What Is Process Costing?

Cost accounting refers to allocating and grouping various expenses incurred by an enterprise in the course of production and operation according to certain objects to calculate total costs and unit costs. Costing is usually based on accounting and is based on currency. Cost accounting is an important part of cost management, and it has a direct impact on the cost forecast of an enterprise and its operating decisions. For cost accounting, first review the production and operation management expenses to see whether they have occurred, whether they should have occurred, and whether they have occurred should be included in the cost of the product, to achieve direct management and control of production and operation management expenses and product costs. Secondly, the expenses incurred are allocated and grouped according to the purpose, and the total cost and unit cost of various products are calculated to provide true cost information for cost management.

Cost accounting

The expenses incurred during the production and operation of an enterprise during a certain period of time are classified, collected, summarized, and calculated according to their nature and place of occurrence, and the total amount of production and operation expenses incurred during that period is calculated and the cost of each product is calculated separately.

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Combination of costing methods

For an enterprise, the cost of its main products must be calculated according to the production characteristics and

1. The core of cost accounting is to understand the company's production processes and key operations, to understand the latest production conditions in the workshop, to combine finance and business by preparing cost accounting statements at the end of the month, and to analyze the monthly cost fluctuations in a timely manner. It doesn't make sense for the office to do the accounting every day.

2. Cost accounting is not just a matter for the finance department and financial staff, but a matter common to all departments and all employees. The first is that cost accounting requires the cooperation of multiple departments such as the production workshop, technical department, and purchasing department. The second is whether the calculated cost is reasonable. It requires not only the evaluation of the financial department and time, but also the evaluation of the production and technical departments. It is necessary for the production and other departments to make a demonstration of the results calculated by themselves. Sometimes it is difficult to find the problem only by the financial department's own inspection. (Note: In practice, there are many differences in the angles or indicators of the financial department and other departments, which may be the reason for the difference.)

3. The cost accounting practice can accept the guidance of cost accounting theory, but it is necessary to break through the constraints of related theories and do not confine to the frame of cost accounting theory. The best cost accounting and management system is the accounting system that is closest to the production process of the enterprise. Only in this way can we reflect the company's production management characteristics. Each enterprise's production characteristics have its own particularities. The company's management has different concerns at different stages. Therefore, under the premise of determining the overall thinking, the cost accounting system requires There is a certain degree of variability. The key is to solve the concerns of management under the guidance of cost theory and combine business and finance.

4. As stated by qiqiaoao, a netizen in China's accounting vision, the current income tax law focuses on profit and loss and light assets, that is, a large number of detailed prohibitive or restrictive provisions are made on the period profit and loss, but the measurement of asset value and production costs lacks corresponding measures. Regulations. However, assets will eventually be converted into period expenses through depreciation, amortization, and sales. The current asset value is the source and basis of future period expenses. It is legal without statutory laws. Since the tax law does not measure related assets, Make prohibitions or restrictive rules, then the depth of accounting effort will determine the cost of future periods, and accounting itself is a discipline between art and science, it is inseparable from estimation, judgment and derived from it The dazzling accounting magic provides a wide choice of corporate taxation. Therefore, the current tax law focuses on profit and loss while measuring assets lightly. This also provides enough planning space for costing.

In the process of modern cost management, forecasting, decision-making, analysis, control, and accounting are inseparable. Cost analysis is required in forecasting and decision-making. Research must be conducted on the data previously calculated by the enterprise, and the accounting data is also other. The basis of each link. The role of small and micro enterprises in cost accounting and cost control is as follows:

Discover customer profit contribution. A very important function of cost analysis is to find the profit contribution of different customers to small and micro enterprises (including profit margin and profit amount). Because the profit margin of the product and the weighted average profit margin of the customer are different, Enterprises must constantly screen and develop valuable products and customers, and provide better products and services to such customers in order to get the maximum profit.

