Summary
The main objective of the Work entitled "Techniques for recording, controlling and calculating costs in Internal Services" was to design cost techniques based on activities for the Internal Service Management Groups of a Commercial Company, working to achieve this in the characterization of the Group under investigation, in the diagnosis of the situation that the cost presented, designing the cost techniques based on the activities that this Group really exerted, finally validating said proposals with the calculation of the cost of the services performed by the entity.
It motivated the development of this work, the need that the internal services had, since they did not have costing techniques that would allow knowing the cost of the different activities that this and all the other Groups that have the rest of the Territorial Divisions of the country.
In its development, the processes were defined, as well as the main and support activities of the internal services, considering their participation in the Value Chain, proposing techniques based on ABC cost; Management needed information on costs that would allow it to make decisions that would make it possible to maximize business performance, since traditional cost systems were not effective, which contributed to providing erroneous information about the margins and profitability of products and services.
Introduction
Accounting is the language of financial decisions, it is the main means of communication regarding the financial impact of the company's activities. This helps decision-making, showing the origin and destination of money, the ability to pay to cover obligations, evaluating performance.
Increasing efficiency is a first-order requirement, however, together with this arduous struggle in itself, the complexity and imperatives of today's circumstances force us to take progressive, parallel and interlocking steps that, while helping to maintain the level of existence of the country - reducing the inefficiency that characterizes the bulk of the economy and, at the same time reducing cost in the part of these that have conditions that allow the economic recovery to be adjusted on new bases in accordance with external trends that allow ensure lasting and sustainable competitive advantages.
The implementation of the bases of business improvement imposes new management methods that allow obtaining greater efficiency through the rational use of material, financial and human resources, which implies the systematic reduction of the costs of the production of goods and services.
The achievement of cost reduction, quality increase and optimization of company results is achieved through the implementation of new cost systems such as: ABC, ABB and ABM.
In investigations carried out, it has been verified that in the management groups that provide internal services to the Copextel SA corporation, there is no cost system that contributes to cost management, which is the basis of the problem situation of this investigation.
For this reason, the scientific problem of this research centers on the need to design cost techniques that allow the registration, control and calculation of internal services for decision-making that contribute to obtaining effective, efficient and competitive results.
The present work has a theoretical significance because it delves into the characteristics of the ABC cost system. The practical significance of the work is evident in the design of the proposed techniques for calculating the cost in the Internal Service companies.
Chapter I.- Characterization of the company.
It is a Cuban trading company, leader in the introduction of advanced technologies in the national market. It owes the prestige gained to the professionalism, technical level and youth of its staff, to the constant spirit of innovation, to the diversity and integrity of the products and services it offers, and to the benefits and guarantees it offers to its clients. Its alliance with suppliers of international prestige, the high quality of its products and the introduction of technological advances, make it have a privileged place in the market preference.
View
To be the main ally of the clients.
Mission
Customers:
Contributing to their success, anticipating their needs, providing them with a wide range of solutions, services and integrative capacity.
Employees:
Guaranteeing a climate that encourages its constant development and its commitment to customers and society.
Society:
Creating values that promote their sustained development.
In 1991, the company began its operations while structuring its way of acting in the market, through Commercial Divisions with sufficient authority to establish business relationships with customers and suppliers. Currently, there is an efficient network of Territorial Divisions that operate throughout the country.
1.1 Characterization of the Management Group of Internal Services.
The Group provides the following corporate services:
- Pantry service, Dining room service, Lunch service, Snack service, Gardening and cleaning service, General repairs, Minor maintenance, Hosting service, Services contracted to third parties.
The Management Group's mission is: To provide, guarantee and satisfy gastronomic services, lodgings, attention to cadres and workers, maintenance, repair, cleaning and contracting with third parties based on the professionalism of our human capital.
1..2 Diagnosis of the current situation presented by costs in internal services.
- The Management Group has an Accounting department that is responsible for registering, classifying, summarizing and analyzing accounting information. Accounting is certified. There are computer equipment to operate the Automated Accounting system, which facilitates the registration, processing and presentation. of accounting information.
The financial statements that are prepared are as follows:
- Statement of Balance or Balance Sheet. Income Statement.
