Application of the three cost accounting methods and comparison

[Abstract] With the internal and external environment changes, the Cost Accounting methods are constantly evolving. Article comparing the manufacturing cost, operating cost and resource consumption of the three methods of accounting Cost Accounting on the characteristics, advantages, problems, to demonstrate by example, evaluation, analysis, Cost Accounting methods reveal the trend.

[Keywords:] manufacturing cost; activity-based costing; resource consumption accounting; Cost

As China's economic development and the market matures, more competitive and sustainable enterprises in order to gain and retain competitive advantage, cost effectiveness and relevance of information can not be ignored. And enterprises to obtain cost information Cost Accounting is the most important means of Therefore, the Cost Accounting method is important. In this paper, the manufacturing cost of currently used method, widely used in the West costing, as well as new developments in cost accounting - resource consumption accounting theory and Application to make a comparison and analysis.


First, the manufacturing cost

(A) the characteristics of manufacturing cost accounting
Manufacturing cost is a manufacturer of traditional cost accounting methods, the accounting method the cost of the enterprise into a certain period of production occurred for the production costs and product costs during the production process of two independent pArts. Only to eventually included in the cost of production production costs, and expenses for the period through profit or loss, calculated with the current product cost nothing.

1. Accounting content. Manufacturing cost, manufacturing cost of the enterprise is divided into three basic manufacturing cost of the project: direct materials, direct labor and manufacturing costs. Of course, there is a need in the enterprise, they can increase the cost of the project, for example, produce more waste number of enterprises, can increase the "scrap loss" cost of the project; fuel consumption, more businesses can increase the "fuel" cost items and so on. manufacturing cost method in accounting, mainly to the production cost is divided into material, labor, three basic cost of the project costs, and then accounting, product cost and then calculate the cost of the object.

2. Accounting methods. Manufacturing cost method of accounting method includes three basic cost calculation method, that is, species law, and sub-step batch method. The three basic cost calculation methods in cost object, and the end of the production cost different allocation of costs. Therefore, different companies, different characteristics of its production, production technology and production organization of the differences led to the adoption of the manufacturing cost of the enterprise cost accounting method, select the different costing methodologies.

3. Accounting process. Costing process, also known as cost accounting process, from the costs were incurred to product cost accounting of the process obtained. Generally speaking, the manufacturing cost, no matter what kind of cost calculation method The accounting process should be similar. production costs can be divided into direct and indirect production costs included in cost of production through two. the cost of the project, if you can discern the occurrence of any fee or charge is exclusive of a certain cost object, then the costs that are directly charged to the cost object costs of production; the contrary, it is indirectly included in the cost of production, you need to use the appropriate method of distribution included in the distribution of production costs. included in a cost included in cost of the direct object and indirect expenses and is included in the cost object costs.

(B) the manufacturing cost disadvantages of costing
1. Manufacturing cost accounting. By manufacturing cost method of accounting costs, manufacturing costs of the allocation ratio of productive working hours distribution method, machine hours ratio distribution method, annual plans, distribution rate allocation method. Manufacturing costs are the indirect costs of enterprises, according to workshop to the basic collection, and at the end of the period allocated to different cost objects. In the traditional labor-intensive enterprises, the larger the proportion of direct labor and manufacturing costs account for a smaller proportion, which are allocated using the allocation method manufacturing costs, even if there is unreasonable, but because the proportion of small, usually not seriously distort product costs; and because the method is simple, most manufacturing enterprises were willing to adopt. However, in the advanced manufacturing environment, a lot of Artificial by machines, a large proportion of manufacturing costs rose. According to the survey, only 70 years ago, the indirect costs of direct labor cost of 50% to 60%, while today the ratio increased to 400% ~ 500%; in the manufacturing cost is applicable, direct labor costs account for 40% of product cost 50%, while today the ratio is less than 10%. Products such significant changes in cost structure, making the traditional "number based costing" (such as the working hours for the machine cost allocation based methods) can not accurately allocate manufacturing costs, lead to different products, between the "cost shift", in turn affect the accuracy of product costing, decision making and control for the enterprise can not provide the correct cost accounting information useful.

