[Luận văn bằng tiếng anh - GRADUATION THESIS] ACCOUNTING FOR PRODUCTION COSTS AND PRODUCT COSTING AT 492 ONEMEMBER LIMITED LIABILITY COMPANY

GRADUATION THESIS ACCOUNTING FOR PRODUCTION COSTS AND PRODUCT COSTING AT 492 ONEMEMBER LIMITED LIABILITY COMPANY2020 and 2021 were the years of difficulties with the world economy in general and Vietnams economy in particular when heavily affected by the pandemic. In todays volatile market economy, businesses that want to survive and develop must have an appropriate and effective business method. An inevitable rule in the market economy is competition, so businesses must find a way to stand firm in the market; build a brand and develop the business further to be able to bring its products to a large number of consumers; constantly improve product quality to meet the increasing needs of users. Grasping the context that the country is transforming on the road of industrialization and modernization, all products from small to large have marked changes in both form and quality, even research and development launched many new products applied in life. In the construction business, expenses account for a fairly large proportion (especially the cost of materials), which is an important indicator on the income statement. Just a small change in cost can change the products price and profit of the business. Therefore, businesses must pay attention to the preservation and use of cost savings but still have to ensure product quality. To do that, the immediate problem is to make full and accurate accounting in the business process. Accounting as a management tool must calculate and manage how to meet that requirement. Therefore, I have chosen the research topic “Accounting for production costs and calculating product costs at 491 OneMember Limited Liability Company” as the topic for my graduation thesis so that I can better understand reality.

MINISTRY OF FINANCE ACADEMY OF FINANCE

Hanoi – 2022

I hereby declare that this thesis is my own work and effort and that has notbeen submitted anywhere for any awards Where other sources of informationhave been used, they have been acknowledged

The data and results described in the thesis are deried from the actualposition of the internship company

Thesis: “Accounting for production costs and product costing at 492 Member Limited Liability Company”

One-Ha Noi, February 21st, 2022

Student

ACKNOWLEDGEMENT

Firstly, I would like to express my vey great thankfulness to all lectures inAccounting Faculty at Academy of Finance for their professional guidance andvaluable support.

Especially, I would like to show my deep gratitude to my supervisor, PhDThai Ba Cong and MSc Nguyen Ba Linh, for their patient guidance, enthusiasticencouragement and useful critiques during the planning and development of myGraduation Thesis and for thier assistance in keeping my progress on schedule

I also want to thank 492 One Member Limited Company for giving mepermission to commence this thesis in the first instance, to do the necessaryresearch work and to use departmental data I have furthermore to thank theDirector and Chief Accountant as well as all seniors at the company who gaveand confirmed this permission and encouraged me to go ahead with my thesis

Finally, because of the limitation of time and knowledge, mistakes areadvoidable, so I wish ro receive more contribution and suggestions to make mythesis better

TABLE OF CONTENTS

Contents

ACKNOWLEDGEMENT 3

LIST OF DIAGRAMS 6

LIST OF TABLES IN THE DISSERTATION 6

LIST OF ABBREVIATIONS 6

PREFACE 7

1 Urgency of the topic 7

2 Research purpose 7

3 Object and scope of the research 8

4 The research method of the topic 8

5 Thesis structure 8

CHAPTER 1: BASIC THEORIES ON ACCOUNTING FOR PRODUCTION COST AND PRODUCT COSTING IN CONSTRUCTION ENTERPRISES 9

1.1 Necessity of accounting for production cost and product costing in enterprises 9

1.1.1 Concept, nature of production cost and product cost 10

1.1.2 Tasks of production cost accounting and product costing 12

1.2 Classification of production costs and product costs 13

1.2.1 Classification of production costs 13

1.2.2 Product cost classification 14

1.2.2.1 Classification of product costs according to data and time of cost calculation 14

1.2.2.2 Classification of product cost based on scope and component costs 15

1.3 Objects of production cost accounting and product costing 15

1.3.1 Objects of production cost accounting 15

1.3.2 Objects of Product costing 16

1.3.3 The relationship between objects of production cost accounting and objects of product costing 16

1.4 Accounting for production costs according to the utility purpose of costs 17

1.4.1 Accounting for direct raw material costs 17

1.4.2 Accounting for direct labor costs 19

1.4.3 Accounting for construction machine usage costs 21

1.4.4 Accounting for production overhead costs 24

1.4.5 Accounting for production cost for the whole enterprise 25

1.5 Methods of valuing closing work in progress 27

1.5.1 Valuing closing work in progress according to the estimated cost 27

1.5.2 Valuing closing work in progress according to equivalent units 28

1.5.3 Valuing closing work in progress based on direct materials cost 29

1.6 Product costing methods in enterprises 29

1.7 Organization of production cost accounting and product costing in terms of information technology application 31

CONCLUSION OF CHAPTER 1 31

CHAPTER 2: ACTUAL SITUATION OF ACCOUNTING FOR PRODUCTION COSTS AND PRODUCT COSTING AT 492 ONE-MEMBER LIMITED LIABILITY COMPANY 32