- The accounting information is prepared at the end of each economic period. There is the accounting rules and procedures manual prepared by the parent company. The absorption costing method is applied to calculate the costs of internal services. Indirect costs occupy a specific weight in the total cost of 70 percent. There are no guidelines for recording and controlling the costs of internal services carried out by territorial divisions. The distribution of indirect costs to services is complex and sometimes they are not distributed. The information obtained on costs does not allow decision-making. The areas of responsibility are defined in the management organization chart.
The results of the diagnosis show the need to implement a cost system that allows management the necessary information for decision-making. For this reason, in the next section new costing techniques based on the ABC System are proposed for the internal services of the Copextel corporation.
1.3 Proposal of techniques based on the ABC system to calculate the cost of internal Services.
This section presents the proposal for the design of the techniques based on the ABC system to calculate the cost of the internal services of the Corporación de Copextel SA, for which the following stages have been considered.
First stage: It consists of identifying the processes and activities..
For the development of this first stage, it was necessary to apply the interview technique to specialists in the economy area and to those responsible for the following areas: kitchen, dining room, maintenance brigade, commercial, warehouse and cleaning workers. management organization chart so that the activities correspond to the areas of responsibility. The results obtained facilitated the definition of processes and activities.
Taking into consideration that a process is a set of interrelated activities aimed at obtaining a specific result, the following are proposed:
Assurance process: In this process, tasks related to the purchase of goods and services, storage, control, conservation, as well as the dispatch requested by the areas to carry out internal service activities are carried out.
Food preparation process: is the preparation and cooking of food, for sale at lunch and snacks to the corporation's workers.
Maintenance and repair process: it is the one developed by the company for maintenance and repairs to the corporation's properties as requested by internal clients.
Hosting process. Includes the hosting services performed by the company, invoiced to internal customers.
Hygiene process: it is the one that the company develops to maintain cleanliness in all areas of the corporation and is billed to internal customers. It also includes tasks related to the conservation and maintenance of green areas.
Billing process: it is the service that the company performs through contracts to third parties and billed to the internal customers of the corporation.
Administration process: includes the tasks related to management and accounting information.
The following diagram shows that the processes coincide with the activities as this is a small Group.
Source: self made
The following diagram shows that the system makes it possible to analyze the efficiency of the processes, as well as the cost of the activities. Once the processes and activities have been defined, the activities are classified into main and support activities.
Source: self made.
In the aforementioned scheme, it becomes evident that the main activities add value, since these services are delivered to the consumers who are the internal clients of the corporation.
In this sense, Porter (1985) proposes that the value chain in any area of the company defines the interrelated set of value-creating activities that extend throughout all processes, ranging from obtaining raw material sources for component suppliers., until the finished product is finally delivered into the hands of the consumer.
For this reason, we consider the measurement of activities necessary to achieve efficient cost management, which is carried out through cost inducers that are the cause of costs or their variability factors. Cost inducers are not so related to volume, since they pay tribute to the behavior of the activity and its costs.
The cost drivers are classified as: first-level cost drivers, are those that are used to distribute the cost elements to the set of activities, and the second-level cost drivers are the distribution bases through which distributes the cost of activities among products or services.
Second stage. It consists of the procedure of recording the expenses for activities from the established Account Catalog.
The costs incurred in the main activities such as: billing, food, accommodation, maintenance and repairs, as well as hygiene represent direct costs and are directly assigned to services, as shown in the following diagram.
Source: self made.
The costs incurred in the main activities are recorded in the account in the account 701 Services in Process.
This control account constitutes a direct expense accumulation center. It includes the amount of expenses that are included directly in the cost of the services provided. Indirect expenses that are transferred at the end of each month are also recorded. It is analyzed by type of currency, processes, main activities, and expense elements.
It is debited: For direct expenses incurred in the development of services such as: materials, fuels, electricity, wages, salary stimulation, depreciation of Tangible Fixed Assets and other expenses incurred in the preparation of services and for the transfer of the balance of account 731 Indirect Expenses at the end of the month.
It is credited: For the transfer to the account 194 Services finished, when they are completely finished.
Expenses incurred in service support activities are recorded in the account
731 Indirect Cats. This account includes the amount of the expenses incurred in the activities supporting internal services and transfers its balance at the end of each month to the account 701 services in process. It is analyzed by type of currency, processes, activities and expense elements.
