226 COMPLETION OF PRODUCTION COSTS ACCOUNTING AND PRODUCT PRICE CALCULATION AT BINH MINH GARMENT JOINT STOCK COMPANY

ACADEMY OF FINANCE
ACCOUNTING AND AUDITING DEPARTMENT
------------

NGUYEN MAI ANH
CQ55 / 21 / 02CLC

GRADUATION COURSE
Topic:
COMPLETION OF PRODUCTION COSTS ACCOUNTING
AND PRODUCT PRICE CALCULATION AT BINH MINH
GARMENT JOINT STOCK COMPANY

Major

: Corporate Accounting

Code

: 21

Instructor

: PhD. Bui Thi Hang

Hà Nội – 2021


Academy of Finance

Graduation Thesis

TABLE OF CONTENTS

PREFACE........................................................................................................1
1. The reason for choosing the topic.................................................................1
2. The research objectives of the topic..............................................................2
3. Research method...........................................................................................2
4. Scope of the study.........................................................................................2
5. Structure of topic...........................................................................................3
CHAPTER I.....................................................................................................4
BASIC THEORY OF PRODUCTION COSTS ACCOUNTING AND
PRICE CALCULATION IN PRODUCTION ENTERPRISES.................4
1.1 The concept of production cost and product cost :......................................4
1.1.1 The concept of production costs:..............................................................4
1.1.2 The relationship between production cost and product cost:...................5
1.1.3 The role and role of production cost accounting and product cost
calculation:........................................................................................................6
1.2. Production cost classification and product cost:........................................7
1.2.1. Production cost classification:.................................................................7
1.2.2. Price classification:..................................................................................9
1.3 Objects and methods of production cost accounting and product cost
calculation:......................................................................................................10
1.3.1 Production cost accounting object and method:.....................................10
1.3.2 Object and method of product cost calculation:.....................................12
1.4. How to evaluate work in progress and product cost method....................16
1.4. 1 Unfinished Product Review ..................................................................16
1.4 .2 Method of calculating product cost.......................................................18
1.5 Types of accounting books used................................................................23

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1.6 Presentation of production cost accounting information and product cost
.........................................................................................................................24
on financial statements....................................................................................24
1.6.1 Accounting vouchers..............................................................................24
1.6.2 Account used..........................................................................................24
1.6.3 Accounting order....................................................................................29
CHAPTER II.................................................................................................32
CURRENT SITUATION OF COMBINATION OF PRODUCTION
COSTS AND PRICE CALCULATION AT BINH MINH GARMENT
JOINT STOCK COMPANY.........................................................................32
2.1 General introduction about Binh Minh Garment Joint Stock Company.. .32
2.1.1 The birth and development of Binh Minh Garment Joint Stock
Company..........................................................................................................32
2.1.2 Products of the company:.......................................................................33
2.1.3 Product manufacturing technology process............................................35
2.1.4 Company organizational structure..........................................................36
2.1.5 Results of production and business activities in recent years.................37
2.1.6 Some regimes and policies apply in the company..................................40
2.2 Current status of accounting work of production cost and product cost
calculation at Binh Minh Garment Joint Stock Company...............................42
2.2.1. The process of accounting professional accounting gathers production
costs and product costs at Binh Minh Garment Joint Stock Company...........42
2.2.2 The professional accountant gathers production costs and product costs

at Binh Minh Garment Joint Stock Company.................................................43
2.3 Assessment of the accounting status of the combined production cost and
product cost calculation of Binh Minh Garment Joint Stock Company..........70
2.3.1 Advantages.............................................................................................70
2.3.2 Disadvantages still exist:........................................................................71
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Graduation Thesis