2.1 General overview of 492 One-Member Limited Liability Company 32

2.1.1 General introduction of 492 One-Member Limited Liability Company 32

2.1.2 Functions, duties, and business sectors 35

2.1.3 Organizational characteristics of the company's management apparatus 37

2.1.4 Organizational characteristics of the company's accounting work 41

2.2 Actual situation of production cost accounting and product cost calculation at the company 50

2.2.1 Cost Aggregation Objects and Cost object 50

2.2.2 Contents of production cost accounting and product costing at the company 52

2.2.3 Product costing at 492 One Member Limited Liability Company 160

2.3 General assessment of the current state of cost accounting and product costing at the company 194

2.3.1 Advantages 194

2.3.2 Disadvantages 196

CONCLUSION OF CHAPTER 2 198

CHAPTER 3: SOME SOLUTIONS TO IMPROVE ACCOUNTING FOR PRODUCTION COST ACCOUNTING AND PRODUCT COSTING AT 492 ONE-MEMBER LIMITED COMPANY 199

3.1 Development orientation of the company; principles and requirements for improvement 199

3.1.1 Development orientation of the company 199

3.1.2 Principles and requirements for improvement 200

3.2 Solutions to improve production cost accounting and product costing at 492 One Member Limited Company 202

CONCLUSION OF CHAPTER 3 207

LIST OF DIAGRAMS

1.1 Diagram of the major accounting transaction on direct raw material

cost

1.2 Diagram of the major accounting transaction on direct labor cost

1.3 Diagram of the major accounting transaction on production

overheads

1.4 Diagram of accounting of production cost of the whole enterprise

according to the periodic inventory method

2.1 Organizational characteristics of the company's management

2.2 Diagram of the company's accounting work

2.3 Form of bookkeeping applied at the Company

2.4 The order of making accounting books on computer software

LIST OF TABLES IN THE DISSERTATION

2.1 December 2020 payroll at Factory 921 – Indirect department

2.2 Daily checking 12/2020 at Factory 921 – Indirect department

2.3 December 2020 payroll at Factory 921 – Direct department

2.4 Daily checking 12/2020 at Factory 921 – Ddirect department

2.5 Construction machinery's description and major repair list

2.6 Summary table of production tools cost for every project

2.7 Summary of payment of production and business expenses in the

fourth quarter of 2020 – Team 926

2.8 Product cost calculation table

2.9 Information from the income statement

LIST OF ABBREVIATIONS

PREFACE

1 Urgency of the topic

2020 and 2021 were the years of difficulties with the world economy ingeneral and Vietnam's economy in particular when heavily affected by thepandemic In today's volatile market economy, businesses that want to surviveand develop must have an appropriate and effective business method Aninevitable rule in the market economy is competition, so businesses must find away to stand firm in the market; build a brand and develop the business further

to be able to bring its products to a large number of consumers; constantlyimprove product quality to meet the increasing needs of users Grasping thecontext that the country is transforming on the road of industrialization andmodernization, all products from small to large have marked changes in bothform and quality, even research and development launched many new productsapplied in life In the construction business, expenses account for a fairly largeproportion (especially the cost of materials), which is an important indicator onthe income statement Just a small change in cost can change the product's priceand profit of the business Therefore, businesses must pay attention to thepreservation and use of cost savings but still have to ensure product quality To

do that, the immediate problem is to make full and accurate accounting in thebusiness process Accounting as a management tool must calculate and managehow to meet that requirement Therefore, I have chosen the research topic

“Accounting for production costs and calculating product costs at 491 Member Limited Liability Company” as the topic for my graduation thesis sothat I can better understand reality

- Proposing several solutions to improve the accounting work of gatheringproduction costs and calculating product costs at 492 One Member Limited

3 Object and scope of the research

-Object: Accounting for production costs and product costing at 491 Member Limited Liability Company

One Research scope:

+ The accounting work collects costs, calculates the cost of products in theenterprise

+Scope of space: 492 One-Member Limited Liability Company

+Time range: from the 4th quarter of 2020 to the 4th quarter of 2021

4 The research method of the topic

In the thesis, a combination of research methods is used to apply theknowledge learned in school to solve specific business and production tasks inpractice, which are:

+ Economic statistical method: Collecting data according to referencesources and survey collected at 492 One-Member Limited Liability Company

+ Methods of analyzing production and business activities

+ Accounting method: Through professional methods of accounting tocollect data and documents, collect production costs and calculate product costs

of the bridge project Military Hospital 175

+ Method of consulting experts: Consult with teachers in the accountingdepartment of the Academy of Finance on the contents related to accounting forproduction costs and product costing, and sharing by the cost accountant at 492One-Member Limited Liability Company

CHAPTER 1: BASIC THEORIES ON ACCOUNTING FOR PRODUCTION COST AND PRODUCT COSTING IN CONSTRUCTION ENTERPRISES.

