The PAMM system by InstaForex company — easy to start work in the currency market
Modern global trends are increasingly becoming evidence of the rapidly growing popularity of work in the Forex market, one of the key concepts of which is investment. In the broadest…

Continue reading →

Accounting software QuickBooks takes care of your business financial needs.
The PAMM system by InstaForex company — easy to start work in the currency market
Modern global trends are increasingly becoming evidence of the rapidly growing popularity of work in the Forex market, one of the key concepts of which is investment. In the broadest…

Continue reading →

Cash register inventory
Inventory cash performs the planned event to compare actual performance and accounting. In other words, the inventory of the cash register is carried out in order to compare the real…

Continue reading →

Cost accounting methods

Cost accounting at the enterprise is an important point in determining the efficiency of the enterprise. Accounting of production costs is carried out according to the methods approved by the top management of the company and allowed by the tax legislation of the country in which the company operates. What methods are used to account for costs? About this and will tell readers Mirsovetov in this article.
Thus, the main methods of accounting for material and intangible costs, which are used by Russian companies are:

The process method.
Order method.
Poperedelny method.
Standard method.
World companies use slightly different methods:

Direct costing.
Just in time method.
ABC costing.
The process method is mainly used in enterprises with a low number of items of goods, as well as a slight influence or lack of work in progress. An example of such production is a coal mine. Direct and indirect (indirect) costs relate to the entire output. In this case, the cost of each unit of production is calculated as a private total cost of the entire generalized volume of production.

The order method is used in small-batch and individual production, for example, in mechanical engineering, where most products are made according to individual drawings. Direct costs of production of such product are accumulated directly on the order, and indirect costs in the place of occurrence of costs (MVZ). The cost price of the order is calculated from the direct costs and indirect costs that are accumulated on the cost center and distributed according to the approved distribution base. The basis of the distribution is often the labor intensity factor.

Poperedelny method is the main method for enterprises with a large number of stages of production, in which there is a need to calculate the cost of semi-finished products. This production is clearly the production of rolled metal. In the chain of cast iron-steel-rolled there is a need to calculate the cost of each of the semi-finished products. Direct and indirect costs are taken into account at each stage. The costs of the entire enterprise are accumulated at the last stage.

The normative method is to account for some of the costs of the current norms of normative calculations. During the reporting period, the analysis of deviations of actual indicators from the standard with the study of bottlenecks is conducted. The cost of this method is calculated as the sum of standard costs and deviations from them, as well as the adopted changes in the norms themselves. Deviations from existing standards are determined by operational accounting.

The standard-costing method is similar in principle to the normative method used in the post-Soviet space. This method works effectively in conditions of constant 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 of production costs, which are approved before the reporting period. In the process of operational cost accounting, the amount of deviations from the standards are accumulated on special accounts, and at the end of the reporting period, as a rule, are related to the overall financial (total) result.

Direct costing or margin method is one of the most common methods of accounting of production costs in the world microeconomics. The difference between the method and the others is that the costs of producing a single product are analyzed only in a variable part of the costs. Under the variables are understood costs, the amount of which directly depends on the amount 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 margin income, calculated as the difference between the available sales revenue and variable costs. Operating profit is the direct difference between marginal income and fixed costs. Another key feature of this method is to account for the impact of balances on operating profit. The increase in balances of commercial products reduces the rate of operating profit and Vice versa.

Using the direct costing method it is possible to calculate the critical production volume, the production of which will be covered by fixed costs. It is calculated by the formula:

V = FC / (NRP-VC), where:

FC – fixed cost amount;

NRP – the price of the unit;

VC – variable costs of production per unit of output.

The “Just in time” method was first tested in Japanese companies in the early 70s and is based on the almost complete lack of stocks. The production of a product is carried out only if it is necessary. This can significantly reduce the indirect costs of maintaining warehouses, losses from equipment downtime, etc. When using the Just in time method, the basic emphasis is on the quality of the goods, its availability and total cost, without considering the price level.

ABC-costing (Activity based costing) is based on cost accounting according to the work (functions). All production is considered as a set of certain operations, in the performance of which resources are spent, both material and labor costs. All operations are divided into 4 work: piece work, batch work, productive work and General economic work. The first three types of work are the cost of a particular product, the fourth work is distributed among the goods produced according to cost drivers.

Target-costing. This method considers the cost price as the calculated value obtained as the difference between the average market price of the produced goods and the profit value. Based on the target cost level, the norms of production costs are approved. This method is quite effective in the development of a new product. If the production cost of experimental batches of goods is higher than the target cost, it does not make sense to start serial production of the goods.

The deed to the apartment
The contract of donation is a kind of written agreement under which the donor transfers the apartment voluntarily and free of charge. That is, in the document itself, it is…


Reporting to the Pension Fund under the new rules
Reporting to the Pension Fund shall be submitted quarterly no later than the 15th day of the second month following the reporting period. That is, reporting to the Pension Fund…


Deposits with interest capitalization
Investment of funds in the escrow account is not the only way of salvation savings from inflation. Thanks to Deposit deposits, in a stable economy, you can even increase your…


The results of the inventory
Every organization is faced with the inventory. As a rule, the inventory is carried out in-house to establish a correspondence between the accounting and the actual amount of inventory or…