Guide to reporting on the cost of production with the full set of sample details

In the business environment competitive, controlling the cost of production not only help enterprises to reduce the cost of products, but also ensure sustainable growth contribute to improve profitability. However, many enterprises still face difficulties in the establishment report production costs accurate tracking fluctuations in cost, find out solutions to optimize efficiency.

So, expense reports play a role in how to manage business finance? How to business can reduce waste, improve production efficiency and optimize product price?

In this article Lac Viet Computing will in-depth analysis of report production costs, the cost type is important, methods of making accurate reports by applying technology to optimize production costs.

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• Detailed instructions report on public debt for business
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1. Overview of the report the cost of production

1.1 report production costs, what is?

Report production costs is one of the important document to help businesses financial control, performance evaluation and production activities, calculate the accurate price of the product. The establishment cost report not only support managers in decision-making, financial accuracy, but also help enterprises optimize costs, improve productivity, maintaining sustainable profitability.

Report the cost of production is accounting documents reflect the full costs incurred in the production process, including raw material costs, labor costs, production costs, general.

• Track control the whole of the expenses incurred in the production process.
• Provide accurate data to calculate the product price, guarantee business with the reasonable price, the optimal profit.
• To help businesses evaluate the performance of production, from which adjust the process to minimize waste.
• Support financial planning and forecasting the cost of future production.

For example, A business of food production can use the template management report production costs to determine the level of expenditure raw materials, reasonable, from which optimize the usage of raw materials, limited shrinkage.

1.2 the Role of the reported production cost in business

Report the cost of production is not just a requirement in the accounting profession but also bring many practical value in admin:

• Cost control efficiency: to Help businesses keep track of each type of cost, from which detect waste, the difference in abnormal to adjust timely.
• Calculate the cost of accuracy: As a basis for determining the cost of products serving the retail price, compare efficiency between the products.
• Decision-making flexibility: Based on fluctuations in cost over time or according to the workshop, the leader can adjust the scale of production, restructuring resources.

Serve the audit report, appraisal, loan or calling for investment: A cost system clearly create trust for partners and financial institutions.

2. When businesses need to report the cost of production?

Reporting the cost of production should not be carried out only under the obligation of accounting that should be viewed as a monitoring tool cost, decision support administrator. Here is the point, businesses should prioritize reporting.

Reporting periodically: Month – Quarter – Year

Reporting periodically to help ensure regular monitoring of the situation of production, timely, cost control and financial planning correctly. Compare costs across the states, detect trends, growth abnormalities (for example: raw material costs increased steadily in 3 months) to actively renegotiate pricing input or change provider.

Purpose:

• By month: in accordance with the business for continuous production or have a lot of orders for the short term. Help manage fast, cash flow, efficiency test each workshop or products.
• According to you: Help assess the trend of fluctuations in the cost seasonal, at the same time serves for reference with the only goal other financial as revenue, gross profit.
• By year: Is mandatory reporting service report year-end financial audit and strategic decisions for the next fiscal year.

When there's large fluctuations in input costs

For example:

• The price of raw material suddenly increases (due to market fluctuations)
• Increase the minimum wage, rising labor costs
• The price of electricity, fuel production increased strength

Why need to report right this moment?

• To measure the degree of influence on the cost of production unit (for example: 20% increase in cost of supplies will make the price increase, how much percent).
• Help finance calculations back to the norm, the proposed adjustments to the sale price or optimize the production.

Business is not “running costs” a passive way, which actively analyze – react promptly, keeping the profit margins stable.

Before the financial reporting period-end

Why important?

• Report the cost of production is the basis for calculating the cost of goods sold, directly affect the profit recorded in the financial statements.
• If recorded wrong the cost of production, will lead to a false profit, affect reports filed tax authorities or rating from the audit.

Practical example: A business noted the lack of cost 12 months will cause the price of the capital unusually low, profit is overstated – guide to the risk and pay tax higher than the actual.