1.1 Necessity of accounting for production cost and product costing in enterprises

In the market economy, businesses that want to survive and develop mustknow how to compete and take it as a driving force to gradually assert theirposition One of the most effective measures that businesses apply is to minimizeproduction costs and reduce production costs without reducing product quality

The process of production and business activities is the process ofcombining basic factors of production (labor, means of labor, and objects oflabor) to create necessary products to serve human needs In the process of thatcombination, the basic elements are consumed creating the cost of doing

product Product cost is a monetary expression of the costs that enterprises havespent regardless of the period related to the volume of products, which areimportant economic indicators, reflecting the quality of production activitiesbusiness, so they are always the top concern of managers.

Clear and accurate accounting of production costs will help managersclearly understand the costs to be spent on production and business activities.From there, compare with the obtained results to determine the profit or loss ofthe production and business activities In addition, accounting for production andbusiness costs also helps managers be more proactive in production managementand discover unreasonable expenses, wasteful expenses, and ineffectivenessresults in production and business

Recognizing the importance of collecting production costs and calculatingcosts is the central stage of the entire accounting work of an enterprise.Therefore, I decided to choose the topic: “Accounting for production costs andproduct costing at 492 One-Member Limited Liability Company” as the topic of

The process of production activities in construction enterprises is acombination of factors of labor, labor materials, labor objects of the productionprocess into corresponding costs: corresponding to the use of fixed assets is thedepreciation expense of fixed assets, with the use of raw materials is the cost ofraw materials, with the use of labor is the cost of wages, wages… In acommodity economy, all of the above costs are expressed in money Thus, theproduction and business costs of construction enterprises can be understood asfollows:

Production cost is: Expression in money of all costs of living andmaterialized labor and other costs that enterprises have spent to carry outproduction activities in a certain period (month, quarter, year ).

The magnitude of the cost of production depends on two factors:

+ The volume of labor and production materials consumed in production

in a certain period

+ The price of the means of production consumed and the wages of a unitthat generates fees

The cost of construction and installation enterprises is always unique, that

is, businesses that jointly undertake the construction of a work or work item, butwith different management and production conditions, often produce productswith different results, structures and magnitudes The individuality in costscreates a difference in bids, which is a decisive factor for the success or failure ofcontractors in the race to win contracts from investors

b Product cost

Product cost of a construction enterprise is expressed in money of all coststhat the enterprise spends to complete the volume of construction and installationwork as prescribed with the investor (in which the volume of construction work

is Installation is the volume of works calculated according to the in-kind criteriaincluded in the completed work design, the construction work may have reached

a reasonable technical stop where it can be tested and handed over and isaccepted for payment)

The content of the cost includes direct costs such as direct materials costs,construction machine costs, labor costs, subcontracting costs, and indirect costssuch as general costs, management costs necessary to create the finished product.(Production costs include: direct material costs, direct labor costs, constructionmachine costs, overhead and subcontracting costs The total cost includesproduction costs plus administrative expenses allocated to the completed work)

Production costs and product costs are two aggregated indicators that reflect the production and business situation of an enterprise Firmly grasping theitems, cost factors, and components of the cost is the basis for enterprises to strengthen the management of production and business in the right direction, bringing high operational efficiency to the enterprise

1.1.2 Tasks of production cost accounting and product costing

Determining the right object to collect production costs and calculate thecost following the actual conditions of the business, satisfying the requirementsset out by management, applying methods of aggregation, costing, and costing inone reasonable scientific and technical way to ensure the adequate, timely andaccurate provision of necessary data for management Detail:

+Determining the right object of collecting production costs following theproduction organization in the enterprise and at the same time determining theright object of cost calculation

+Reflect fully, accurately, and promptly all actual production costsincurred

+Check the implementation of cost norms, materials, labor usingconstruction machines and other cost estimates Timely detection of deviationsfrom the estimated norm of unplanned expenses, damages, losses, and damages

in production to prevent timely

+Accurately and promptly calculate the cost of construction andinstallation products, which are completed services of the enterprise

+Check the implementation of the enterprise's cost reduction according toeach project, work item, each type of product outlining the ability andreasonable and effective price reduction levels

+Correctly determine, hand over and pay the completed construction andinstallation work volume promptly Periodically inspect and evaluate theunfinished construction volume according to regulations

+Properly evaluate the results of production and business activities of eachproject, work item, each construction department, production team, etc in agiven period Timely making accounting reports on production costs andcalculating construction and installation costs Provide accurate and quickinformation on production costs and cost calculation to serve the managementrequirements of business leaders

1.2 Classification of production costs and product costs

1.2.1 Classification of production costs

1.2.1.1- Classification of production costs according to the cost elements.