Establish reference for business assessment. The degree of market competition encourages small and micro enterprises to formulate multiple indicators to evaluate the salesperson's performance. The quality of service indicators should be one of them. The so-called business quality is the planned gross profit of the product (the difference between the transaction price and the planned cost price of the product). But we cannot simply blame the salesman for the actual cost of controlling the product. With transparent, fair, and operable business standards, the salesperson's business orientation can be correctly guided, so that small and micro enterprises can reduce business risks.

Through the implementation of various effective cost accounting and cost control methods, companies can increase profit margins and reduce business risks, urge all departments to pay more attention to cost control, and mobilize the enthusiasm of middle management and employees of the enterprise, thereby promoting the sustainable and stable development of the enterprise . Cost accounting is an important part of strengthening the cost management of small and micro enterprises. Cost accounting and cost control have an impact on the profit policy, turnover policy and structural policy of the enterprise, and then affect the investment income of the enterprise.

With the continuous development of the market economy, enterprises have gradually become self-sustaining economic entities and self-operating economic entities. Maximizing economic benefits is an inevitable choice for the survival and development of enterprises. However, the market economy is a legal economy. Enterprises must pay taxes on time and according to quality. In addition, enterprises also have to pay for the cost of consumption in the production process. How to manage the cost of the enterprise is a big production problem for the enterprise. Enterprise cost accounting is an important part of enterprise management and financial decision making. Under the market economy, if an enterprise wants to be invincible in competition, it must reduce production costs and do a good job of cost accounting.

Principles of Costing

The first is the principle of legitimacy. When performing cost accounting, the cost must be included in compliance with national laws and regulations. The second is the principle of reliability, which means that the costing information requirements of an enterprise are consistent with objective economic matters. The principle of relevance mainly includes the usefulness and timeliness of cost information. Usefulness means that cost accounting must provide effective information for enterprise decision-making, and timeliness means that timely measures are taken and information is feedbacked in time to improve work; According to the accounting principle, the production cost of an enterprise is that production activities are divided into periods according to a certain stage, and the cost of products in each period is calculated separately; It is included in the cost of the current period. In addition to this, there are actual cost principles, consistency principles, and importance principles, which will not be analyzed one by one here.

Costing procedures

When production costs begin to occur, the entire cost calculation process until the total cost and unit cost of the finished product is calculated is called a costing procedure. Generally, it includes the review of production cost expenditures, determination of cost calculation objects and cost items, opening of product cost sub-ledgers, There are six steps: allocation of element costs, allocation of comprehensive costs, division of finished product costs and work in process costs, and calculation of total and unit cost of the product.

Problems Existing in Enterprise Cost Accounting Control

With the continuous development of the market economy and the gradual improvement of the corporate accounting system, China's current enterprise cost accounting and management have made great progress, but there are still shortcomings. For example, in terms of production and operation: the lack of professional cost accounting personnel, unscientific cost accounting methods, inconspicuous division of workshops, or incomplete transfer procedures, etc., have severely affected the cost control of enterprises. With the strengthening of economic integration, today's competition is international competition with advanced foreign enterprises. Therefore, we must see the problem clearly before we can find a solution.

Costing procedures are not scientific

The current cost accounting procedures of some enterprises in China are not standardized. For example, the current cost accounting procedures of some enterprises assist the production department in allocating the costs incurred to a certain product through multiple allocations, but each time the allocation standards are different. In this way, it is easy to cause the auxiliary production cost allocated by the product to deviate from the actual benefit of the product.

Cost calculation object is not standardized

For an enterprise, it is necessary to accurately determine the object of cost calculation in order to measure the consumption of products produced and sold in the future so as to match its income. The object of cost calculation is specifically to resolve who should bear the cost. However, some companies have not paid much attention to the object of cost calculation. Therefore, in actual cost accounting, regardless of the differences in production specifications and varieties, the cost accounting is performed in accordance with a standard, which will inevitably lead to a lack of authenticity in cost accounting.