When necessary, decisions about selling prices, investment, expand or reduce production

Reporting at this help answer questions such as:

• Cost to create 1 product are beyond the sale price?
• Products are hole, still selling?
• Any costs accounted for a large proportion and can optimally be?

Specific benefits businesses get:

• The price match, avoid selling below cost
• Identify which products should be prioritized investment products should stop production

Investment planning machinery/recruitment based on actual data, not feelings

3. The method of reporting the cost of production

Business can choose one of following three methods to the organization reporting the cost of production, depending on the level of investment for the accounting system, human resource capacity and production scale. Each method has distinct advantages, but the most important is the business need to understand the essence to choose the method that reflects the cost best.

3.1. Method of

Principle of operation: Business recorded continuously every professional import – export raw material, semi-finished products, finished products throughout the production. News is that fluctuations of raw materials, workers, production costs are reflected instant details.

How to perform:

• When importing raw materials, accounting recorded an increase in warehouse
• When used for production, establishment votes. the recorded cost
• Other expenses, such as salaries, production costs, general... also be recorded as soon as they arise
• Periodically or at maturity, accounting gather data on TK 154 to report the cost of production

Fit: Businesses have medium and large scale, continuous production, there is the investment for accounting software, ERP software, inventory management as AccNet, MISA, FAST...

3.2. Methods of inventory periodically

Principle of operation: Business no detailed tracking of goods and supplies throughout the production, which to the end of any new inventory to determine the amount of inventory the beginning of the period, enter in the states, cumshot, use and conservation of the end states. From that calculate the energy used to accounting for expenses.

How to perform:

• Not recorded cost of materials immediately upon use
• Final inventory inventory, use the formula:
  The raw materials used = the first viable states + Enter in – Survive the end of a.
• Then new record to report the cost of production

Fit: small Business, startups, business, craft or produce according to orders, simple, no system management software.

3.3. Method coefficient/ratio

Principle of operation: Business use of constant or proportional allocation to split production costs for many products produced the same process, the same raw material.

How to perform:

• Building coefficient of conversion for each type of product (usually according to the consumption of raw material or the machining time)
• The total cost of production in the states will be allocated according to this coefficient to calculate the price of each type of product

For example: Business beverage production there are 3 types: type 330ml, 500ml and 1 liter. Based on consumption of raw materials can be converted into score:

• 330ml = 1 unit
• 500ml = 1.5 units
• 1 liter = 2.5 units
  The total cost of production will be allocated according to the number of products multiplied by the coefficient.

Fit: Business big production process, stable, homogeneous product of processes such as brewing, beverage, cement, pharmaceutical products.

4. Structure of the report the cost of production business

The table reports the cost of production helps enterprises monitor, control, to optimize each item of cost in the production process. To ensure the accuracy of transparency, the expenses are classified into three main groups: the cost of direct material cost, direct labour cost, manufacturing general.

4.1. The cost of raw materials directly

The cost of raw material is direct expenditures related to the main raw material constituting the product. This is the kind of costs accounted for the largest proportion of total production costs can directly affect the product price.

The item the cost of raw materials directly

• Main materials: The material directly form the final product (for example: iron, steel, wood, plastic, fabric).
• Raw material: material Is supported but is not the main component (for example: screws, glue, paint, packaging).
• The cost of buying raw materials: including the cost of transportation, warehousing and wastage in the process of preservation.

For example, A company with the cost of direct material including fabric, buttons, zippers, sewing thread.

The impact of the cost of raw materials directly to production

• If the business does not control good price of imported raw materials, production costs will increase, affecting the profit margin.
• Status of waste or wastage of raw material can increase the cost of production.
• Applications warehouse management system smart track consumption of raw materials, optimum process for importing goods.

For example: A manufacturing enterprise of furniture can use AI to analyze data consumption of wood, from which optimized the process of cutting wood to reduce wastage.