Debit: For expenses incurred for cleaning materials, office supplies, fuels, depreciation and other expenses incurred in support activities.
It is credited: At the end of the month for the transfer of indirect expenses to the account 701 Services in Process.
Coding of activities.
To facilitate the recording of costs in activities, the following coding is proposed.
- 0101 Billing0202 Maintenance and repairs0303 Accommodation0404 Dining0405 Pantry0506 Cleaning0507 Green Areas0608 Purchases0609 Warehouse0710 Management0711 Economy
The first two digits represent the process code and the last two digits refer to the activity.
Expense classifier by item and sub items
Raw Material and Materials.
It represents the consumption of those traditionally basic materials that are consumed in production or services; They also classify materials that, although not directly accounted for at cost, participate in it. They also classify all the materials that are consumed in the area of Distribution, Administration or Commercial Management of the Division and / or Management
- 101 Raw materials102 Auxiliary materials103 Spare parts and pieces104 Supplies and tools105 Office materials106 Cleaning and cleaning materials107 Clothing and linen108 Waste, and deterioration of inventories109 Other material expenses110 Equipment and other means
Fuels
It represents the materials that, by means of their combustion, are used to produce energy, and which are traditionally consumed in the means of transport, machinery or equipment, as well as in production or services; excluding those used as raw materials.
- 201 Special gasoline202 Regular gasoline203 Diesel204 Gas.209 Other fuels and lubricants
Energy
Represents the consumption of electricity supplied and used both in the production activity or services provided in the fundamental activity, as well as in support of administrative or commercial or distribution activity.
- 301 Electricity.
Wages
Represents the ascendancy of salaries, wages and other remuneration, accrued by the workers of the Divisions and / or Management, in the process of production or services in the fundamental activity; as well as in other non-fundamental administrative, commercial or distribution activities, it includes paid rest, bonuses and stimulation.
- 401 Salaries 403 Paid break 405 Salary stimulation 409 Other workforce payments
Taxes and contributions
It includes those expenses paid or incurred as a taxpayer to the country's tax authorities in accordance with the regulations established and in force for that purpose.
- 501 Contribution to social security (14%) 502 Tax on the use of labor power (25%)
Depreciation and amortization
Represents the expense for the loss of value of Tangible Fixed Assets that transfer their value gradually in the production process to the product or in the provision of service or merchandise marketing. They are charged to expenses monthly according to the rates established in Regulation No. 10.
Tangible Fixed Assets
- 601 Depreciation of buildings and other constructions 602 Depreciation of productive machinery and equipment 603 Depreciation of transportation means and equipment 604 Depreciation of computer media and equipment 605 Depreciation of machinery and equipment 606 Depreciation of leased fixed assets 608 Depreciation of other assets tangible fixes
Intangible Fixed Assets
- 610 Amortization of intangible fixed assets
Deferred Assets
- 615 Organizational expenses 616 Adaptations and improvements to leased properties 620 Property and content insurance 621 Motor vehicle insurance 622 Storage insurance 623 Insurance for internal transportation of goods 624 Taxes on land transport 626 Travel insurance 629 Other deferred assets
Other expenses
- 701 Domestic transport tickets 702 International transport tickets 703 Travel expenses and other expenses for domestic travel 704 Travel expenses and other expenses for foreign travel 705 Other travel expenses
Communications
- 710 Postal mail, telegraph, tele and cable 711 Telephone and fax 714 Other communication services
Minor maintenance and repairs
- 715 Minor maintenance and repairs of buildings and other Constructions. 716 Minor maintenance and repairs of machinery and equipment. 717 Minor maintenance and repairs of transportation equipment. 718 Minor maintenance and repairs of computer media and equipment. 719 Minor maintenance and repairs of machines and technicians. 720 Maintenance and repairs. minor furniture, fixtures and the like. 722 Parking
Leases
- 730 Rent of real estate 733 Lease of real estate and warehousing services 734 Lease of means of transport for the transport of goods 735 Leases of equipment 736 Rent of motor vehicles
Real Estate and Protection Services
- 740 Water and sewerage 741 Cleaning of offices and common areas 743 Protection services 744 Weatherization services 748 Subcontracting for the execution of productions or services 749 Real estate administration services.
