1. Summary
This work was carried out at the UEB Distributed Generation Diesel Locations belonging to the Villa Clara Provincial Electric Company, I quote at Finca El Ancora, e / t Sub-plant Highway and Feed Factory.
study-costs-locations-distributed-generation-villa-clara-cubaThe research arises from the need to have a Cost Sheet to carry out an efficient foundation of the planned indicators, it also contributes to the Strengthening of Internal Control, which favors a correct analysis of the economic results in a certain period of time..
To achieve this, an extensive bibliographic search was carried out, as well as a study of all the technical-productive characteristics and in the accounting order of the Distributed Generation UEB to obtain the necessary data to proceed with the investigation, which allowed us to reach the conclusions and recommendations for its improvement.
2. Introduction
The current conditions in which the world economy operates, characterized by the accelerated process of globalization and internationalization, require Cuban companies levels of competitiveness that allow them to remain in the national market and increase exports, which could be achieved to the extent that be able to offer quality products or services and with the lowest possible costs.
It is an indispensable element in an economic management system to ensure the role of cost in the country's economic planning, fundamentally in the correct management of the company through agile mechanisms that allow calculation with a high degree of reliability.
The business success of the 21st century is directed to the fact that the key to competitiveness is given by the control of human resources, raw materials, energy resources and the means of production, the limited Cuban company of material and natural resources, subjected to a tight economic blockade for more than forty-five years to insert itself in an increasingly changing and competitive environment imposed by the United States that also monopolizes almost all the countries that produce these resources and manage them in their own interests.
For the development of this research, the Diesel Sites belonging to the Generation UEB are taken as a reference to the Santa Clara Electric Company, whose mission is to generate electric energy efficiently and in a timely manner to satisfy all its customers, through the employing advanced methods, means and techniques, with a level of professionalism that guarantees the success of the objectives set, the generator set provides electrical service for the full satisfaction of all its customers, combining state-of-the-art technology with a highly qualified workforce and professional with a view to achieving a better and efficient use of the three cost elements (Direct Materials, Direct Labor and Indirect Manufacturing Expenditure),framed in the fundamental problem of the Distributed Generation UEB, which is the distortion of its consumption indexes, which are currently above the national average, this justifies an investigation to detect possible technological and control failures, which makes it necessary to determine the Cost Sheet for proper resource planning.
Proposing at the same time that this situation is scientifically addressed, which is why the following scientific problem is defined.
How to determine the cost sheet for the generation of Electric Power in the Diesel Sites of the UEB Distributed Generation?
In order to solve this research problem, the general objective is to determine the Cost Sheet for the generation of Electric Power in the Diesel Sites of the UEB Distributed Generation.
This objective is broken down into specific objectives in order to address the study problem in a more detailed way, focusing on:
1. Shaping the theoretical-referential framework on the subject under study
2. Carrying out the characterization of the Company under study.
3. Description of the electric power generation process of the UEB Diesel Sites Distributed Generation.
4. Make a general diagnosis of the current situation of the UEB.
5. Prepare the Cost Sheet for the generation of Electric Power in the Diesel Sites of the UEB Distributed Generation.
These objectives were set in relation to an investigative logic guided by the following research questions:
1. What is the current situation presented by the consumption indices in the Diesel Sites of the UEB Distributed Generation?
2. What elements of the cost must be taken into account for the preparation of a Cost Sheet to generate electrical energy in the Diesel Sites of the UEB Distributed Generation?
3. What influence will the determination of the new Cost Sheet offer in the correct planning of the inputs of the Generation UEB?
The work was carried out in the Diesel Sites belonging to the Distributed Generation UEB, which will include, from the determination of the causes that affect that the consumption indexes are currently above the provincial average, the preparation of the Cost Sheet in the Diesel Sites of the UEB Distributed Generation, which affects the economic result of said Company at the end of a certain economic period.
Based on the scientific problem to be solved, the following research hypothesis is established:
If the cost sheet is produced for the generation of Electric Power in the Distributed Generation UEB, it will be possible to count on a correct budgeting of resources.
The variables object of study are the following.
The independent variable consists of determining the cost of production from the calculation of both direct and indirect cost items, Direct Materials, Direct Labor, and Indirect Manufacturing Expenses at the UEB Distributed Generation Diesel Sites.
The dependent variable consists of determining the causes that affect the increase of the consumption indexes in the Diesel Sites of the UEB Distributed Generation, which will allow a correct planning of its resources.
Methods used.
In this research project the cost accounting aspects will be presented, the elements that compose it, deepening in the elaboration of the cost sheet, we will work with the data emanating from the Diesel Locations of the Distributed Generation UEB.