4.2. Costs directly

Cost of direct labour is wages and allowances for workers directly involved in manufacturing the product. This is an important factor in the total cost of production, especially in the industry that needs a lot of manual labor, such as textiles, footwear and food processing.

The item cost, direct labour

• Basic salary: fixed salary of production workers.
• Overtime, bonus and productivity: Cost arises when workers do overtime or performance.
• The account insurance: social insurance, health insurance, unemployment insurance under the provisions of the law.

For example: A factory-assembled car rental cost, direct labour, including salaries of workers, assembly line, quality control, operate machinery.

How to optimize costs directly

• Automation of production processes helps to reduce dependency on manual labor.
• Reorganize work shifts reasonable to limit overtime costs.
• Application AI to analyze the performance of labor, from which layout workers to suit each stage of production.

For example: A factory manufacturing electronic can use sensors, tracking systems productivity to identify workers have a high-performance, optimized training procedures.

4.3. The cost of production in common

Cost of joint production is a whole other costs related to the manufacturing process but can not be attributed directly to each product. This is the cost of a permanent nature or transform big influence on the financial performance of the business.

The item production costs, general

• Depreciation fixed assets: machinery, equipment, factories, transportation of raw materials.
• The cost of electricity, water, maintenance workshops: included electricity for the production line, cooling system, repair costs periodically.
• Cost production manager: Salary of the production supervisor, warehouse manager, accountant production.

For example: A factory manufacturing food production costs include the cost of refrigeration for preserving raw materials, cost of maintenance system, packaging line and wage foreman workshop.

The impact of the cost of production common to business

• The cost of production generally difficult to control than the cost of materials, labor, because many terms are fixed costs.
• If not optimized, the business can be financial pressure, particularly in duration reduced output.
• Use technology monitoring costs help detect the payments are not necessary, optimized operation.

For example, A textile factory can use sensors IoT to track power consumption, thereby determining machinery would expend more energy and adjust the schedule accordingly.

5. Instruction set table reports the cost of production details professional

The report detailed visual to help businesses evaluate production efficiency, the detection of inconsistencies in the process of using resources to make decisions to improve fit.

Here are the steps to take to report the exact cost effective.

Step 1. Identify the main expense item

Before reporting, businesses need to identify and classify the main expense items, including:

• The cost of raw materials directly
• Costs directly
• The cost of production in common

Determine fixed costs – variable costs

• Fixed costs: Expenses do not vary with the level of production, such as rent factory, depreciation of machinery.
• Variable costs: The costs change according to the number of products produced, like raw materials, wage workers work according to the product.

Determine the range reported production costs

Businesses need to determine:

• Statements according to the accounting period (month, quarter, year).
• Report by project or manufacturing orders.
• Reports according to type of product or production line.

Step 2. Collects data processing, accounting

Recorded aggregate cost data

• Collect data from the accounting department, raw material production.
• Collated with the purchase invoices, warehouse, payroll workers.
• Recorded costs according to each stage of production, to help businesses determine the period incurred cost.

Use accounting software to manage cost data

• Automatic recognition and classification of costs according to each item to minimize errors.
• Synchronize accounting data with the ERP system or software to manage production in order to have accurate reporting.
• Support to generate reports quickly under each accounting period, avoid entering data manually cause mistakes.

For example: A manufacturing enterprise electronic components use ERP software to track each consignment and warehousing of raw materials, automatically calculates the cost of raw materials according to each order.

Check out the collated data, the actual costs with the estimates

• Compare the data collected with the budget had set up previously to detect the difference.
• If there is a deviation, need to check the price of raw materials increase, consumption of raw material is larger than expected, or low labor productivity.
• Check the validity of the cost of joint production, ensure no waste in spending operate.

Step 3. Analysis of performance evaluation cost

Compare actual costs with the budget expected

• Calculate the percentage difference (%) between actual costs and estimates to determine the cost exceeds the budget.
• If the cost is higher than expected, should cause analysis to propose a solution to cut costs.