Other business expenses
- 750 Promotion, advertising and other commercial expenses 752 Service to suppliers and clients 753 Representation and courtesy expenses 755 Guarantee to clients 756 Commissions 758 Identity expenses.
Miscellaneous expenses
- 760 Research and development 761 Training 762 Technical documentation, subscriptions and publications 763 Computer Programs 764 Events and meetings 765 Audits and supervisions 766 Engineering Services 767 Technical consultancies and professional services 768 Interconnectivity services 769 Other computer services 770 Reproduction and printing 771 Document Processing Service 773 Fire coverage 780 Toll785 Distribution expenses - Social Appliance Program799 Other expenses885 Surcharge in internal management
Accounting treatment of direct expenses in the dining room activity.
| 701 | Services in Process | $ 2295.00 | ||
| 01 | Badge | $ 835.00 | ||
| 0404 | Worker's Dining Room | $ 835.00 | ||
| 101 | Raw material | $ 2160.00 | ||
| 204 | Gas | 30.00 | ||
| 301 | Electricity | 50.00 | ||
| 601 | Depreciation of buildings and other Constructions | 25.00 | ||
| 606 | Furniture, fixtures and the like | 30.00 | ||
| Various accounts | $ 2 295.00 | |||
| Counting the expenses incurred in the activity of the dining room. |
As can be seen in the previous journal entry, all expenses incurred in the worker dining cost center have been charged to the 701 Services in Process account. This account is analyzed by currency type 01 Currency and o2 National Currency. Activity analysis 0303 Dining room is proposed. It is also analyzed by expense elements according to its nature.
The journal entry to record labor and other expenses in the national currency is illustrated below.
| 701 | Services in Process |
$ 764.50 |
||
| 02 | National currency |
$ 764.50 |
||
| 0404 | Worker's Dining Room |
$ 764.50 |
||
| 401 | Wages |
$ 365.00 |
||
| 403 | Paid rest |
43.13 |
||
| 405 | Salary stimulation |
109.50 |
||
| 501 | Contribution to social security |
72.46 |
||
| 502 | Labor Use Tax |
129.41 |
||
| 606 | Depreciation of furniture, fixtures and the like |
45.00 |
||
| Multiple Accounts |
$ 764.50 |
|||
| For expenses incurred in the dining room |
In the journal entry, it can be seen that the 701 Services in Process account receives a debit for all direct expenses in national currency incurred in the activity of a cafeteria.
The accounting treatment of expenses incurred in support activities is illustrated below.
| 731 | Indirect expenses |
$ 1,200.00 |
||
| 01 | Badge |
$ 1200.00 |
||
| 0608 | Purchases |
$ 400.00 |
||
| Expense items |
$ 400.00 |
|||
| 0609 | Warehouse |
$ 800.00 |
||
| Expense items |
$ 800.00 |
|||
| Multiple Accounts |
$ 1,200.00 |
|||
| For the expenses incurred in the Assurance Activity. |
As the expenses incurred in support activities such as insurance and administration are denoted, they are recorded in the account 731 Indirect expenses. Registration will be by currency type.
Distribution of indirect costs to activities.
In order for all costs to be included in the main activities, it is necessary to distribute the indirect costs using the cost drivers.
The selection of the most suitable inductors is a function of the parameter of most significance in the costs of the activity. For the distribution of said expenses, the accumulated expenses in each support activity are determined with a distribution measure that is identified with the activity. This distribution will be made for each type of currency.
For the distribution of the indirect costs of the activities of the insurance process, the man hours are proposed. The information is obtained from the accounting records.
The accumulated cost of the warehouse activity amounts to $ 800.00 in currency. Its distribution is illustrated below.
The distribution of the expenses of the insurance activity is illustrated below.
Distribution of the expenses of the activities of support purchase and insurance in CUC.
| Activities |
Hours worked |
Distribution Coefficient |
Assigned cost |
| 0404 Dining room 0405 Pantry |
192 192 |
$ 0.1894 |
$ 36.36 36.36 |
| 0101 Billing |
192 |
36.36 |
|
| 0202 Maintenance Repairs |
1536 |
290.92 |
|
| 0303 Accommodation |
576 |
109.09 |
|
| 0506 Cleaning 0507 Green areas |
1152 384 |
218.19 72.72 |
|
| Total |
4224 |
$ 800.00 |
Distribution of the expenses of the purchasing activity.
