Cost accounting methods
So, the main methods of accounting for material and intangible costs that are used by Russian companies are:
World companies use several other methods:
The process-based method is mainly used in enterprises with a low number of product lines, as well as little influence or lack of work in progress. An example of such a production can serve as a coal mine. Direct and indirect (indirect) costs relate to absolutely all output. In this case, the cost of directly each unit of production is calculated as a private total costs for the entire generalized volume of production.
The custom method is applied in small-lot and individual production, for example, in mechanical engineering, where most products are made according to individual drawings. The direct costs of producing such a product are accumulated directly on the order, and the indirect costs at the cost center (cost center). The cost of the order is calculated from the direct costs and indirect costs that are accumulated in the cost center and distributed according to the approved distribution base. The distribution base is often the coefficient of labor intensity.
The transfer method serves as the main method for enterprises with a large number of production stages, at which the need arises to calculate the cost of semi-finished products. Such production clearly serves the production of metal. In the chain of cast iron-steel-rolled there is a need for calculating the cost of each of the semi-finished products. Direct and indirect costs are accounted for at each redistribution. The costs of the entire enterprise are accumulated at the last redistribution.
The regulatory method is to account for some of the costs at current standards for standard costing. During the reporting period, an analysis of deviations of actual indicators from standard ones is carried out with the study of bottlenecks. The cost of this method is calculated as the sum of the standard costs and deviations from them, as well as the accepted changes in the norms themselves. Deviations from existing standards are determined by means of operational accounting.
Standard costing is a method similar in principle to that used in the post-Soviet space by a normative method. This method effectively works in conditions of unchanged prices for raw materials and auxiliary materials, as well as a stable product range. This method appeared in the depressed American economy of the 30s. The method is based on the use of standards for the cost of production, which are approved before the reporting period. In the process of operational cost accounting, the amounts of deviations from the standards are accumulated on special accounts, and at the end of the reporting period, as a rule, are attributed to the total financial (total) result.
Direct costing or margin method is one of the most widely used in the world microeconomics methods of accounting for production costs. The difference from other methods is that the costs of production of a single product are analyzed only in the variable part of the costs. Under variable means costs, the amount of which directly depends on the quantity of goods produced. Fixed costs (the company bears them regardless of production) are analyzed in the context of the enterprise. One of the main concepts in the use of this method is the marginal income, calculated as the difference between the available sales revenue and variable costs. Operating profit is the immediate difference between marginal income and fixed costs. Another key feature of this method is taking into account the effect of balances on operating profit. The growth of commodity balances reduces operating profit and vice versa.
Using the direct costing method, it is possible to calculate the critical production volume, the production of which will cover fixed costs. It is calculated by the formula:
V = FC / (NRP-VC), where:
FC – the sum of fixed costs;
NRP – unit price;
VC – variable costs per unit of production.
The “Just in time” method was first tested in Japanese companies in the early 70s and is based on the almost total absence of stocks. Production of a product is carried out only when it is necessary. This can significantly reduce indirect costs for the maintenance of warehouses, losses from equipment downtime, etc. When using the Just in time method, the basic focus is on the quality of the product, its availability and total cost, without considering the price level.