CHAPTER III................................................................................................73
SOME SOLUTIONS TO COMPLETE COLLECTIVE ACCOUNTING
AND PRODUCT PRICE AT BINH MINH GARMENT JOINT STOCK
COMPANY....................................................................................................73
3.1 Requirements and principles of perfecting the accounting of production
costs and product cost calculation at Binh Minh Garment Joint Stock
Company..........................................................................................................73
3.1.1 Principle..................................................................................................73
3.1.2 Requirements of Finishing.....................................................................74
3.2. A number of solutions to perfect the accounting that gathers production
costs and product prices at Binh Minh Garment Joint Stock Company..........75
3.2.1 It is necessary to deduct in advance salary for production workers' leave.
.........................................................................................................................75
3.2.2 Change in the method of depreciation of fixed assets............................76
3.2.3 The production losses should be clearly identified:...............................76
3.2.4 Other solutions........................................................................................77

3.3. Conditions for implementing the solution of perfecting accounting
measures to collect production costs and product prices at Binh Minh
Garment Joint Stock Company........................................................................78
CONCLUDE..................................................................................................80
REFERENCES..............................................................................................81

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PREFACE
1. The reason for choosing the topic
Over the decades under the proper leadership of the Party and State,
independence and development of a market economy with the state's macro
regulation. Thanks to that change, our country is increasingly developing and
gradually building the economy in the direction of industrialization and
modernization. The whole world is suffering from the effects of the Covid-19
epidemic. Therefore, it is required that businesses operate according to the principle
of "taking revenue from expenses and making profits". Profitable business is both
the purpose and the means for enterprises to survive and develop. The problem is
how to determine the cost that the business needs to cover, the business has profit or
loss, this requires business managers to regularly pay attention to the public.
management, production cost and product cost factors that aggregate production
cost accounting and product cost calculation are a direct tool to help cost
management work closely. closely and regularly. From there, it helps managers to

make the correct processing and settlement process in a timely manner; Combined
with information on market prices, production cost information helps business
managers determine the reasonable selling price of products, find an optimal
product production structure, take advantage of the production capacity to bring
high efficiency. Thereby helping us to determine whether to expand or narrow
production to what extent?
In addition, the detailed cost and cost documents also help a lot for the
accounting work, the internal economy of the enterprise, rational use of this
information will create economic leverage, develop productivity. Labor in lowering
product costs, promoting the whole enterprise to go up is considered an important
work of accounting work in manufacturing enterprises, so it is impossible to
account production costs and product costs. arbitrarily, but must correctly and fully
calculate the product cost.

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Recognizing the importance of this issue with the knowledge acquired during
the course of studying at the Academy of Finance, at the same time, researching the
reality of accounting, production costs and product cost calculation at Binh Minh
Garment Joint Stock Company, I boldly chose the topic " Improving production
cost accounting and product cost calculation at Binh Minh Garment Joint Stock

Company " at Binh Minh Garment Joint Stock Company as key graduation thesis.
In order to complete this thesis, I would like to thank the brothers and sisters in
the finance and accounting department of Binh Minh Garment Joint Stock
Company and especially Tien's devoted guidance and attention. doctor. Bui Thi
Hang created conditions to help her complete her thesis.
2. The research objectives of the topic
Complete the knowledge learned about the accounting organization.
Based on practical study of production cost accounting and product
cost calculation at the Company. Giving some suggestions to contribute to
perfecting production cost accounting and product cost calculation at Binh
Minh Garment Joint Stock Company.
3. Research method
- Inheriting existing documents on research problem.
- Investigating and collecting data through the company's accounting
books.
Data analysis method.
- Expert method: exchange, consult with people who have experience
in research issues.
4. Scope of the study
Scope of space: Production cost accounting and product price
calculation at Binh Minh Garment Joint Stock Company.
Time scope: study accounting documents and documents and about
financial statements 2018-2020.