2. During the cost accounting. Manufacturing cost, only the production cost can be included in the final product cost, and cost during the period through profit or loss. However, some costs, though not during the period occurred in the production process, but with the product costs are closely linked. For example, under the premise of a fast-growing high-tech product Research and development before production costs more, but these costs are not production costs, manufacturing cost is not included in its production costs, but during the period included the costs removed from the product cost out, is not conducive to accurate calculation of production costs. At the same time for distribution, customer service and other costs associated with the product pricing is not included in the cost of context, misleading pricing decisions.

3. Labor cost accounting. Manufacturing cost, the cost of the project due to labor costs accounting consists of two pArts: the direct labor costs (production line workers the wages and welfare), included in the basic manufacturing Cost Management workshop wages and welfare. does not include Research and development, design, staff salaries and fringe benefits, not including staff recruitment, training and other expenses, and these labor costs are also closely related with the product costs, labor costs accounted for the inaccuracy of the content will lead to inaccurate product costing.

With economic development, manufacturing enterprises in the business, technology and other significant changes have taken place, meaning that once the majority of manufacturers have adapted and cost accounting methods - the manufacturing cost method requires the development of new, or requires a new method to replace him. but this time, the operating cost method came into being.


Second, the operating cost method

(A) the generation of activity-based costing
From the above, the existence of a variety of defects, making the traditional manufacturing cost is difficult to provide accurate cost information. Therefore, the need to build a new model corresponding Cost Management. Based on this requirement, in 1971, the United States Stowe, Dr. Booth accounting scholars have published a significant impact on <<job costing and input-output accounting> "was Written, opened a new comprehensive study of cost accounting management the regiment. Later scholars around the world stArted to pay attention and The cost of this new method. which young scholars from Harvard University Robin Cooper (RobinCOOper) and Robert Kaplan (RobertKaplan) take the lead in the calculation of such costs in 1988, referred to as ABC (Aetivity-basedCosting), Since then, ABC is used in many Western countries advanced enterprises, and its theoretical maturity.

(B) of the operating cost method of accounting features
ABC is a job for the accounting object, and accounting operations of the various production resources consumption, calculate the cost of each operation, and then the final product consumed by the number of jobs that will be included in the allocation of costs of operating the final product, which calculate the total cost of a variety of end products and unit costs of a cost accounting method.

1. Accounting content. In the job costing, product costs are not production costs, but the full cost, a manufacturing center for a run, as long as all costs are reasonable, effective, and are useful for the final output costs, and thus should be included in product costs. Operating expenses Cost emphasize the causal, and whether or not directly related with the production process.

2. Accounting Methods. Costing the business activities that is formed by a series of work activities, products consume activities and activities consume resources. Costing the object is the various job costing and accounting operations of the various production and consumption of resources, computing the cost of each operation, and then the final product consumed by the number of jobs that will be included in the allocation of costs of operating the final product, thus calculating the total cost of a variety of end products and unit costs.

3. Accounting process. Operating cost is "cost drivers" theory as the fundamental basis of a cost accounting method, the key is to acknowledge the cost drivers generate jobs, and to output objects and the causal relationship between inputs. In the calculation of product costs, the basic principles of costing of products consume activities and activities consume resources, the focus from the traditional "product" to "work" on. Therefore, the operating cost method used in calculating the cost of the basic process is: to operations for the accounting object, first of all resources based on resource allocation of costs of motivation to work, and then tracked by the activity drivers to the product, the final cost of the product obtained.