The entire cost of production and business of the enterprise is divided intothe following elements:

+Cost of raw materials and tools include: main materials, auxiliarymaterials, fuel, construction equipment materials

+Labor costs are all wages, social insurance, health insurance, union dues,and other amounts payable to employees

+Depreciation costs of fixed assets is the whole that must be depreciatedand deducted before repair costs major repair in a month for all types of fixedassets in the enterprise

+Outsourced service cost is the amount to be paid for services purchasedoutside

Outsourcing for production such as machine rental, water, electricity, etc

+Other monetary costs are costs incurred in the process of productionactivities in addition to the four cost factors mentioned above such as cash costs,reception costs

Classification according to this criterion helps us understand the structureand proportion of each type of cost in production and business activities, helpingenterprises estimate production and business costs for the following period

1.2.1.2 Classification of production costs according to the utility purpose of the cost

According to these classifications, expenses that have the same purposeand use are classified under the category of expenses All construction costs aredivided into the production cost và non-production cost

- Production overhead costs: Including salary of team management staff;deductions according to the salary of social insurance, health insurance,unemployment insurance, trade union expenses, workers directly producingworkers using construction machines, team management staff, costs of materials,tools and tools, fixed assets depreciation expenses.

 Non-production costs:

- Selling expenses: are costs incurred to promote and market products tocustomers Any expense that is associated with selling a good or making a sale isconsidered a selling expense

- Administration expenses: These are expenses for the managementapparatus, related to the general operation of the whole enterprise such as:depreciation costs of fixed assets serving the management apparatus, salaries andallowances paid to the board of directors, management staff, cost of materials,office supplies, fees, insurance, outsourcing costs for corporate offices

This classification has the effect of serving the requirements of managingconstruction and installation costs according to estimates Because in basicconstruction activities, making project estimates, construction work items is anindispensable stage of work

1.2.2 Product cost classification

1.2.2.1 Classification of product costs according to data and time of cost calculation

- Planned product cost: is the product cost calculated on the basis of

planned production costs and planned output

- Standard product cost:  is the price calculated based on current coststandards at each time in the planning period, so the normative cost usuallychanges following the change of cost standards in the production process Bycomparing actual costs with standard costs, enterprises can control whether theuse of production costs is reasonable, not wasteful or not, thereby promptlymaking an adjustment plan

- Actual product cost: Is the product cost calculated on the basis of the data of actual costs incurred in the period and the output of products exported in the period

1.2.2.2 Classification of product cost based on scope and component costs

- Full factory cost: reflect all costs incurred related to the production andmanufacturing of products within the workshop, production department,including direct material costs, direct labor costs and production overhead costs

- Full cost of sales: reflect all costs incurred in connection with theproduction and consumption of products

1.3 Objects of production cost accounting and product costing

1.3.1 Objects of production cost accounting

The production cost aggregate object is the range or limit to whichproduction costs are incurred

To determine the object of gathering production costs in each enterprise, it

is necessary to base on factors such as:

- Production properties, product manufacturing process characteristics (simple orcomplex production)

- Type of production: single production, the mass production

- Product features

- Requirements and management level of the business

- Unit of cost calculation applied in construction and installation enterprises

Thus, the object of collecting production costs in each specific enterprisecan be identified as each product, product type, product details of the same type,the entire technological process, each technological stage, each segmentworkshop, each production team, each order, project, work item

For construction and installation enterprises, due to the characteristics ofproducts, production organization, and production technology, the object ofproduction cost collection is usually identified as each work or work item

1.3.2 Objects of Product costing

Objects of cost calculation are products, jobs, and services produced byenterprises, which need to be calculated cost and unit cost.

Unlike production cost accounting, cost calculation is the determination ofthe actual price of each finished product Determining the cost object is the firstjob in the entire product costing work The cost accounting department mustbase itself on the production characteristics of the enterprise, the types ofproducts and services the enterprise produces, etc to determine the appropriatecosting object In construction and installation enterprises, the object ofcollection of production costs, which can be works, work items, or completedconstruction and handover volumes

1.3.3 The relationship between objects of production cost accounting and objects of product costing

In essence, the object of production cost aggregation and the object ofproduct costing are the same because they are both scopes to gather costs andserve the same management, analysis, cost control, and pricing But productioncosts and costs are two different aspects of the production process, costs reflect anon-production waste, and product costs reflect production results. 