The expenses of the purchase activity amount to $ 400.00 in currency, they are distributed considering as an inducer of the cost the man hours.
Distribution of insurance costs in MN.
| Activities | Hours worked | Coefficient | Assigned cost |
| 0404 Dining room 0405 Pantry |
192.0 192.0 |
0.0947 / hhs |
$ 18.18 18.18 |
| 0101 Billing |
192.0 |
18.18 |
|
| 0202 Maintenance Repairs |
1,536.0 |
145.46 |
|
| 0303 Accommodation |
576.0 |
54.54 |
|
| 0506 Cleaning 0507 Green areas |
1,152.0 384.0 |
109.10 36.36 |
|
| Total |
4224.0 hours |
400.00 |
The journal entry to record the transfer in currency of the indirect expenses incurred in the support activities purchase and warehouse is illustrated below.
| 701 | Services in Process | $ 1,200.00 | ||
| 01 | Badge | $ 1200.00 | ||
| 0404 | Dinning room | $ 54.54 | ||
| Transfer of indirect expenses | ||||
| 0405 | Pantry | $ 54.54 | ||
| Transfer of indirect expenses | ||||
| 0101 | Billing | $ 54.54 | ||
| Transfer of indirect expenses. | ||||
| 0202 | Maintenance and repair | $ 436.38 | ||
| Transfer of indirect expenses | ||||
| 0303 | accommodation | $ 163.54 | ||
| Transfer of indirect expenses | ||||
| 0506 | Cleaning | $ 327.29 | ||
| 0004 | Green areas | $ 109.09 | ||
| Transfer of indirect expenses | ||||
| 731 | Indirect expenses | $ 1200.00 | ||
| 0608 | Purchases | $ 400.00 | ||
| Transfer | $ 400.00 | |||
| 0609 | Warehouse | $ 800.00 | ||
| Transfer | $ 800.00 |
The administration expenses will be assigned in their entirety to the billing activity, since they must be compensated by the internal management surcharge.
Third stage: It consists of assigning costs to services.
Once the indirect costs have been distributed to the main activities, the costs will be assigned to the services by type of currency. The calculation of the cost per activities is illustrated below.
Activity: 0404 Comedor Obrero.
Currency Type: CUC
| Elements | Total cost |
Inductor cost |
Unit cost |
| Raw Material (Food) | $ 2160.00 | 3600 diners | $ 0.60 |
| Gas | 30.00 | 0.01 | |
| Electricity | 50.00 | 0.02 | |
| Depreciation of buildings and other constructions | 30.00 | 0.01 | |
| Depreciation of furniture, fixtures and the like | 30.00 | 0.01 | |
| Transfer of indirect expenses | 54.54 | 0.02 | |
| Total cost of worker's canteen | 2354.54 | 0.67 |
The unit cost of a diner in the raw materials (food) item is 0.60 Cuc and the elements that represent other expenses have a total unit cost of 0.07 Cuc. The total unit cost of the worker canteen is 0.67 Cuc
Below is the calculation of the unit cost of a diner in the national currency
Activity: 0404 Dining room
Currency Type: MN
| Elements |
cost Total |
Cost Inductor | Unit cost |
| Raw material and materials |
50.00 |
$ 0.01 |
|
| Wages |
365.00 |
3600 diners |
0.10 |
| Paid rest |
43.13 |
0.01 |
|
| Salary stimulation |
109.50 |
0.03 |
|
| Contribution to social security |
72.47 |
0.02 |
|
| Tax on the use of labor power |
129.41 |
0.04 |
|
| Depreciation of furniture, fixtures and the like |
25.00 |
0.00 |
|
| Transfer of indirect expenses |
113.64 |
0.02 |
|
| Total cost of the worker canteen |
908.15 |
0.23 |
As can be seen in the table above, the total unit cost in the working canteen in the national currency is $ 0.23 per diner.
The total cost of the Worker dining room = 2354.55 Cuc + 908.15 MN
= 3262.70 / 3600 diners = 0.90 pesos.
Activity: 0405Pantry.