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5. Structure of topic
In addition to the introduction and conclusion of the content of your thesis,
there are 03 chapters:
- Chapter I: Basic theory of production cost accounting and product cost
calculation in manufacturing enterprises.
- Chapter II: Accounting status of production cost and cost calculation at Binh
Minh Garment Joint Stock Company.
- Chapter III: Solutions to perfect the accounting of production costs and
product cost calculation at Binh Minh Garment Joint Stock Company.
Due to limited practice time as well as knowledge, accumulation of practical
experience is not much, so my dissertation is inevitable. So I look forward to the
help of the instructors and the accounting staff of Binh Minh Garment Joint Stock
Company to improve my research topic. At the same time, it helps me to learn more
deeply about accounting in general and accounting for total production costs and
product costs in particular.

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CHAPTER I
BASIC THEORY OF PRODUCTION COSTS ACCOUNTING AND PRICE
CALCULATION IN PRODUCTION ENTERPRISES
1.1 The concept of production cost and product cost :
1.1.1 The concept of production costs:
The emergence and development of human society are associated with the
production process. Social production by any mode of production is also associated
with the movement and consumption of the basic factors that make up the
production process. Therefore, the formation of production costs to create the value
of manufactured products is inevitable, not dependent on the subjective will of
people. Cost perceptions can differ in terms of viewpoints and forms of cost
representation, but they all admit a common problem: '' The cost of production is a
monetary expression of the total waste of living labor. and the animalization
necessary for the production and business activities that enterprises must spend in
the business cycle ”.
- The concept of product cost:
Price is the production cost calculated for a volume or unit of product, labor
or service, produced or provided by the enterprise in a period.
In the production process in an enterprise, on the one hand, an enterprise has
to spend production costs, on the other hand, the enterprise's production results have
obtained certain finished products, services and labor. finished products. These
finished products need to be priced, the product cost includes only costs involved
directly or indirectly in the production process, excluding costs incurred in the
business cycle of the enterprise.
Any subjective calculation that does not properly reflect the factors of value
in cost can lead to the breakdown of the commodity-currency relationship, the
inability of business efficiency and the inability to simply reproduce. and extended
reproduction.

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1.1.2 The relationship between production cost and product cost:
Production cost and product cost are two separate concepts but have a very
close relationship because they are two sides of the production and business
process. The same qualitatively similarly manifests itself in monetary terms of the
live labor and the materialized labor cost, but varies in quantity. When it comes to
production costs that limit them to a certain period, regardless of the type of
product, finished or not, also when it comes to the product cost, it determines the
amount of production cost. given a certain amount of completion.
From an operational process perspective to consider, the production process
is a continuous process, while the cost of products performed at a time is cyclical to
compare costs with blocks. quantity of products, services and services completed.
At the time of the cost calculation it may be an unfinished product
volume containing a certain amount of cost to it - that is, end-of-period work in
progress. Likewise, at the beginning of the period there may be some volume of
unfinished product in the previous period which is transferred to further production,
which does not contain a certain amount of cost for it - that is the beginning work in
progress. . Thus, the finished product cost in the period includes the production cost
of the previous period transferred to and part of the production cost of the product

in the period.
Z = Dđk + PS - Dck
Inside :
Z - Total cost of finished product
Dđk - Work in progress at the beginning of the period
PS - Production costs of products incurred in the period
Dck - Ending work in progress
In addition, the product price is subjective, the calculation in the product cost
including any costs depends on the decision to calculate and determine costs,
objects, results as well as regulations of the management regime. financial
economic management, current accounting regime. Production costs in a period

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include costs of production that are prepaid but not amortized to this period and
expenses payable in the previous period that arise but do not include prepaid costs
of the previous period. this period and other expenses payable in this period but
have not actually incurred. In contrast, product cost is only related to accrued
expenses in the period and prepaid expenses amortized within the period.
1.1.3 The role and role of production cost accounting and product cost
calculation:

In economic management there are many different tools to manage, but
accounting is considered the most important management tool in which production
cost accounting and product cost calculation are the focus of the whole work. It has
provided the necessary information on production costs and product costs to help
managers analyze and evaluate the implementation of cost norms and cost estimates
in time. fees; the use of assets, materials, capital, labor; performance situation on
product cost planning to make appropriate decisions. Contribute to strive to save
costs, lower product costs to create conditions to gain competitive advantage in the
market.
To meet the requirements of managing production costs and cost of
accounting products, it is necessary to perform the following key tasks:
- First of all, it is necessary to properly recognize the position and role of
cost accounting and product cost calculation in the entire accounting system of the
enterprise, and its relationship with other relevant accounting departments.
- Based on the characteristics of production and business organization,
production technology process, type of production, product characteristics, the
ability to account for specific management requirements of enterprises to select and
determine correctly. the right object and the method of gathering production costs
according to the appropriate plans and is the basis for determining the price
calculation object.

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- On the basis of the relationship between the production cost accounting
object and the identified price calculation object, to organize the appropriate and
scientific application of the costing method.
Organize the accounting apparatus in a scientific and reasonable manner on
the basis of clearly assigning the responsibilities of each employee, each related
accounting department.
- Organize documents, initial accounting, the system of accounts,
accounting books in accordance with accounting principles and standards to ensure
the requirements of information acquisition, processing and systematization. in
terms of costs and costs of the business.
- Organize the preparation and analysis of reports on costs, product prices,
provide necessary information on costs and product prices to help business
managers make decisions quickly. fast, suitable with the production process and
product consumption.
Therefore, it is necessary to organize production cost accounting and
product price calculation. That is the objective and indispensable requirement of
any manufacturing business. Doing this can ensure that businesses can operate and
thrive in the current market economy.
1.2. Production cost classification and product cost:
1.2.1. Production cost classification:
Production and business costs have many types, many items, differing both
in content, properties, uses and roles, positions ... To facilitate the management and
accounting, it is necessary to conduct the division. type of production cost.
Production cost classification is the arrangement of production costs into
each category, each different group according to certain characteristics.
There are many different cost classifications, each of which fulfill more or
less different purposes, so they coexist and complement each other. Some of the
most commonly used classifications are listed below.

- Classification by cost factors:

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+ The cost of raw materials, materials: includes the entire value of raw
materials, main materials, auxiliary materials, spare parts, tools, tools ... used in
production and business (excluding value used materials are not fully stored and
scrap recovered).
+ Factors of fuel cost, driving force used in the production and business
process in the period (except for the used amount which is not used up, re-imported
to warehouse and recovered scrap)
+ Salary costs and allowances: reflect the total salary and salary-related
allowances payable to all workers and employees.
+ The cost factors of social insurance, health insurance, trade union fees:
Reflect the part of social insurance, health insurance, KPCD and unemployment
insurance deducted according to the prescribed rate on the total salary and salary
allowances payable to workers tablets.
+ Fixed asset depreciation cost factors: Reflecting the total depreciation of
fixed assets to be deducted in the period of all fixed assets used for production and
business in the period.
+ The cost factor for services purchased from outside: Reflecting the entire

cost of services purchased from outside for use in production and business.
+ Other cost factors in cash: Reflecting all other expenses in cash not
reflected in the above factors used in production and business activities in the
period.
This classification tells us what costs in the production and business
process, and how the structure of each cost in the total cost is. On the other hand, it
is also used to aggregate factor costs as a basis for determining cost estimates for
the next period and as a basis for planning labor, materials, and capital for the next
period.
- Classified by cost items in product cost:
According to current regulations, product prices in Vietnam include 5 main
items:

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+ Direct raw material costs: Reflecting all costs of raw materials, main
materials, auxiliary materials, fuel ... participating directly in the production,
manufacture of products or performing services or services. service.
+ Direct labor cost: including salary, salary allowances and deductions for
social insurance funds, health insurance, trade union funds in proportion to salaries
incurred.