However, determining the object of collecting production costs is the basisfor accounting in detail, recording general numbers, and allocating productioncosts reasonably to help enterprises strengthen management and control Checkthe cost-saving and perform well on business accounting

The identification of cost objects is the basis for accountants to makeproduct costing sheets (product details), select appropriate costing methods,organize reasonable costing work, serve the management and inspection of theimplementation of the cost plan, and calculate the business efficiency of theenterprise

1.4 Accounting for production costs according to the utility purpose of costs 1.4.1 Accounting for direct raw material costs

Direct material cost is the total cost of actual materials used in theconstruction production process such as main raw materials, auxiliary materials,other materials, etc for each project or work item, including costs Formwork,

scaffolding is used many times and do not include the value of the equipment to

be installed by the contractor, the value of the fuel used for constructionmachines, and materials used for construction team management

Direct material costs related to any work or work item shall be collectedaccording to the direct method for that work or work item For material costsrelated to many cost objects such as scaffolding and formwork, it must beallocated to each object according to reasonable methods such as the number ofuses, cost norms, completed construction volume

Accounting account used: Account 621 – the cost of direct materials

Accounting documents used:

+When exporting materials used for production and construction,documents are usually used: receipt of materials, delivery note

+When buying materials for immediate use without going through thewarehouse: Sales invoices, value-added invoices

-Aggregation method

+ Direct aggregation method: Direct costs should be collected directly foreach work, work item On the basis of original documents reflecting the quantityand value of materials exported for that work or work item

+Indirect collection method: Materials related to many works, work items

in such case must be distributed according to a certain criterion

Diagram 1.1: Diagram of the major accounting transaction on direct raw

(3) Returning unused material at the end of the accounting period

(4) Transferring the value of raw material exceeded the normal rates(abnormal cost)

(5) At the end of the accounting period, transfer (or allocate) the cost ofraw material to each cost center

At the end of the accounting period to calculate and determine the actualmaterials used for each work, work item

The value ofunusedremaining rawmaterial at theend of the period

-The value ofrecoveredscrap

1.4.2 Accounting for direct labor costs

In the construction and installation enterprises, direct labor costs do notinclude allowances for team managers and office staff in the enterprisemanagement apparatus Social insurance, health insurance, and union dues arecalculated on the wages of workers directly engaged in production andconstruction

Direct labor costs in construction enterprises include: Main salary, salaryallowances of direct construction workers, construction workers (transportation,loading and unloading of materials, preparation workers construction and sitecleaning)

Accounting account used: Account 622 - direct labor costs

Accounting documents used: are allocation table wages, payroll, salarypayment sheet, etc

Direct labor costs are usually calculated directly for each project item.Direct labor costs also include wages paid to outsourced workers

Diagram 1.2: Diagram of the major accounting transaction on direct labor cost

Annotation:

(1) Salaries, wages, and allowances for direct employees

(2) Recognizing payroll compensations for direct employees

(3) Provision for annual leave

(4) Actual benefits payable to employees when leaving is taken

(5) At the end of the accounting period, transfer (or allocate) direct labor cost to the cost center for calculating costs of products and services

1.4.3 Accounting for construction machine usage costs

Accounting for construction machines usage cost can be carried out in theform of specialized construction by machines such as infrastructure construction,underground construction or mixed production and construction, bothmanually and by hand The use of construction machines is done in manydifferent ways such as:

- Enterprises have construction machines and organize the construction bythemselves: In this case, the construction machines are the assets of theenterprise, the enterprises can organize separate groups of construction machines

or not into teams construction machines that are assigned to construction teams

to manage and use

- Enterprises renting construction machines: In this case, enterprises canrent machines with workers to operate machines or without workers to operatemachines

Construction machines usage cost are all labor materials and direct moneycosts for the process of using construction machines such as fuel costs,motivation for construction machines, machine depreciation costs, repair costsand regular repair of construction machines, salary costs of machine control andservicing…

Accounting account used: Account 623 – construction machines usagecosts – for collection and allocating costs of construction machines directlyserving construction and installation activities in construction and installationenterprises performing construction

Accounting documents used: the lease contract, the minutes of liquidation

of the lease contract, the operation log, the acceptance record, etc

Expenses for using construction machines in a construction andinstallation enterprise are all direct costs incurred in the process of usingconstruction machines to perform the volume of construction work by machinesaccording to the mixed-cost construction method Use of construction machinesincludes the following items:

- Labor costs: Main salary, supplementary salary, allowances payable toworkers operating construction machines

- Expenses for depreciation of construction machines

- Cost of hired services.

- Expenses in other currency for construction motorbikes

Diagram 1.3: Accounting entries for the cost of using construction machines

Ac 623

Ac 334,338 Ac 154

(1) Ac 154

(5) Ac 632

(10)

Ac 154

(6)

(1) Labor costs use construction machines

(2) Cost of materials and tools for production

(3) Depreciation cost of construction machines

(4) Buy materials, and tools for immediate use

(5) Other expenses by cash

(6) The cost of using the car, and machine

(7) Businesses selling car services, construction machines internally

(8) At the end of the accounting period, transfer construction machine usagecosts to the cost center

(9) Transfer of construction machine usage costs higher than normal rate toaccount 632

1.4.4 Accounting for production overhead costs

Accounting account used: Account 627 – production overhead costs –reflects all general production costs and opens details for each project team

Accounting documents used: Table of allocation of materials, tools, table

of salary distribution and social insurance; Calculation and amortization of fixedassets; VAT invoices, payment slips, debt notices

Production overhead costs reflect the costs of the construction team andconstruction site, including Salary of workshop management staff, constructionteam, and construction team; deductions for social insurance, health insurance,unemployment insurance, and trade union funds are deducted at the prescribedrate on the salary of workers directly producing construction products andemployees using construction machines and management staff of workshops,construction teams, and teams; depreciation of fixed assets shared for teamoperations and other expenses shared by the team, etc.