Currency Type: CUC
| Elements |
cost Total |
Cost Inductor |
cost Unitary |
| Raw Material (Food) |
$ 680.00 |
400 diners |
$ 1.70 |
| Transfer of Indirect Expenses |
54.54 |
0.14 |
|
| Total cost of the pantry |
724.44 |
1.84 |
The table shows that the total unit cost in the Pantry activity whose process is to prepare food for snacks for workers, the unit cost is 1.84 Cuc.
The same procedure is proposed to calculate the cost in the national currency.
The cost will be represented by the total expense of the workforce, plus the indirect expenses received from the cost assurance center.
Calculation of the cost of the services provided by the maintenance brigade.
The cost of direct materials will be obtained from the information contained in the work orders according to vouchers for exits from the warehouse. To determine the cost of the Other Expenses item, the following calculation will be made.
Activity: 0202 Maintenance and Repairs.
Currency Type: CUC
|
Elements |
cost Total |
Inductor Cost (hours worked) |
cost Unitary |
| fuel |
600.00 |
1536 hours | 0.26 |
| Tool and tool wear |
60.00 |
0.04 | |
| Depreciation of transportation equipment |
100.00 |
0.07 | |
| Viaticals |
384.00 |
0.25 | |
| Transfer of indirect expenses |
436.38 |
0.28 | |
| Total cost Other expenses |
1299.88 |
0.90 |
The cost of one hour of the maintenance brigade for other expenses is 0.90 Cuc. The total cost of the service in currency is represented by:
- Materials cost according to exit voucher and work order $ xxx.xx
Plus:
- Cost of Other expenses (0.90 x hours worked in the execution
From the xx.xx service
Total cost of the service in currency $ xxx.xx
The same procedure is applied to calculate the cost in the national currency, considering the tariffs on raw materials.
Activity: 0303 Accommodation.
Currency Type: CUC
| Elements |
cost Total |
Inductor cost Guests days |
Unit cost |
| Office supplies |
$ 200.00 |
120 days guests |
1.67 |
| Cleaning materials |
160.00 |
1.33 |
|
| Tools and tools |
120.00 |
1.00 |
|
| Electricity |
80.00 |
0.67 |
|
| Depreciation of building and other constructions |
45.00 |
0.38 |
|
| Depreciation of computer equipment |
32.00 |
0.27 |
|
| Depreciation of furniture, fixtures and the like |
26.00 |
0.22 |
|
| Telephone and fax |
120.00 |
1.00 |
|
| Internal Management Surcharge |
20.00 |
0.17 |
|
| Transfer of indirect expenses |
163.34 |
1.36 |
|
| Total cost of accommodation. |
967.34 |
8.07 |
The same procedure will be applied to calculate the cost of the accommodation activity in the national currency.
Activity: Cleaning of premises
Currency Type: CUC
| Elements |
cost Total |
Inductor cost Hours men |
cost Unitary |
| Cleaning materials |
$ 120.00 |
1152 hours |
0.10 |
| Tools and tools |
40.00 |
0.03 |
|
| Transfer of indirect expenses |
327.28 |
0.28 |
|
| Total spends |
487.28 |
0.41 |
The unit cost of the cleaning service is 0.41 Cuc per hour.
Activity: 0101 Billing
Currency Type: CUC
| Elements |
cost Total |
Total Billing Cost Inductor |
cost Unitary |
| Office supplies |
$ 120.00 |
$ 4150.00 |
0.03 |
| Depreciation of computer equipment |
25.00 |
0.006 |
|
| Depreciation of furniture, fixtures and the like |
15.00 |
0.004 |
|
| Transfer of indirect insurance costs |
44.45 |
0.01 |
|
| Transfer of indirect expenses Administration |
420.00 |
0.10 |
|
| Total expenditures |
1404.45 |
0.15 |
The unit cost of the service provided by the billing activity is 0.15 Cuc, an amount that is part of the internal management surcharge.
Accounting Treatment of finished services
To register the finished service, the following journal entry is made.
Partial Accounts Must Be
194 Finished Services $ 2344.45
01 Currency $ 2344.45
701 Services in Process $ 2344.45
0404 Dining room $ 2344.45
900 Transfer $ 2344.45
Registering the finished service
As shown in the journal entry, the cost of finished services is recorded in the control account 194 Finished Services. This account represents the amount of services that have been completely completed and have not yet been billed to customers. It is analyzed by type of currency.
It is debited: for the finished services.
