What Is Cost Variance?

The material cost difference account is used to calculate the difference between the actual cost and planned cost of various materials of the enterprise, the debit side registers the difference between the actual cost greater than the planned cost (overexpenditure) and the savings difference due to the issued material, and when adjusting the planned cost of the inventory material , Adjust to reduce planned costs. The lender registers the difference between the actual cost less than the planned cost (savings) and the difference in overexpenditure that the material should bear, and adjusts the increased planned cost when adjusting the planned cost of the inventory material. (Red text for savings and blue text for overspending). In the "Material Cost Variance" subject, the borrower registers the difference in overspending and the difference in savings due to the material, and the lender registers the difference in savings and the difference in overspending that the material should bear.

Material cost variance

When materials are routinely sent and received at the planned price, a "Material Cost Difference" account needs to be set up as an adjustment account for the material account. Subjects

Material cost variance = actual cost-planned cost

The difference is a positive number, which means that it is actually too large, called "overrun margin" (debit); a difference is a negative number, which means that it is actually small, is called "savings difference" (credit). When sending out materials, the plan that is carried forward first is the plan Costs, and then adjusted to actual costs.

The formula is transformed into:

Actual cost =

I. Accounting of the difference between the actual cost and planned cost of various materials of the undergraduate project.

Depending on the specific situation, the enterprise can set up a separate account;

(1) The material cost difference of the incoming materials, the actual cost is greater than the planned cost difference, debit the undergraduate, credit the "Material Purchasing" subject; the difference between the actual cost and the planned cost is the opposite

The debit balance at the end of the course reflects the difference between the actual cost of the company's inventory of raw materials and more than the planned cost; the credit balance reflects the difference between the actual cost of the company's inventory of raw materials and less than the planned cost.

The accounting of material cost differences is an important part of inventory accounting. It is one of the important and difficult points of industrial accounting business accounting, and it is also a difficult point of application in accounting practice. How to improve the effect of this part of learning and application, the following is a shallow discussion.

Clarify the content of material cost variance accounting

According to the current accounting system, the material cost difference is the difference between the actual cost of the material and the planned cost under the planned cost of materials. But the material referred to here is not only the content of "raw materials" account calculation. Also includes

Example: A unit issues 100m3 of wood and a wooden box for processing and packaging. The planned cost of wood is 1,000 yuan / m3. The material cost difference is 1%. The round-trip transportation fee is 1500 yuan, the processing fee is 3,000 yuan, and the value-added tax is 510 yuan.

Enterprises that use planned cost accounting for material inventory, because their materials are stored and issued using planned price accounting, so they should set up a "material cost variance" account. When the enterprise "actual cost of materials" is issued, due to outsourced inventory For the difference formed, the inventory cost difference allocation rate should be calculated, so as to calculate the difference in costs that should be borne by issuing the inventory, and the planned cost of the issued materials should be adjusted to the actual cost. Therefore, the inspection of material cost differences should be carried out from the following aspects:

Inspection of carry-over of cost differences of purchased materials. Pay attention to check that the company materials have arrived, the invoice statement has not been received, the payment has not been paid or the acceptance bill has not been issued.

I. "Material Cost Variance" Account Nature, Use and Structure

"Material cost variance" belongs to

[Case 1] Unexplained over-rated loss is included in the material cost difference, and the case of false increase in material over-expenditure

A company's raw materials use planned cost accounting. A batch of material A was purchased one day. Fill in the special value-added tax invoices: the quantity is 12,000 kg, the unit price is 10 yuan, the price is 120,000 yuan, the tax rate is 17%, the tax amount is 20,400 yuan, and the total price and tax are 140,400 yuan. Fill in the material storage list: the storage amount is 11,250 kg, the planned unit price is 8 yuan, and the planned cost of the storage material is 90,000 yuan. The material has a nominal loss rate of 5%.

When an enterprise pays according to the invoice amount, the accounting process is:

Borrow: Material purchase 140,400.00

Loan: bank deposit 140,400.00

When materials are collected into the inventory, the accounting treatment is:

Borrow: Raw materials 90,000.00

Tax payable-VAT payable (input tax) 20,400.00

Material cost difference

Credit: Material purchase 140,400.00

According to the rated loss rate of material A, the amount of over-rated loss can be calculated to be 150 kg (12,000-11,250-12,000 × 5%). The amount is 1,755 yuan. The price is 1,500 yuan and the tax is 255 yuan. This part of the unexplained over-rated loss is an abnormal loss. According to the accounting system, it cannot be directly included in the material purchase cost, but it should be included in the "property loss and pending account" account, and its input tax cannot be calculated. Deductions. The company's account processing not only increases the input tax by 255 yuan, but also causes the material cost difference to increase by an excess of 1,500 yuan, which will inevitably affect the calculation and distribution of the material cost difference rate for the month, and then affect the cost.

Reviews

The calculation and carry-over of material cost variances is the basis of variance distribution. There are many different forms of miscalculation and misconversion of enterprises. This example is due to mistreatment of over-rated losses, which results in misconversion of material cost differences. In addition, errors in the valuation of income materials, errors in tax calculations, errors in the calculation of differences, errors in the direction of carrying forward differences, and subjects carried forward may all lead to miscalculations and errors in material cost differences. You need to contact "Materials The tax checking of the purchase account is also resolved.

Case 2 Less material loan spread, expanding product cost

An enterprise adopts planned costs for daily material sending and receiving accounting. It was found in the inspection that the planned cost variance rate used by the company in the distribution of materials cost for each month of this year was a fixed number of -4%. This caused suspicion by the inspectors. The recalculation of a certain month was carried out by spot check. The material cost difference rate for that month was -8.5%, and the planned cost of material consumption for that month was 256,820 yuan. Therefore, the difference of less refinancing is 11,556.90 yuan. After questioning the accounting staff, the defendant was told that -4% was an estimated variance rate.

Reviews

This is a typical example of the material consumption cost of a company that uses planned cost accounting for materials. Because such materials are priced according to the planned unit price, the unit price is relatively unchanged. In addition to the cost of the consumption of the virtual column (such as the number of production production supplies, or the number of non-production supplies included in the production supply) In addition to the quantity), they often make efforts in the allocation of material cost differences, more allocation of overruns or less points, regardless of the difference in savings, thereby falsely increasing the cost of material consumption. However, this result of mis-dividing the cost difference of the material factory will inevitably cause the material cost difference rate of the material consumed in the month to be inconsistent with the material cost difference rate of the material at the end of the month. You can find the clues about the cost difference of misclassified materials.

When calculating the actual raw material cost of a product, the difference in costs that should be borne by the raw materials consumed must be considered, that is, the price difference of the raw materials consumed. The calculation formula is as follows:

The material cost difference that should be allocated for a product = the raw material fixed cost of the product + (-) the raw material deviation from the fixed amount difference * the material cost difference allocation rate

At this time, the formula for calculating the actual product cost is:

Product actual cost = product fixed cost + (-) deviation from quota + (-) cost difference of raw materials and semi-finished products