Diagram 1.4: Diagram of the major accounting transaction on production

overheads

Annotation:

(1) Indirect labor incurred

       (2) Indirect materials used

       (3) Tools and supplies are used for administering the factory

       (4) Depreciation cost of a fixed asset used in the factory

       (5) Services and other expenses used for administering the factory

       (6) Decrease in factory overhead cost

       (7) Amount of fixed overhead costs not allocated

       (8) Transfer (or allocate) of factory overhead cost to cost center

1.4.5 Accounting for production cost for the whole enterprise

For ordinary manufacturing enterprises, depending on the form ofinventory accounting (according to the method of regular declaration or periodicinventory), the accountant has a method of collecting production costs for thewhole enterprise Fit In construction and installation enterprises, due to thespecific economic, organizational and technical management, the inventoryaccounting form applied is the regular declaration This form affects theaccounting work of enterprise production costs

Depending on the accounting form the enterprise is applying, accountantsuse different types of books to collect production costs For example, if anenterprise applies the Journal form, the accounting books to collect productioncosts include:

+General accounting books include: Journal, ledger

+Detailed accounting books: depending on specific managementrequirements and defined cost accounting objects, accountants open detailed costbooks for each project or work item to keep track of actual costs incurred

Accounting account used: Account 154 - work in progress - reflects the

total cost of production, business, service for product costing, and services inenterprises applying the perpetual inventory method In enterprises applying theperiodic inventory method, account 154 only reflects the actual value of productsand services in progress at the end of the period

Diagram 1.5: Diagram of accounting of production cost of the whole

enterprise according to the periodic inventory method

Annotation:

(1) Reallocate opening balance of work in progress to account 631

(2) At the end of the period, direct material expenses are allocated to the cost centre

(3) At the end of the period, direct labor expenses are allocated to cost center

(4) At the end of the period, overhead expenses are allocated to the cost centre

(5) Allocation of the closing balance of work in progress to account for 154 (6) Value of non-repairable products is not counted into the cost of finishedgoods

(7) The cost of finished goods and completed services

1.5 Methods of valuing closing work in progress

Unfinished products in construction and installation enterprises are works,work items that have not been completed or have not yet been accepted foracceptance, handed over, and not yet accepted for payment

Work-in-progress cost is the cost of production to make up the volume of in-progress

work-At the end of the accounting period to calculate the cost of finishedproducts, it is necessary to determine the cost of work in progress the end of theperiod

of the period

+

Productioncosts incurredduring theperiod

-Cost of work

in progress

at the end ofthe period

1.5.1 Valuing closing work in progress according to the estimated cost

According to this method, the actual cost of the ending work-in-progress isdetermined by the formula:

+

The actual cost ofconstruction andinstallation volumeperformed in theperiod

construction in

work in

periodaccording tothe estimate

Cost of completedconstruction andhandover volume inthe period according

to the estimate

+

Cost of construction

in progress at theend of the periodaccording to theestimate

1.5.2 Valuing closing work in progress according to equivalent units.

This method is mainly applicable to the evaluation of work-in-progressswitch installations According to this method, the actual cost of installation inprogress at the end of the period is determined as follows:

of the period

+

The actual cost ofconstruction andinstallation volumeperformed in theperiod

according tothe estimate ofthe volume ofconstruction inprogress at theend of theperiod

calculatedaccording tothe equivalentcompletedoutput

completedconstructionand handovervolume in theperiod

according tothe estimate

+

Cost ofconstruction inprogress according

to the estimateconverted toequivalent finished

output

1.5.3 Valuing closing work in progress based on direct materials cost

According to this method, work-in-progress at the end of the periodincludes only direct material costs, and processing costs include finishedproducts

- Conditions of application: Suitable for enterprises with simpleproduction processes, where the direct cost of main raw materials accounts for alarge proportion of the total production costs, the cost of auxiliary materials, andother processing costs account for a negligible proportion.