Costing Application, broadening the scope of cost, and cost allocation, the allocation will be based on a single standard to be allocated according to cost drivers more, excluding the artificial standards set by the unreasonable allocation of costs the impact of increased transparency and accuracy of costing. Therefore, managers tend to use activity-based costing provides cost information. But as ABC's in-depth Applications, one by one of its disadvantages are also apparent. reposted elsewhere Free Download Center http://www.hi138.com Papers (C) the shortcomings of ABC costing
1. Operational difference. By operating cost method is the operational cost difference between a major flaw. Were as follows: First, too much work. Costing was first introduced, it is mainly used for single-sector and region, cost accounting, analysis, this simple environment, the effect of costing particularly notable, but if you want to implement a wide range of this method, the workload will be enormous. Second, the cost method to obtain the required operating cost information difficult. the traditional accounting information system imputation and allocation in accordance with department fees; and activity-based costing Application is based on operating cost resources across the traditional sector to determine the cost. Therefore, enterprises should adopt this method, bound to the accounting system, recycling, and its higher cost.

2. Accounting problems in the operations division. First, the traditional operating cost method, the division of work is based on cost drivers as the standard to divide, and cost drivers to determine the causal relationship between Zeyi mainly exist for some but not demonstrate a clear causal factors will be ignored, which will inevitably lead to some job classification does not accurately reflect the true situation. Second, under the traditional costing, job classification based on no established standards, based on experience only, for future operations, if you encounter a new situation may not be considered comprehensive. production orders in the current situation become a trend, if carried out based upon the work of traditional division of ABC, it is difficult in the short period of time the job classification accuracy will not only increase the number of workload, the effect can not be guaranteed.

3. Accounting problems in the process. Operating cost is allocated based on operating expenses, the cost of resources consumed by imputation to the job first, and then redistributed to the product cost. However, the operating cost method may be a cost center There is only one cost driver, there may be two or more cost drivers, and therefore produce multiple output units. In the cost center assigned to the operation costs, it will the existence of such problems: the number of products the existence of a unit of measurement, operation of resources consumed by different units of measurement, the cost collector to the job difficult to accurately measure the amount of resource consumption, only static monetary indicators, it is difficult to clearly reflect resource consumption, can not dynamically enhanced Cost Management, will affect the final product cost and distribution are correct.

In view of ABC costing in the above-mentioned limitations in the need to actively seek solutions. Resource consumption on the operating cost method of accounting is an extension and improvement.


Third, resource consumption accounting

Resource consumption accounting (Resource Consumption Accounting, abbreviated RCA) was started in 2002 in the United States launched a new cost accounting methods; is a conclusion, the dynamic and comprehensive cost accounting system; is the elasticity of marginal cost method in Germany ( GPK) and ABC combination product (Clinton, Keys, 2002).

(A) the characteristics of resource consumption accounting accounting
1. Accounting object. Resource consumption accounting accounting object is the main resource. Resource consumption accounting believe that enterprises have the resources to serve other resources, so accounting for the job object to provide services not only the resources, but also the resources consumed by the resource itself, that is interactive resources consumption costs incurred. so as to fully reflect the process of resource consumption, to accurately calculate the resource cost.

2. Accounting methods and accounting process. Using resource consumption accounting in the accounting of costs, the first based on the resource action by reason of resources rally point. Resource drivers cause "Resources → Job" and "resources → resources" of the causal relationship jointly determine, including " Resources → Job, "the direct allocation of resources, motivation, and" resources → resources "interactive distribution of resources motivation. based on the resource action by reason after the resource rally point equivalent to the U.S. cost accounting known as the" cost center "of a unit, this unit all occurred costs (resource consumption) are assembled in this, as the number of assembled resources for post-production output. because the breakdown of each rally point after only one "motive", a cost object, so only one rally point on a resource output units. and then rally point on the consumption of resources allocated through the division of operations. Finally, included in the product cost. Therefore, the resource consumption accounting accounting process: Resource rally point - work - products. which resources rally point on the division of resources according to the cause, the division of work based on the cost drivers. rally point resources in the resource allocation process to work, using a non-monetary quantitative indicators, calculated by the operating costs allocated to the product when used simultaneously monetary indicators and quantitative indicators. that the quantitative measurement of output in money terms during the process of phase separation and that fully reflects the separation of resources between consumption and cost accounting: the consumption of resources is the prerequisite for cost accounting, cost accounting is a resource consumption of currencies.