Theoretical and empirical, quantitative and qualitative methods are used.
Direct observation, group interviews, personal statements, non-verbal communications and content analysis are used. The case study validates the proposed procedure and tests the general hypothesis of the investigation.
* Method of bibliographic analysis: The bibliographic sources that are consulted will include those referring to the subject of Cost Accounting.
* Theoretical Method (analysis and synthesis): It allows analyzing, justifying and synthesizing the aspects to be dealt with over time.
* Historical Method: It enables the study of events that occurred and their evolution over time.
* Observation Method: Provides an exhaustive search of the data in a logical way about the analysis and treatment of the economic variations used.
* In addition, the logical historical method, the analytical-synthetic and the empirical will be applied through direct observation and documentary analysis.
Limitations and Scope:
* The study shows as limiting the profile of the disclosure of the data for its collection and the reduced time of the application of the study; as well as its effectiveness.
* Timely measurement and evaluation of economic indicators at the end of a given period.
* Contribution to business improvement by providing a tool that allows the correct measurement of consumption rates in the Distributed Generation UEB for subsequent analysis.
This research is divided into 3 chapters:
Chapter I: Theoretical foundation of the topic to be investigated.
Chapter II: Characterization and general diagnosis of the UEB Distributed Generation.
Chapter III: Calculation of the Cost Sheet for the Generation of Electric Power in the Diesel Sites of the UEB Distributed Generation.
3. Development
CHAPTER I: THEORETICAL FOUNDATION OF THE SUBJECT TO INVESTIGATE.
This chapter provides an overview of the nature, concepts, and classifications of cost and its accounting taken from various internationally renowned scholars in order to update the reader on the most modern principles and terminology of this discipline. Perceiving that the objective of cost control is to assist management in the production of a usable unit, product or service, at the lowest possible cost, in accordance with predetermined quality standards. Those that allow management to make periodic comparisons of real costs with standard costs, in order to measure execution and correct inefficiencies, as well as carry out an adequate planning process.
1.1. Management Accounting, Definition of Cost.
Accounting is the science that aims to classify, measure and value for later, synthesize and analyze the company's performance figures, in order to obtain an adequate information base for its management, which allows the maximum achievement of the proposed objectives. Therefore, the fundamental purpose of accounting is to provide financial information regarding an economic entity. Thus, accounting is related to the measurement, recording and reporting of financial information to various user groups.
Management requires financial information to plan and control the activities of a business, and also requires information from outsiders who provide funds or who have other interests to demand such material. As these users grow, so too do accounting concepts evolve to meet the needs of a changing society.
According to the recipients, the accounting is usually divided into Financial Accounting and Administrative or Managerial Accounting. Both constitute the two most important branches of Accounting, arising from the need for specialization and fulfillment of clearly defined purposes.
Financial Accounting "is primarily interested in financial statements for external use by investors, creditors, unions, financial analysts, government agencies, and other interested groups."
It is the branch of accounting focused on the preparation and presentation of a set of financial statements in order to provide information that is useful in making decisions of an economic nature by most users, especially external users (owners, suppliers, financial institutions, investors, government and government entities, workers and the general public).
Management Accounting «… aims to provide relevant, historical or provisional, monetary or non-monetary, segmented or global information on the internal circulation of the company for decision-making.»
It refers more directly to information prepared and presented for use by the people who, internally in the entity, must make decisions day by day regarding its administration (directors, managers, administrators, officers, etc.).
ID. The recognition and evaluation of commercial transactions and other economic facts through an adequate accounting action.
Measurement. Quantification, which includes estimates of business transactions or other economic events that have been or may be caused.
Accumulation. The orderly and consistent approach to recording and classifying business transactions and other economic events.
Analysis. The determination of the reasons and the relationships of the reported activity with other facts and economic circumstances.
Preparation and interpretation. Coordination of accounting and / or planning of data in a logical way to satisfy a need for information, including, if appropriate, conclusions derived from these data.
However, despite the differences, there is an interrelation between both accounts, as illustrated in Figure 1.1.
A good part of the information used by management accounting comes from financial accounting, since it has information about the expenses that have occurred during the period considered. At the same time, management accounting also provides information to financial accounting, such as the reference to the prices of raw materials, work in progress and finished products that financial accounting will use to value inventories at the end of the year.