- Suitable for businesses where the cost of materials accounts for a largeproportion of the product cost This method is suitable for cases where the cost

of direct materials accounts for a large proportion of the total production costs,and the output of unfinished products between accounting periods does notfluctuate much

progress at the beginning of the period

+

The direct materialcosts incurred inthe period

The volume of

progress at theend of theperiod

The volume offinishedproduct

+

The volume ofwork in progress atthe end of theperiod

1.6 Product costing methods in enterprises

Because there is a fundamental difference between the objects ofproduction cost accounting and the objects of product costing, there is adistinction between the cost accounting method and the product costing method.Basically, the costing method includes the following methods:

The step-by-step costing method takes into account the cost of finished products

semi-The K-step costing method calculates the cost of half-finished products

 Simple method

This method is applied in construction and installation enterprises with alarge number of works, the object of cost collection is suitable with the object ofcalculating the cost of works, work items, etc

According to this method, the sum of all direct production costs for work,work item from commencement to completion is the total cost of a work or workitem

Formula: Z = C

In which: Z: Total cost of manufactured products

C: Total production costs gathered by works, work items

In case an uncompleted work or work item has a completed constructionand handover volume, the actual price of the completed construction andhandover volume is determined as follows:

+ Actual expensesincurred duringthe period

- Actual cost inprogress at theend of the period

1.7 Organization of production cost accounting and product costing in terms of information technology application

Accounting software is increasingly proving its superiority to manualaccounting The application of accounting software to accounting work bothmeets the requirements of integration of Vietnamese accountants withinternational accounting and is consistent with the characteristics of all types ofVietnamese enterprises with the socialist orientation in the market economy

Performing accounting work in terms of information technologyapplication needs to be organized according to the following principles:

- Organization of accounting work on computers must ensure scientificrationality, based on compliance with the Law on Accounting, following therequirements of the State's macro-management, following accounting standardsand accounting policies of the State.

- Organization of accounting work on computers in enterprises mustensure that it is suitable to the specific characteristics, conditions andcircumstances of the enterprise

Organization of accounting work on computers must ensure that thereceipt, inspection, processing, and provision of economic and financialinformation of enterprises must meet the requirements of management ofenterprises and the State

The organization of accounting work on computers must be consistentwith the payroll and qualifications of the existing contingent of accounting staff

Organization of accounting work on computers in enterprises needs tothoroughly grasp the principles of thrift and efficiency

CONCLUSION OF CHAPTER 1

In chapter 1, the thesis analyzed, systematized and clarified the concept,nature of production cost and product cost, the classification of production costsand product costs, objects of production cost accounting and product costing,accounting for production costs according to the utility purpose of costs,methods of valuing closing work in progress, product costing methods inenterprises, and organization of production cost accounting and product costing

in terms of information technology application This is an important theoreticalbasis as a reference base, creating an overview for detailed analysis in order toevaluate the actual situation of accounting for production costs and productcosting at 492 One-Member Limited Liability Company in the chapter 2

CHAPTER 2: ACTUAL SITUATION OF ACCOUNTING FOR PRODUCTION COSTS AND PRODUCT COSTING AT 492 ONE- MEMBER LIMITED LIABILITY COMPANY.

2.1 General overview of 492 One-Member Limited Liability Company 2.1.1 General introduction of 492 One-Member Limited Liability Company.

-         Business name: 492 One - Member Limited Liability Company

-         Trading name: 492 CO., LTD

-         Director: PHAM VAN TAM

- Civil construction and industrial: From 1996 to present

- Construction of roads and bridges: From 1996 to present

- Construction of irrigation and hydroelectricity: From 1996 to present

- Detecting and handling landmines, explosives: From 2012 to present

       492 One - Member Limited Liability Company, formerly known as 492Construction and Construction Materials Manufacturing Company The headoffice is located in Dai Kim Ward, Hoang Mai District, Hanoi City

       On June 26, 1994, the Ministry of National Defense issued Decision No.374/QD – QP supplementing the business lines allowing the construction oftraffic works, basic construction, irrigation, and trading in materials andequipment

       On April 4, 1996, the Ministry of National Defense issued Decision No.506/QD – QP changed its name to 492 Construction Company On October 8,

1996, the Ministry of Defense issued Decision No 1747/QD – QP ranked thecompany as a construction company 1st class enterprise.

       Implementing the Government's policy on the reorganization of owned enterprises, on April 29, 2003 the Prime Minister issued Decision No.80/2003/QD – BQP on merging 492 into company 17 and changing its name toConstruction Enterprise 492 On April 24, 2006 according to Decision 255/QD –TCT of the Minister of National Defense, Decision to move the factory 492under Company 17 to the state of Truong Son Construction Corporation from01/05/2006

State-       492 Co., LTD is an enterprise with legal status, seal, deposit account, bankloan, tax code, business registration license issued by Hanoi city

492 Co., LTD is a defense economic enterprise performing two tasks:economic construction and defense potential enhancement All businessactivities shall be carried out according to the practice certificate issued by theMinistry of Construction and the business registration issued by the Hanoieconomic arbitration

2.1.2 Functions, duties, and business sectors

2.1.2.1 Function

492 One Member Limited Liability Company is an enterprise with thefollowing business lines:

- Construction of civil, industrial, and technical infrastructure works;

- Producing and trading in construction materials and equipment;

- Construction consulting;