It is credited: for the services billed to customers.
When invoicing finished services to internal customers, income is recorded as follows:
Partial Must Have
136 Accounts receivable from clients- Internal Operations. $ 2696.12
01 Currency $ 2696.12
Customer Analysis $ 2696.12
903 Sales of services-Internal Operations $ 2,696.12
01 Currency $ 2696.12
0404 Dining room $ 2696.12
Recording the income by dining room.
Account 903 Sales of services-Internal Operations, includes the amounts for income accrued from services billed to internal customers.
It is credited: For the services billed to customers.
Debit: For the cancellation of the balance at the end of the period with credit to the Result Account.
It is proposed that this account be analyzed by activities, with a view to evaluating performance.
To record the cost of services sold, the following journal entry is made.
Partial Must Have
813 Cost of sales of services-Internal Operations $ 2344.15
01 Currency $ 2344.15
0404 Dining room $ 2344.15
194 Finished services $ 2344.15
Currency $ 2344.15
Recording the cost of services
The workers' dining room
The account 813 Cost of sale of services- Internal Operations, represents the real cost of the services billed to internal customers. It is proposed that it be analyzed by activity.
Debit: For the actual cost of services billed to internal customers.
It is credited: For the cancellation of the balance at the end of the period with debit to the Result Account.
To record the daily charge to the workers for services of the workers' canteen in national currency, the following journal entry is made.
Partial Must Have
101 Cash on hand $ 4320.00
903 sales Internal operations $ 4320.00
02 National Currency $ 43200.00
0404 Dining room $ 4320.00
Registering the sale of dining room services.
In the case of the workers' canteen, the internal services company returns the counter value of the currency in national currency to the internal clients, registering this operation as follows:
Partial Must Have
903 Sales of services-Internal Operations $ 2,696.12
02 National Currency
0404 Dining room $ 2696.12
566 Miscellaneous accounts payable-Internal Operations $ 2,696.12
02 National Currency $ 2696.12
Customer Analysis $ 2696.12
Registering the counter value to pay for the service
From the workers' dining room.
Fourth stage. Analysis of costs by activities.
A fundamental premise for evaluating performance is the Budget. This synthesizes the objectives of the company and constitutes an instrument that allows management to exercise control over the fulfillment of the objectives. The control will be carried out by comparing the budget with the results actually achieved. The analysis of the deviations will allow evaluating the cause-effect relationship, as well as decision making.
The budget will be drawn up for each activity and its consolidation constitutes the company's budget.
To evaluate the performance of the activities under study, the following indicators are proposed.
- Compliance with the sales plan by activities Cost by weight of sale Work productivity.
The cost-by-sales weight indicator constitutes a regulatory and evaluating element of the entity's management. Expresses the cost for each peso of net sales. As it is a tool for decision making, it is proposed that it be evaluated by activities.
The calculation method of the indicator is as follows:
The information for the analysis of cost by weight is obtained from the Income Statement and the Activity Budget.
Work productivity.
Labor Productivity expresses the relationship between the quantity of goods and services produced and the quantity of work invested in its realization. In order to calculate the productivity of work, the value method is proposed, which consists of measuring the level of activity in units of value. It is calculated as follows:
___Net sales_______
Average number of workers
This indicator will be evaluated in each activity, with the purpose of knowing the participation of workers in the increase in net sales.
It cannot be thought that with the application of the exposed techniques, a solution to a problem as complex as the calculation of the cost is given, but it is a way of approaching so that the cost is used as a management tool. As these techniques are applied, they will be perfected, with a view to achieving adequate planning of costs in internal services.
Conclusions
- Management needs information on costs that allows it to make decisions that maximize business performance. Traditional cost systems are not effective, as they provide erroneous information about the margins and profitability of products and services. The ABC cost system enables the reduction of costs, increased profits and improvements in performance. The proposed techniques make it possible to know the real cost of services, providing the necessary information for planning, recording, controlling and analyzing the cost of activities, making possible the taking of decisions that contribute to increasing the effectiveness and efficiency in the use of material, financial and labor resources.The proposed techniques allow the preparation of budgets by activities and the control of income and the result generated by each activity. The proposed techniques are a starting point to achieve cost management.
recommendations
- Apply the techniques proposed in the Cost Centers of the Internal Services Group of Corporación Copextel SA Make supervision and monitoring and periodically report the results of the application Make comparative analyzes by areas, at the end of each accounting period, to measure the effectiveness of the application of techniques. Train all personnel involved in each process, in all techniques related to the ABC Cost system.