+ General production costs: are costs incurred within the workshop (minus
direct labor and materials costs).
+ Selling expenses: Including all expenses incurred related to the sale of
products, goods and labor.
+ Administration expenses: Including costs incurred related to business
administration and administrative management in enterprises.
This classification is the basis for aggregating production costs by item of
charges. It is also the basis to check the implementation of cost norms and the
implementation of the price plan and the cost reduction plan.
1.2.2. Price classification:
To meet the requirements of management, cost accounting and planning as
well as the requirement to set commodity prices, prices are considered under many
different angles and scope of calculations. Here are some price classifications:
- According to the time of calculation and the source of data to calculate the
price:
+ Planned cost: The planned cost is determined before entering the business
on the basis of the actual cost in the previous period and the norms and cost
estimates of the planning period.
+ Rated cost: Like the planned cost, the norm price is also determined before
starting product production. However, unlike planned costs which are built on the
basis of advanced averages and do not change throughout the planning period, the
cost norms are built on the basis of current cost norms. At a certain time in the

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planning period (usually the first day of the month), the norm price always changes
in accordance with the changes of the cost norms in the production process.
+ Actual cost: Actual price is an indicator determined after the end of the
product manufacturing process on the basis of costs incurred in the production of
the product.
This classification is effective in managing and monitoring costs, identifying
the causes of excess or deficit in the accounting period. From there, adjust the plan
or cost level accordingly.
- According to the scope of costs incurred:
+ Production cost (factory cost): is an indicator reflecting all costs incurred
related to the production and manufacture of products within the workshop or
production department, including costs. direct materials, direct labor, and general
production costs.
+ Consumption cost (total cost): is an indicator reflecting all costs incurred
related to the production and sale of products (production costs, management costs
and selling costs. row). Therefore, the consumption cost is calculated by the
formula:
The total cost of
the product

Production
=

cost of the

+

Enterprise Cost

+

Cost of

Management
consuming SP
consumed
product
1.3 Objects and methods of production cost accounting and product cost
calculation:
1.3.1 Production cost accounting object and method:

Production cost accounting subjects:
Determining the production cost accounting object is essentially
determining where the costs are incurred and where the costs are borne. On that
basis, to select the appropriate cost accounting method. Production cost accounting
subjects can be:
- The entire production technology process of the enterprise.

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- Each stage, separate technological process, each workshop, production
team or team. Each group of products of the same type, each item, each product,
each part.
- Each project, work item, workshop, production team.
Production cost accounting method:
Production cost accounting method is a method or system of methods used
to collect and classify production costs within the limit of the cost accounting
object.
Each production cost accounting object adapts to a cost accounting method,
so there are many different cost accounting methods (direct method, proportional
method, by-product value elimination method , conjugate method….)
Usually, businesses use the following two main methods:
- Direct cost accounting method: (also known as simple method)
According to this method, expenses directly related to each object will be
recorded directly to that object.
The direct recording method requires a strict, meticulous organization of
the initial accounting, and the right subject to bear the cost. This method ensures the
accurate collection of costs by each object, provides accurate data for management
accountants to calculate the cost of each product, each type of service, and enhance
the checking of expenses. charges according to subjects.
However, this method is applied in enterprises with simple production type,
small quantity of products, large volume production and short production cycle….
- Indirect cost accounting method:
According to this method, the production costs related to many accounting
objects do not have the conditions to hold separate initial records for each object
must choose appropriate allocation criteria to allocate production costs. that for each
subject to bear the cost. The accuracy of the method depends on the selection of

allocation criteria
Applying this method must follow the following two steps:

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Step 1 : Determine the distribution coefficient by criteria:
H =

C
T

In which: - H is the distribution coefficient.
- C is the total cost to be allocated.
- T total of the allocation criteria units of the subjects subject to
the CPSX allocation.
Step 2 : Calculate the number to determine the cost to be allocated to each
expense object according to the formula:
Ci = Ti * H
In which: - Ci is the cost allocated to the ith object.
- Ti is the number of standard allocation units of the ith object.
- H is the distribution coefficient.