Construction and completion of civil, industrial, traffic, irrigation, postal,hydroelectric, technical infrastructure works in urban centers and industrialparks;

- General contractor consulting and managing construction projects;

- Consulting, construction of residential areas, urban areas, industrial parksand civil, industrial, transportation, irrigation, post offices, and technicalinfrastructure works including project formulation investment, biddingconsultancy, testing, investment project appraisal, design verification of totalcost estimates, quality assurance, project management (excluding work design);

- Experimental construction;

- Interior decoration;

- Investment, business, housing, and infrastructure development;

- Construction of technical works, agricultural and rural infrastructure;

- Services of sports facilities, swimming pools, tennis courts, gymnasiums,and entertainment organizations (except for the type of entertainmentbanned by the State);

- Drilling for foundation treatment and works of dikes, dams,embankments, and water reservoirs;

- Drilling, mining, mineral processing, and construction materialproduction (except for minerals banned by the State)

2.1.2.2 Duties

Strictly implementing the laws of the state, obligations towards the state,protecting property, protecting production; maintaining security, social order,and safety within the company, performing national defense obligations, andtaking measures to protect the environment around the company

Independently establish relationships with economic partners Establishjoint ventures and associations to enhance production and business efficiency

Learn market research, better exploit the existing market, find newmarkets

Research and apply science, technology, and management science toimprove product quality, reduce production costs, and lower product costs

Create a stable income for staff, take care of the material and spiritual life,constantly train and foster to improve the professional, cultural, scientific, andtechnical skills for employees

2.1.2.3 Business sectors

- Construction of houses of all kinds

- Construction of railways and road projects

- Construction of public works

- Construction of other civil engineering works

- Collapse

- Prepare surface

- Installation of electrical systems

- Install water supply, drainage, heating, and air conditioning systems

- Installation of other building systems

- Finish construction

- Technical testing and analysis

- Mining of stone, gravel, clay

- Producing concrete and products from cement and gypsum

- Wholesale of materials and other installation equipment in construction

- Producing metal structures

- Repair of machinery and equipment

- Repair of electrical equipment

- Maintenance and repair of automobiles and other motor vehicles

- Installation of machinery and industrial equipment

- Transporting goods by road

2.1.3 Organizational characteristics of the company's management apparatus

Chairman of the Board of Directors cum Director

Deputy Director in

charge of Southern

projects

Deputy Director in charge of irrigation and hydroelectric projects

Department of

Economics -

Planning

Accounting and Finance Department

Supply Department Department of Labor –

Deputy Director

in charge of military

Political Department

Diagram 2.1: Organizational characteristics of the company's management apparatus

Functions and duties of the department:

* Board of manager

Including the Chairman of the Board of Directors cum the Director, the DeputyDirectors in charge of the segments The director is responsible for running allactivities of the company under the one-head regime and is responsible to the superiorfor the company and represents all the rights and obligations of the company beforethe law The Deputy Directors are responsible for managing and advising the Director

on the general affairs of the company under their assigned powers and functions

- Check for abnormality

- Intervene in company operations when needed

* Department of Economics - Planning

- Having a job marketing function, identifying investment projects, jointventures, joint ventures production and business development

- Tendering and receiving construction works

- Construction investment work

- Make and manage the implementation of the business plan of the unit and theplan assigned to the units under the company

- Prepare, design, organize the construction, acceptance, and handover of theworks in coordination with financial accounting department for settlement of works

- Organizing the implementation of economic and technical norms inconstruction, analyzing results business results and reporting to superiors

- Manage payroll and train workers

* Accounting and Finance Department:

- Development of the company's financial plan

- Exploiting and using capital, funding for production, business, and operation

of the company, managing and using, preserving, and developing capital sources

- Organize the implementation of the Ordinance on accounting and statistics offinancial regimes applicable to enterprises

- Implement the financial reporting regime with superiors and relevant stateauthorities

- Cooperate with the Department of Economic - Planning and otherdepartments to participate in the payment and settlement of the costs of the works ofthe Team

* Political Department:

- Organize salary calculation, make salary table, summarize labor costs,calculate health insurance, social insurance, personal health insurance, unemploymentinsurance, and transfer to the accounting department to perform accounting work

- The work of cadres to organize the Party building, to synthesize the politicalwork of the Party's work

- Regularly follow up on production and business activities of the Company,timely motivate staffs Paying attention to the material and spiritual life of allemployees of the unit

- Implement the rewarding work for those with high achievements in thebusiness activities of the unit

* Department of Labor – Administrative:

- Logistics work, ensuring military supplies and equipment

- Office administrative work serving the company, storing contact information,receiving guests

* Supply department:

- Make plans on materials, supply, and coordinate materials for projects bymonth, quarter, and year

- Manage and control the entire import - stock - export - inventory - inventory

of materials of the Company's Warehousing system

- Maintain and implement the warehouse book system according to theregulations of the Financial Accounting regime