Cost Accounting Practice (Second Edition)

Author: Su Shu-Huan (Editor) / Country:
Publisher:
Publish Date: 2006-02-01
Features:
Step-by-Step Practical Method
Step 1: The Purpose of the Practice
Through the practice, understand the characteristics and scope of the step-by-step costing method, master the procedures and methods of the step-by-step costing method; grasp the application of the step-by-step transfer costing method and the parallel transfer costing method.
Step 2: Characteristics and Procedures of the Step-by-Step Costing Method
The step-by-step costing method is mainly applicable to large-scale, mass production enterprises with multiple production steps. Its cost calculation object is the cost of various products and the cost of each production step they go through. According to whether the cost of semi-finished products is calculated, the step-by-step costing method is divided into the step-by-step transfer costing method and the parallel transfer costing method.
1. Step-by-Step Transfer Costing Method
It is a step-by-step costing method adopted to calculate the cost of semi-finished products. Its characteristic is that the cost of semi-finished products consumed in each step is transferred from the product cost ledger of the previous step to the product cost ledger of the same product in the next step along with the transfer of semi-finished products, so as to calculate the cost of semi-finished products in each step and the final product cost. This method is divided into the comprehensive transfer method and the item-by-item transfer method based on how the cost of semi-finished products transferred is reflected in the next step's product cost ledger.
The comprehensive transfer method refers to the semi-finished products consumed in each step being recorded in the product cost ledger of each step as "direct materials" or "semi-finished products." Since the semi-finished products transferred from the previous step are composed of raw materials and processing costs, and during comprehensive transfer, they are all recorded as "direct materials" or "semi-finished products," to assess and reflect the structure of the enterprise's product costs, the comprehensive cost of semi-finished products consumed in each step should be decomposed step by step starting from the last step to be restored to original cost items such as direct materials, direct labor, and manufacturing overhead.
The item-by-item transfer method transfers the cost of semi-finished products consumed in each step to the respective cost items in the product cost ledger of each step according to cost items. Therefore, this method directly provides product cost data reflected by original items without the need for cost restoration.
2. Parallel Transfer Costing Method
It is applicable when the cost of semi-finished products is not calculated in each step. This method does not transfer the cost of semi-finished products consumed but only calculates the various production costs incurred in the current step and the portion of these costs that should be allocated to the finished product cost. Then, the portion of costs allocated to the same finished product in each step is parallelly transferred and summarized to calculate the cost of the finished product of that product.
Step 3: Requirements of the Practice
(1) Set up "Basic Production Cost" and "Auxiliary Production Cost" accounts (set up separately by workshop) and sub-ledgers (set up according to the cost calculation object of each workshop), and record the opening balances (Note: no manufacturing overhead account is set up in auxiliary production workshops).
(2) Prepare journal vouchers based on various cost allocation summary tables and record the relevant accounts.
(3) Allocate auxiliary production costs at the end of the month using the planned cost allocation method.
(4) Allocate and transfer manufacturing overhead costs of the basic production workshop at the end of the month.
(5) Allocate and transfer the cost of finished products at the end of the month (respectively by comprehensive transfer and item-by-item transfer).
(6) At the end of the month, reconcile the closing balances of the "Basic Production Cost" and "Auxiliary Production Cost" accounts with their sub-ledger balances.
Step 4: Practice Data
1. Basic Information of the Enterprise
Linghu Technology Company is a general VAT taxpayer and mainly produces two types of products: computers and DVD players.
- Computer products are completed by three workshops. A workshop produces A components, B workshop processes some A components into B components, and C workshop performs assembly. A components and B components are both sold externally. A workshop's finished A components are delivered to the semi-finished product warehouse for acceptance; B workshop takes B components from the semi-finished product warehouse as needed. The cost of semi-finished products consumed by B and C workshops is calculated using the FIFO method for the entire month. The cost of work-in-progress in A workshop is valued at standard cost at the end of the month, while B and C workshops are valued using the equivalent units method (50% completion rate at the end of the month). To account for semi-finished products and finished products, the company uses the step-by-step transfer costing method (respectively by comprehensive transfer and item-by-item transfer).
- DVD players are completed by three workshops. Workshop A and Workshop B produce spare parts separately, and Workshop C performs assembly. The spare parts produced by Workshop A and Workshop B are not sold externally and no semi-finished product warehouse is set up. Therefore, there is no need to account for semi-finished product costs, and the company uses the parallel transfer costing method. The allocation of work-in-progress in each step uses the equivalent units method. The completion rate of work-in-progress in each workshop at the end of the month is 50%.
The company also has two auxiliary production workshops: machine repair and transportation, which provide repair and transportation services for basic production workshops and administrative departments. Both workshops allocate costs based on planned costs at the end of the month. For simplicity, all cash-related transactions involve bank deposits, and settlement vouchers are omitted.
2. Account Balances of the Company as of May 1, 2003
The "Basic Production Cost" account balances are as follows:
- Workshop A: 14,400 yuan
- Workshop B: 19,000 yuan
- Workshop C: 16,500 yuan
- Workshop A: 19,500 yuan
- Workshop B: 11,460 yuan
- Workshop C: 13,120 yuan
The balances of the "Auxiliary Production Cost" and "Manufacturing Overhead" accounts are both 0.
The balance of the "Self-Made Semi-Finished Products" account is 80,500 yuan.