1.3.2 Object and method of product cost calculation:
Objects for calculating product prices:
* Objects for calculating product costs: are types of products, jobs,
services or services, manufactured or performed by an enterprise in the period,
where the total cost and unit cost must be calculated.
Bases for determining product costing subjects:
- Characteristics, organizational structure and production of products.
- Product production features and technological process.
- Request management and provide information in the business.
- Using the finished product or half-finished product characteristics of the
unit.
- The ability and qualifications of economic staff in general and accounting
staff in particular.
* Cost calculation period: is the time needed to sum up production costs to
calculate the total cost and unit cost of the completed result unit. Normally, the cost

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calculation period can be monthly, quarterly or yearly and is chosen to coincide
with the accounting reporting period.
* Price calculation unit: is the unit recognized in the national economy and

most commonly used. The actual price calculation unit must agree with the price
calculation unit stated in the enterprise's product price plan.
Product cost calculation method:
Price calculation method is a method or system of methods used to
calculate the cost of a product unit.
Due to the different characteristics of production organization and
technological process of each type of enterprise, there are many different costing
methods.
* Simple cost calculation method:
- Conditions to apply: This method is applied in an enterprise that produces
only a few items with large volume, short production cycle, unfinished products
with or without significant
Under this method the cost of a product is calculated by:
Value of work in
Total cost of
finished products

=

progress at the
beginning of the
period

Unit cost of product

Value of work

Expenses
+

incurred in

-

the period

in progress at
the end of the
period

Actual total cost
Number of finished products

=

- Advantages: short calculation, does not require high level.
* Price calculation method excluding costs of manufacturing byproducts:
- Conditions of application: This method applies to enterprises with
production technology processes that produce both main and byproducts as a result
of production.
- Characteristics:

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+ The object of production cost accounting is the entire production
technology process. The object of cost calculation is the completed main product of
the technological process.
+ In order to calculate the cost of the product itself, we must exclude the
production cost calculated for the by-product from the total production cost of the
whole technological process. The part of production cost charged to the woman is
usually calculated on the planned cost, which can also be calculated by subtracting
the net profit and taxes from the selling price.
After the production cost of the byproduct is calculated, the total cost of the
main product is calculated as follows:
Total cost of
main product

=

CPSXDD

+

đầu kỳ

CPPS
trong kỳ

-

CPSXDD

cuối kỳ

-

CPSX sản
phẩm phụ

The production cost of the byproduct is also calculated separately by item by
multiplying the proportion of the cost of producing the byproduct in the total
production cost of the whole technological process multiplied by the corresponding
item.
Proportion of production

=

The cost of manufacturing byproducts
Total cost of production

costs of byproducts
To simplify and reduce computational volume, production costs of
byproducts can be subtracted from direct raw material costs.
* Coefficient price calculation method:
- Conditions of application: This method is applicable in cases where the
same technological process of production with the same materials, labor, production
machinery, equipment ... is obtained at the same time. Costs are not separately
accounted for each type of product, but must be accounted for for the whole
production process.
- Characteristics:
+ Production cost accounting object is the entire production technology process
or product group. The object of price calculation is each separate product.

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+ Accounting based on the conversion coefficient to convert all types of
products to the original products, from there, based on the total costs related to the
prices of the gathered products to calculate the original product cost and price of
each product.
The original
product unit cost

Total production costs of products
Total number of original products converted

=

Unit price of

=

product i

The original product
unit cost

Product

*

conversion
coefficient i

Value of
Total production
costs of products

work in
=

Value of work

Total production

progress at

+

the beginning

costs incurred in

-

the period

in progress at
the end of the
period

of the period
* Calculate the cost by the ratio method:

- Conditions of application: This method is applied in cases where on the
same production technology process, a group of products of the same type are
obtained with different types, grades and specifications. The costs of producing
these products are not proportionally related or cannot be converted by a factor.
- Characteristics:
+ The object of production cost accounting is the entire technological
process of producing products of each product group. Price calculation object is
each size specification of finished products in product group.
+ Select the allocation criteria to calculate the actual cost distribution rate
for each specification in the product group. Criteria can be selected as the planned
price or the norm price of the product calculated by the actual output.
+ Total standard of allocation:

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Tổng tiêu chuẩn
phân bổ Total

=

criteria for

Actual total output of
specified product i

*

Distribution standards of
specification products i

allocation
+ The price ratio of each item:
(Mobile + PS - Dck)
Total criteria for allocation
+ Actual price of each product specification:

Price ratio (by item)
Total cost for each
specification
Actual unit cost

=

=

Total criteria for each

*

specification

Price ratio

Total actual cost of specification i
Product output specifications i
specification i
1.4. How to evaluate work in progress and product cost method.
=

1.4. 1 Unfinished Product Review .
Unfinished products (SPDD) are products that have not finished their
processing phase, and are still in the production process.
In order to calculate product prices, enterprises must conduct an inventory
and assessment of SPDD, depending on the characteristics of the production
organization, the technological process and the nature of the product, enterprises
can apply one of the methods. France follows:
a. Value of work in progress according to the cost of main raw materials:
Under this method, the entire processing cost is calculated for the finished
product. Therefore, in work in progress only includes the main material value.
Number of SPDD at the end of the

The main
material value

=

is in SPDD

period
Number of TP + Number of SPDD

The entire value
*

of the main
materials

exported
b. Determine the SPDD value according to the estimated equivalent output:
Based on the level of completion and the amount of SPDD to convert the
SPDD into a finished product. Conversion criteria are usually based on hourly hours

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or the standard salary. To ensure the accuracy of the assessment, this method should
only be applied to the calculation of processing costs while the cost of the exact raw
materials should be determined by the actual number used.
Number of SPDD at the end of the period

All key raw

(not converted)

material

The main
material value
is in SPDD

* values have

=

Number of TP + Number of SPDD (not

been

converted)

exported

Number of SPDD at the end of the period

Processing cost is
in SPDD (by

Total

(not converted)
=

*
Number of TP + Number of SPDD

type)

processing
cost for
each type

converted to finished products
c. Value of work in progress by 50% of processing cost:

To simplify the calculation, for the types of products where processing
costs account for a low proportion of the total cost, accountants often use this
method. In essence, this is a form of the yield-equivalent estimation method, which
assumes SPDD is completed at 50% of the finished product:
SPDD value,

=

The main raw material

50% of

+

incomplete
value is in work in progress
processing cost
d. Determine the SPDD value by direct raw material or material cost or direct cost:
Under this method, the value of work in progress includes only direct raw
material costs or direct costs (direct materials, materials and labor), regardless of
other costs.
e. Determine the SPDD value according to the norm or planned cost:
Based on the consumption norm (or planned cost) for the stages, steps,
work in the product manufacturing process to determine the value of work in
progress.

Nguyen Mai Anh

17

CQ55/21.02CLC


Academy of Finance

Graduation Thesis

1.4 .2 Method of calculating product cost.
Price calculation method is a method or system of methods used to calculate
the cost of a product unit.

Due to the different characteristics of production organization and
technological process of each type of enterprise, there are many different costing
methods.
a. Simple cost method (also called direct method).
- Conditions to apply: This method is applied in an enterprise that produces only a
few items with large volume, short production cycle, unfinished products with or
without significant
Under this method the cost of a product is calculated by:
Value of work in
Total cost of
finished products

=

progress at the
beginning of the

+

period
Unit cost of product

Value of work

Expenses
incurred in

-

the period

in progress at
the end of the
period

Actual total cost
Number of finished products

=

- Advantages: short calculation, does not require high level.
b. Price calculation method according to orders.
- Conditions to apply: apply in enterprises producing single products or small
batches according to customer orders, specializing in processing ... orders are preordered by customers.
- Characteristics:
+ For enterprises that manufacture according to customer orders, the
accountant will collect production costs according to each order., Regardless of the
number of products of the order is more or less, technological process to
manufacture simple or complex products.