(B) the cost of resource consumption accounting advantages outlined
The costing of resource consumption accounting in the characteristics can be seen in the kind of flexibility is the marginal cost of Germany (GPK) and the United States costing (ABC) combined with each other, a better solution in the operating cost method the drawbacks and problems. and thus become the development trend of cost accounting.


Fourth, the Application of three methods and analysis examples

(A) Application examples of three methods
Suppose a manufacturer of production took place in a regional # 1 related costs as shown in Table 1.


1. Manufacturing cost applications. Assuming that the production of regional production of A, B, C three products this month, the number of production hours were 2 000,1 200,1 600 (unit: hour), calculated as shown in Table 2.

2. Application of ABC. Assuming that the production areas in the two operations: operating machinery and for production preparation, production by these two operations A, B, C three products. According to cost drivers, the production area by past experience The cost is divided into the following two operations (resources - job), as shown in Table 3, Table 4.

Then, the job included in the distribution of resources consumed in production costs (operation - product), as shown in Table 5.

3. Resource consumption accounting application (assuming the conditions of application and operating cost the same). First of all, according to the production areas of the two outputs (mechanical and manual), that resources be divided into two motives rally point resources: human resources rally point and mechanical resources to rally point, as shown in Table 6, Table 7 (Resource Motivation - Resource rally point). Then, according to cost driver, according to past experience operating the production area is divided into two machines and the production preparation work, the two a resource allocation of resources to the rally point on the following two operations (cost drivers - jobs, resources - job), as shown in Table 8, Table 9. Finally, the operation included the distribution of resources consumed in production costs (operation - product) , as shown in table 10.

(B) Evaluation of three methods applied
There are three methods in cost accounting application, can be found: the manufacturing cost method, the imputation of the four production areas are indirect costs are included in the project cost, in the distribution, the first object is the product costing varieties, followed by cost the distribution of the standard is a single - the production of man-hours; activity-based costing, the first division of work based on cost drivers, and then the production area allocated to the operation of resource consumption, consumption of different products according to various operating conditions, the job will be assigned from the consumption of resources allocated to different products, here, only the consumption of resources, monetary measurement. resource consumption accounting, the first division of resources based on resource rally point on motivation, the imputation of the cost of production area allocated to various rally point, each a rally point on the cost drivers is only one, then the output of resources allocated to the rally point on a different job, then the resources consumed by the job allocated to the different products.

In the application of three different product cost accounting method, the manufacturing cost by the allocation of indirect cost allocation criteria when the impact is great, and the method of cost allocation criteria in the choice of a single, unscientific, and will affect the product costing accuracy; operating cost to operating as the core, each operation may have two or more of the cost drivers, which have different production units, but ABC did not consider, as the example above, in determining the operating point of the distribution fee, not by labor hours and machine hours, uniform distribution, on the one hand can not be measured non-monetary information; the other hand also affects the accuracy of the product cost. The causal relationship between the consumption of resources according to resource accounting focus on the cost of ownership, that is based on the cost of resources allocated to cost objects, providing an accurate measurement of monetary and non-monetary information, and resources companies can rally point as the center for cost planning, cost control, cost, feedback and cost estimates, is a comprehensive Cost Management system. Of course, the emergence of a new thing must have its shortcomings, in practice, remains to be tested and continuously improved.


[Main references]
[1] Feng Qiao roots. Cost Accounting Accounting Innovation and resource consumption [J]. Accounting Research, 2006.12.

[2] Yang Jiliang. A new method of cost accounting - resource consumption accounting overview [J]. Management accounting, 2005.4.

[3] Pak Ming. Cost Management System Innovation - resource consumption accounting [J]. Accounting Research, 2006.4.

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