Processes and structuring of cost systems
Introduction
Cost systems are a structured information system and a process, which helps administration to maximize its utilities today and in the future. Which is divided into two systems one gives cost accounting information and the other gives operational control information. But for the moment we will only talk about the cost accounting information system, since it is the system to assign the costs of products and/or services and other objects according to administration specifications.
Developing
To carry out the allocation of these costs, it is very importantFunction, is the cost of production, this is generated in the process of transformation of raw material into finished products and is composed of three primary elements for the development of products and/or services, which are direct raw material, hand ofdirect work and indirect positions.
These elements mentioned are fundamental for the development of products and/or services and are the ones that will lead us to determine the cost of their production, followed by their cost of sale. That is, the elements are vital for the elaboration of products and services, as well as the elements are vital for life, since we are a composition of these, because the same goes for the elements for the production of products and/or services.
Regardless of the sector to which a company will be dedicated to a production, which will imply elements for the production of the product and/or service. These elements have an order what we first need to offer a product or service will be:
The raw material is the elements that are subject to manufacturing or transformation processes for physical/or chemical change, before being sold as finished products. For example: In a starting garden we need tables, chairs, crockery, tablecloths, tent, etc.
The following is the labor, which is the human effort that intervenes in the process of transformation of the raw material into finished product, this is divided into two:
- Direct labor (mod)
- Indirect labor (MOI)
Continuing with the previous example our direct labor in the garden will be, the gardener and the mayor. And indirect labor, advertising, DJ, in charge of decorating the garden, waiters.
Finally, we find indirect costs, these are called manufacturing expenses, they are the set of manufacturing costs involved in the transformation of the raw material and that are not fully identified or quantified by the elaboration of specific items of products, productive processesor certain cost centers. And they are classified as two:
- Fixed costs: These are the costs whose value consumed does not depend on the volume of production reached. Within the garden, fixed costs will be the land insurance policy, municipal taxes such as the property and salaries of workers.
- Variable costs: are those where their value consumed depends on the volume of production reached. For the garden of events these costs will be the light, buy spare parts of chairs, tables or crocker.
Once the elements that integrate the production of the product or service offered, it is necessary to carry an inventory of the raw material to know the cost of production, through inventories:
- Peps
- UEPS
To later carry out a warehouse output valuation, which will help us to have control and good management of the products to provide good customer service. The methods are:
- Average cost
- Peps (first tickets, first outings)
- UEPS (last entries, first exits)
The elements for the production of any product or service are undoubtedly any key piece for their development and to carry out a cost system, since it is important to know the cost of production, and then determine the cost of sale and powerOffer a product or service with a fair price for the customer as well as knowing the accounting information information of the company and carrying a good cost administration that is competitive. The benefits of knowing an accounting cost control system:
- We know the cost of production
- Production cost control
- Provides information for decision making
- Projects and budgets can be done
- Offer a competitive sale price
- Achieve customer satisfaction through prices
conclusion
In conclusion, the elements as I mentioned are fundamental, since they are the basis of the production process and provide us with information to determine the appropriate price of a product or service.
References
- Colín, j. G. (s.F.). academy.Edu. Obtained from File: /// C:/Users/Sham0/Downloads/Accounting_Costs_4a._Ed._Colin_J..PDF
- UNID. (s.F.). UNID. Obtained from https: // Bachelor.UNID.Edu.MX/Mod/Book/View.PHP?ID = 3249481
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