Nguyen Mai Anh

18

CQ55/21.02CLC


Academy of Finance

Graduation Thesis

+ For direct costs (raw materials, materials; direct labor) incurred in the
period directly related to an order, the order must be directly accounted for in
accordance with the original documents (or distribution table. additional costs).
+ For general production costs, after the assembly is completed, it will be
distributed to each application according to appropriate standards (production hours,
direct labor costs ...).
+ The price calculation in these businesses is only conducted when the
orders are completed, so the cost calculation period often does not agree with the
reporting period. For orders up to the incomplete reporting period, all of the costs
gathered under the order are considered work in progress at the end of the next
cycle. For completed orders, the total cost aggregated for that order is the total cost
of the finished product.
Work in
The total actual cost of the
order

=

progress at the
beginning of

+

Production costs
incurred in the period

the period
Unit cost of

The total actual cost of the order
Number of completed products of the order
product
- Advantages and disadvantages:
=

+ Advantages: The job is simple to calculate the cost price, not having to
take into account unfinished production costs
+ Disadvantage: The number of tables is many because an order can have
many production parts, if done in a long time, it will be difficult to calculate the
cost.
c. Coefficient price calculation method.
- Conditions of application: This method is applicable in cases where the
same technological process of production with the same materials, labor, production
machinery, equipment ... is obtained at the same time. Costs are not separately

Nguyen Mai Anh

19

CQ55/21.02CLC


Academy of Finance

Graduation Thesis

accounted for each type of product, but must be accounted for for the whole
production process.
- Characteristics:

+ Production cost accounting object is the entire production technology process
or product group. The object of price calculation is each separate product.
+ Accounting based on the conversion coefficient to convert all types of
products to the original products, from there, based on the total costs related to the
prices of the gathered products to calculate the original product cost and price of
each product.
The original
product unit cost

Total production costs of products
Total number of original products converted

=

Product
conversio
Unit price of

=

product i

The original product
unit cost

n
*

coefficient
i

Value of
Total production
costs of products

work in
=

Value of work

Total production

progress at

+

the beginning

costs incurred in
the period

of the period

-

in progress at
the end of the
period

d. Proportional price calculation method.

- Conditions of application: This method is applied in cases where on the
same production technology process, a group of products of the same type are
obtained with different types, grades and specifications. The costs of producing
these products are not proportionally related or cannot be converted by a factor.

Nguyen Mai Anh

20

CQ55/21.02CLC


Academy of Finance

Graduation Thesis

- Characteristics:
+ The object of production cost accounting is the entire technological
process of producing products of each product group. Price calculation object is
each size specification of finished products in product group.
+ Select the allocation criteria to calculate the actual cost distribution rate
for each specification in the product group. Criteria can be selected as the planned
price or the norm price of the product calculated by the actual output.
+ Total standard of allocation:
Total criteria for
allocation

=

Actual total output of

specified product i

*

Distribution standards of
specification products i

+ The price ratio of each item:
Price ratio (by item)

=

(Mobile + PS - Dck)
Total criteria for allocation

+ Actual price of each product specification:
Total cost for each
specification
Actual unit cost

=

=
specification i
e. Method of excluding byproducts.

Total criteria for each

*
Price ratio

specification
Total actual cost of specification i
Product output specifications i

- Conditions of application: This method applies to enterprises with
production technology processes that produce both main and byproducts as a result
of production.
- Characteristics:
+ The object of production cost accounting is the entire production
technology process. The object of cost calculation is the completed main product of
the technological process.
+ In order to calculate the cost of the product itself, we must exclude the
production cost calculated for the by-product from the total production cost of the
whole technological process. The part of production cost charged to the woman is

Nguyen Mai Anh

21

CQ55/21.02CLC