Lack of innovation in costing methods

At present, many Chinese enterprises still adopt traditional cost accounting methods, mainly batch method and variety method. Large-scale, multi-step enterprises that do not require step-by-step calculation of product costs in terms of management are generally suitable for the variety method; while single-variety production enterprises are suitable for the batch method. However, some companies apply it rashly and do not make a reasonable choice according to the actual situation of the enterprise. Instead, they follow the traditional cost accounting method. Due to the continuous development of the market economy, the traditional cost accounting method is gradually unable to meet the needs of the enterprise.

Lack of cost control during product design

With the continuous advancement of science and technology, the speed of product replacement is accelerating, and some companies have not carried out technical updates in real time, and product updates are not timely, which has substantially increased the production costs of enterprises. Many companies in China simply increase their output by simply increasing their output. One-sided thinking is that as long as the output increases, the unit product cost will decrease and the company will profit. In this way, it is easy for companies to ignore market demand. In the long run, the company's inventory will increase, which is not conducive to product sales.

5. Imperfect financial system

The current cost accounting management and control system is account-based cost management. If the cost of management is not calculated, prior forecasting and decision-making are not valued, and advanced management methods are not used, it will lead to unscientific cost management. And some enterprises even lack a perfect financial system, accounting professionals in the accounting department are not professional, their certificates are incomplete, and their cost accounting is not standardized. This has seriously affected the authenticity of cost accounting management.

Solutions to Enterprise Costing Problems

At this stage, China has made some progress in cost accounting and formed some advanced experience in cost accounting. Therefore, our enterprises should reform according to the actual situation of the industry and learn from advanced experience.

Standardize Costing Objects

Costing objects are also called "costing objects", or "cost objects". Generally speaking, the costing object refers to the subject of costing, that is, the costing of "who", and "who" is the object of costing. If an enterprise produces different products, the production and management processes and management requirements will be different. When determining the cost accounting target, the enterprise should pay attention to adapting to the requirements of the enterprise's production technology and production organization, and at the same time, focus on meeting the enterprise's requirements for strengthening cost management. The determination of an enterprise's costing object should be linked to production management. In addition, the division of cost objects must be scientific and reasonable. In actual work, we must not be too detailed or too coarse in the division of accounting objects. Too large or too small will affect the accuracy of cost accounting.

Choose the appropriate cost allocation criteria

In the case where enterprises share costs in the production, the distribution standard we use at this time should pay attention to the principles of rationality and simplicity. The so-called reasonable means that there will be a certain relationship between the selected allocation standard and the allocation cost, and we should allocate the cost according to the closeness of the connection. Simplicity means that it is easy to obtain information on the allocation criteria for calculation.

Advance computerized cost accounting

With the continuous updating of computer technology, information management methods with computer technology as the core have become an inevitable development trend of modern cost accounting. Computerized accounting not only greatly speeds up the feedback of information and improves the efficiency of business processing, but also enables accurate and timely cost forecasting, decision-making and accounting, and effective cost control.

4. Focus on talent training

The senior managers of some enterprises lack the emphasis on cost management and neglect the management of accounting staff, resulting in low overall quality and professional level of accounting staff. However, the quality of accounting staff is directly related to the quality of cost management. Therefore, enterprises should pay attention to the training of accounting talents, establish and improve the accounting selection system, train staff regularly, pay attention to the construction of ideological quality, and cultivate a team that can adapt to The modernization of cost management requires a professional and technical team.

5.Use scientific cost management methods

With the continuous development of the market economy, the current cost management model has already changed. It is no longer limited to the production process of products, but should focus on product demand analysis, technology development trend analysis, and product information source costs and technology costs. And inventory cost, cost of sales and other cost information analysis. Therefore, enterprises must adopt modern cost management methods to improve the accuracy and timeliness of information processing.

The scientific and systematic cost accounting is the premise of cost management. However, many enterprises in China still follow the traditional cost accounting model. There are many shortcomings and it is difficult to provide reliable opinions on corporate decisions. Innovation is the most important issue to improve the cost management of Chinese enterprises. Enterprises must immediately carry out cost management concept innovation, cost accounting method innovation, and cost accounting staff innovation to create a good environment for the healthy development of enterprises.