Analyze the causes of discrepancies costs

• If the cost of raw materials increase, the need to assess the causes from the raw material or consumable in the manufacturing process.
• If labor costs increase, the need to check the level of overtime hours, labor productivity, performance machinery.
• If the cost of joint production increase, the need to consider factors such as maintenance, machinery, electricity and water consumption more than usual.

Performance evaluation using raw materials and labor

• Check the percentage of shrinkage of raw materials in each stage of production.
• Reviews labor productivity based on the number of finished product per hour worked.
• Giving solutions to optimize the efficient use of raw materials and labor to help reduce the cost of production.

Step 4. Optimized production costs to improve financial performance

Technology application to manage the cost of production more efficient

• Integrated AI system to analyze cost data, to help businesses forecast is fluctuating costs in the future.
• Use warehouse management software smart to track raw materials, in real time, avoid the excess or shortage of raw materials.
• Optimize workforce productivity by monitoring system production helps reduce wasted time and increase efficiency for manual labor.

For example, A company produces plastic that can use AI to analyze data consumption of raw materials according to each shipment of production, from that given the local project save cost more efficiently.

Adjust the manufacturing processes to reduce costs

• Re-evaluate the production stage has a high cost, from which the optimization process to reduce costs not necessary.
• Consider adopting automation technology to replace manual labor helps to reduce costs and improve performance.

6. Report the cost of production in the circular 200 and 133

6.1. Specified current accounting of recorded cost of production

According to the regulations of the Ministry of Finance, production costs are recorded in accordance with appropriate principles honesty. Specific:

• Circular no. 200/2014/TT-BTC: applies to business scale, accounting system, complex, requires preparation of financial statements in full compliance with international standards more.
• Circular 133/2016/TT-BTC: Apply for small business and medium textured account is simple, easy to deploy more.

Both circular require business to reflect the full costs incurred in the period, not to survive the cost or recorded at the wrong time. The cost of production must be clear classification, tracking details for each object set costs such as products, orders, works or factory production.

6.2. The accounting accounts often use

To report the cost of production, the accountant should use the account the peculiarities follows:

• TK 621 – the Cost of raw materials, live: Recorded value of raw materials used to produce products.
• TK 622 – Cost, direct labour: Recorded salaries, the account related to workers directly.
• TK 627 – the Cost of joint production: Include the indirect costs such as depreciation, electricity, water, and repair of machinery and salary management workshop.
• TK 154 – Cost production of unfinished business: Is account aggregation, whole set cost from 621, 622, 627 to calculate product price. Final cost from TK 154 will be the switch to TK 155 (Finished products) or 632 (cost of goods sold) if the product has been completed and consumption.

Illustrative examples:

A business furniture manufacturer in month 4:

• Purchased raw materials worth $ 500 million
• Wage workers 120 million
• Cost of joint production: 100 million

Accounting will the account:

• Debt 621: 500 million
• Debt 622: 120 million
• Debt 627: 100 million
• There are 152, 334, 111... depending on the source of the cost

=> Set on 154: Debt 154/ There are 621, 622, 627

6.3. Mistakes common business needs to avoid

Business, especially small and medium enterprises, often suffer from some flaws common following:

• Don't separate clearly the direct costs and the cost of joint production, leading to misleading price.
• No detailed tracking for each order or workshops, which causes difficulties when analyzing production efficiencies.
• Recognition of expenses in the wrong accounting period, distort financial statements.
• Teen record, the record comes (for example: warehouse, timesheet), that cost is not sufficient grounds accounting.
• Do not adjust or provisioning when the uncompleted last long.

The solution is: construction accounting procedures, internal clear, the use of accounting software has the function of automatic synthesis cost, cross-check periodically between accounting – inventory – production.

7. Download full sample report production costs professional

DOWNLOAD FREE sample report production cost AT HERE

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Let's start today by upgrading the system report production costs of the business, application and technology to optimize processes, reduce errors and improve financial performance.