Bibliography Consulted
- AIMAR FRANCO OSVALDO.: »Activity based cost systems. Past, present and future." Cost and Management Magazine, Spain, March 1995, Publication T.IV-No.15.AMAT ORIOL SALAS. "Hotel Accounting and Finance» Eada Gestión, Barcelona, Spain, 1993. AMAT ORIOL and JOHN BLAKE: «Creative Accounting», Ediciones Gestión 2000, SA, Spain, 1996, Pages 71-73.AMAT ORIOL and SOLDEVILA GARCIA PILAR: « Accounting and Cost Management », Editora Gestión 2000, Spain, 1997, Chapter 5. ARMENTEROS DIAZ MARTA:» Cost systems in Cuba, You have to catch up. El Economista de Cuba Magazine, No. 9, ANEC, Cuba, 1999.BEASCOECHEA ARICETA J. »ABC and Cost Analytical Accounting», Bilbao, 1994.CASTELLO TALIANI EMMA.: »The cost per activity system is imposed«, Harvard-Deusto Finanzas & Contabilidad, Bilbao. 1994 ESTRIN TL, KANTOR J. and ALBERS D.:»Is ABC the Right One for Your Business?», University of Windsor, Canada, 1999. HICKS DOUGLAS T.: "Yes, ABC Is for Small Business, Too." Journal of Accountancy, August 1999. HODBY T., THOMSON J. and SHARMAN P. "Activity-Based Management in A&T", USA, 1995. HORNGREN CHARLES: "Cost Accounting Concepts and Applications for Management Decision Making", USA, 1995. KAPLAN RS: »In defense of cost-based management by activities» Cost and Management Magazine, Spain, September 1993, Publication T.III-No.9."Cost Accounting Concepts and applications for managerial decision-making", USA, 1995. KAPLAN RS: »In defense of cost-based management by activities» Cost and Management Magazine, Spain, September 1993, Publication T.III -No.9."Cost Accounting Concepts and applications for managerial decision-making", USA, 1995. KAPLAN RS: »In defense of cost-based management by activities» Cost and Management Magazine, Spain, September 1993, Publication T.III -No.9.
Contributed by:
M.Sc. Maria Luisa Lara Zayas. ([email protected])
Full Professor of the UCLV. Master of Science. More than 30 years linked to Teaching and business activity in various branches of the economy. Professor of the Accounting Discipline of the Sancti Spiritus University Center 'José Martí ”. Enough experience in Accounting, Costs, Finance and Auditing. She has taught various Postgraduate and Master's courses in these subjects and other topics related to the activity. She is currently working on various research projects related to this Discipline, including Accounting Procedures, Auditing and Cost Manuals. Author of several Publications.
Lic. Ederlys Hernández Meléndrez ([email protected])
Full Professor of the UCLV. Applicant for the title of Doctor of Science. More than 30 years linked to business activity in various branches of the economy and to Teaching. Supervising Auditor of the Corporación Copextel SA., And Discipline Professor at the Sancti Spiritus University Center "José Martí". She has taught various postgraduate and Master's courses in these subjects, and other subjects related to the activity. Enough experience in Accounting, Costs, Finance, and Auditing. She is currently working on various research projects related to this Discipline, including Accounting Procedures, Auditing and Cost Manuals. Author of several Publications.
Other authors:
M.Sc. Ramón Miranda Echevarría, Dean of the CUSS School of Accounting and Finance.
M.Sc. Mariela Cantero García, Head of the Accounting and Finance Department. CUSS.
M.Sc. Enrique Toledo, Specialist Official of the Company under study.
M.Sc. Niurys Castañeda Portal, Accounting Specialist. Manager of Company Management
Lic. Ramón López Ramos, Diploma of Audit. Head of the Company Systems Department. M.Sc. Humberto Alé. Lawyer. Manager of Management of Internal Services of the Company.
Lic. Rayko Ruiz Carrazana, Head of the Accounting Discipline. CUSS
Sancti Spiritus, Cuba. March 2007.
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