANY

Tax Code: 0 2 0 0 5 4 5 1 4 5

Address: Km103 (QL5) Nguyen Binh Khiem, Dong Hai, Hai An, Haiphong, Viet Nam

Buyer – Full Name:

Company: Bac Ky Joint Stock Company

Amount of money written in words: One hundred and ninety three million, zero

hundred seventeen thousand two hundred and sixty two dong

(Sign, Full name)

Figure 2.5: Oil Invoice

Accounting department will receive the invoice and record in subsidiary ledger in Misa software.

Figure 2.6: Accounting source – Subsidiary Ledger Account 621

Subsidiary Ledger Address: Company Office; December 2019

Balance Credit

Transfer Oil to Unfinished Goods

Transfer Oil to Unfinished Goods

2.1.1.4 General Accounting Procedures

The process of recording direct material cost is root from Source Documentsfrom other departments and Invoices from Suppliers Accounting Department willcollect all of those and record in both General Journal & Subsidiary Ledger –Account 621 regularly Summary Report & Trial Balance are recorded at the end ofperiod The process is summarized in the diagram below:

Figure 2.7: Recording Direct Material Cost

The journal is used to record economic transactions arising in eachaccounting period and in an accounting year in chronological order andreciprocal relations with account of that operation The General Book include

Financial Statement

Subsidiary Ledger –Account 621

Summary Report – Account 621

 Date of recording

 Date of Document

 Document No

 Explanation / Details

 Account & Contra Account

 Amount in Debit & Credit

Ledger is a general accounting book used to record economic and financialoperations arising in the accounting year according to the accounting accountsprescribed in the accounting accounts system applicable to enterprises Eachaccount may open one or several consecutive pages on the Ledger, which issufficient for recording in an accounting year At the end of the period (month,quarter), it must close book, add up the total arising Debit amount and the totalarising Credit amount, calculate the balance of each account as a basis formaking the Balance sheet of arising amounts and Financial report Theseinformation is included in Ledger:

 Date of recording

 Document information: Date & Number

 Location in General Journal book (Page, No of Line)

 Contra Account

 Amount (Debit & Credit)

Besides, Bac Ky use Misa software for accounting work Thus, all data isupdated and stored regularly Person in charged can find the data & re-check theinformation easily

Next page, there are some documents (General Journal & Ledger) exportedfrom the software:

Figure 2.8: Accounting source - General Journal

General Jounal Adress: Company Office; December 2019

Tranfer Direct Materials to Unfinished Goods T12/2019 - BP CUSTOMS

621 Customs 154.03 0 3,020,00031/12/201

Tranfer Direct Materials to Unfinished Goods T12/2019 - BP SÀ LAN

621 SALAN 154.10 0 754,721,49231/12/201

9

31/12/201

9

NVK0347 9

Tranfer Direct Materials to Unfinished Goods T12/2019 - BP

5,059,074,89

3 31/12/201

Bac Ky Investment Joint Stock Company

Form: S03b-DN

Room 611, Song Hong Tower, 23 Phan Chu Trinh, Hoan Kiem District, TP Ha

Date 22/12/2014 – Ministry of Finance)

Ledger(For General Journal method)

Figure 2.9: Accounting source – Ledger Account 621

Date month year

(Sign, full name) (Sign, full name) (Sign, full name)

2.1.2 Accounting for direct labor cost

2.1.2.1 Characteristics of labor cost

Direct labor cost is a cost item that accounts for a large proportion of thecost (10-15%) and is directly related to the labor’s rights as well as theobligations of the company Therefore, the correct and adequate accounting ofdirect labor costs not only contributes to the reasonable and accurate calculation

of the cost of the service but also has an important meaning in the accurate andtimely payment of wages for workers

Types of labor used

Currently, the labor force in Transportation consists of two types: long-termcontracts employees and outsourced workers

The employees include direct workers (like drivers…) and indirect workers(direct manger, order and planning staff…)

 Method of calculating payroll

For direct workers (drivers), BKI applies a combination method of fixedwage and wage for each trip/truck

For indirect employees, BKI pays package wages according to the work ofeach person (there is a separate salary policy based on the rank, capacity andactual work completed by each person)

For the long-term contract employees, BKI deducted Insurance inaccordance with current regulations

For the part of employees who are outsourced, BKI does not deductdeductions from social insurance and health insurance by month but calculated inthe unit price of labor paid directly to the employees As for the trade union fee,the Company still deducted as officials and employees in the list

The table bellow represents the method of calculation for regular drivers:

Total Salary = Taxable & Non-taxable Amount

Table 2.1: Accounting source – Main drivers for calculating salary

 For temporary driver, the wage is 500,000/order However, BKI rarely usetemporary driver

 Deductions will be calculated based on the fixed salary, with the percentagebelow:

Table 2.2: Accounting source – Deduction of Salary

 From the Salary Calculation, TRAN Accountant will record the

transaction in Subsidiary Ledger – Account 622 (03), as well as General Journal (04) and Ledger – Account 622 (05).

(Currency: VND)

Included in Income Taxable

1) Fixed Salary = 4,730,000/25.5 days

x Actual Working Days in Month2) Allowance for Meals = 50,000/day x Actual Working Days in Month3) Wage for Laden KM = 900/km x Laden KM in Month

4) Wage for Empty KM = 600/km x Laden KM in Month

5) Allowance for Overtaget KM

8) Allowance for difficult order = 200,000 x No of Difficult Orders

9) Allowance for Trailers-cutting = 10,000 x No of Trailers-cutting in month

Not included Income Taxable

 Example: below are the tables for calculating salary for one driver, who

worked 24 days in Jan-20 There are also some other main fundamentals

Figure 2.10: Example of calculating driver salay

2.1.2.2 Used accounts

To record Direct Labor Cost for Transportation, BKI use Account 622 - TRAN

- Debit: Record of actual direct labor cost: Salaries, wages and other

deductions from salaries and wages as prescribed in the period

- Credit: Forward the actual direct labor cost used for Trucks in the period

in Account 154 TRAN – Unfinished Product Cost

2.1.2.3 Detailed Accounting Procedure

Record Salary for 1 direct labor – 1 trucking driver

 Because Trucking need many labors, there are about 130 drivers in thecompany, it requires a quite complex process to calculate the salary each month

 There are 3 main departments, who are directly related to driver salaryprocess: Driver Manager, TRAN Accounting Department, Human Resource Insummary, the process is:

Transportation line will set the orders for driver and send the excel file daily

to TRANS Accounting And after finishing 1 order, Driver will come toAccounting Department to have the confirmation about that order Thus, TRANSaccounting will have all the the information related to Salary calculation At theend of the month, TRANS Accounting will calculate and send this document out.(figure 2.12; 2.13)

TRAN Manager collect all drivers' schedule, which includes the

total KM, the time, orders

TRAN Accounting Department add the information about Toll fee

& Other unexpected fee, which is paid by drivers.

Driver Manager collect all information & source related, calculate

salary for each driver Then send it to Human Resources Department

Human Resource recieve the data from Driver Manager and send it

to General Accounting for payment

Figure 2.11: Process of calculating driver salary

Figure 2.12: Driver Schedule from TRANS Department

Code: BM TRANS03Version: 002

Date: 26/12/2019 Page: 1/1

DRIVER SCHEDULE 12.2019

No. Truck No. Driver - Full Name Code Laden KM Empty KM Total Trailers- cutting Shuttle trips Working Days Trips SR Trips MR LOLO in Tri

Phuong

LOLO in Haiphong