The concepts expressed on the term cost have been diverse, although all agree that cost is the value of material and human resources, consumed or used in the elaboration of a product or in the provision of a service, which constitutes a measure of productive economic efficiency, so its behavior makes it easy to evaluate the results. The cost attends to the moment of consumption, the expense refers to the moment of acquisition, then the costs becomes expenses when the good to which they are valued disappears (that is, an income is sold and perceived for said sale), since at that time the company has expired. It is at that moment when the cost already converted into an expense is used to obtain the results (profit and loss account).An asset is an unexpired cost that may give benefits in the future (the sale of the good or product has not yet been made).
Cost Accounting is a branch of Management Accounting which is fundamentally related to the accumulation and analysis of cost information for internal use by managers, in the valuation of inventories, planning, control and decision making. It is also the one that synthesizes and records the costs of the manufacturing, service and commercial centers of a company, so that the results of each one of them can be measured, controlled and interpreted, by obtaining unit costs and Totals in progressive degrees of analysis and correlation.
The term cost accounting referred to the different ways of accumulating historical costs and relating them to the purpose of providing data for the valuations of inventories used in balance sheets and profit and loss statements. Although cost accounting still continues this important role, its boundaries have extended far beyond the financial statements.
Characteristics of Cost Accounting.
1. It is a branch or phase of General Accounting.
2. Obtaining information regarding the unit cost of the product or batch of articles.
3. Cost analysis in all its aspects, in order to obtain detailed information for the company's executives.
4. Control of the three elements of cost to produce an item. Primary purpose of cost accounting.
5. Registers, classifies, summarizes and presents only the operations, past or future necessary to determine, what it costs to acquire, exploit, produce and sell an item or a service.
6. The specific objectives of analytical accounting emphasize obtaining information, with a short-term perspective, to:
* Calculate the costs of the different parts of the company and the products obtained.
* Know what each stage of the production process costs, in the value chain of a company. The value chain is made up of the stages of the production process that add value to the product or service offered by the company.
* Valuation of stocks.
* Analysis of the accounting result generation process.
* Contribution to control and cost reduction. Companies have moved from being essentially concerned with production, since the market absorbed everything; and finally by reducing costs, when it is really difficult to keep increasing sales.
1.2 Classification of costs, elements that make up the cost for their emergence and / or destination in Cuba.
The production cost is the value of the set of goods and efforts that have been incurred or will be incurred, that the manufacturing centers must consume to obtain a finished product, in conditions to be delivered to the commercial sector. Direct materials, direct labor and indirect manufacturing costs expressed in value are part of the cost of a product.
Materials are the main goods used in production and transformed into finished articles with the addition of direct labor and indirect manufacturing costs. Materials can be divided into direct and indirect materials. Direct materials are all those physical elements that are expendable to consume during the process of making a product, selling, accessories and its packaging, and represent the main cost of the raw material in the manufacturing process. This with the condition that the consumption of the input must be proportionally related to the number of units produced. Indirect materials are all materials that are not directly associated with the manufactured product.
Labor is the physical or mental effort expended on the manufacture of a product. Its cost can be divided into direct and indirect labor. Indirect labor is the one that does not participate directly in the production process.
Indirect production costs or manufacturing charges are all production costs, except for raw materials and direct labor. They are all the costs that a center needs to incur in order to achieve its goals; costs that, except in exceptional cases, are of indirect allocation, therefore it requires distribution bases.
Indirect manufacturing costs can be subdivided according to the object of expenditure into three categories:
* Indirect materials
* Indirect labor
* General indirect manufacturing costs.
In addition to indirect materials and indirect labor, manufacturing charges include the cost of acquiring and maintaining production facilities and other factory costs. Included within this category we have the depreciation of the plant and the amortization of the facilities, the rent, heating, electricity, driving force, property taxes, insurance, telephones, travel, etc. All indirect manufacturing costs are direct to the factory or plant.
The classification in fixed and variable costs is useful in preparing budgets for future operations. Costs classified as direct or indirect with respect to the product or department are useful in determining the profitability of product lines or the contribution of a department to the profits of the company.
Raw materials and direct labor give rise to disbursements, which are part of manufacturing charges. The first involves handling, inspection, maintenance, insurance, etc. costs. The second requires the provision of social services, personnel offices, time study offices, etc.
For product costing purposes, all costs incurred in the factory are eventually allocated to the production departments through which the product circulates. The accumulation and classification of costs by department is called distribution or allocation of costs. Costs that can be directly attributed to the department are assigned directly. Overhead manufacturing costs and service department costs are allocated on some basis to the production departments and are also allocated to production as it passes through the departments.
It is important to define the criteria for the classification of Production Costs, in order to carry out a correct planning process for this we take into account the following:
According to the elements that make up the cost of a product:
Materials: These are the main goods that are used in production and are transformed into finished articles with the addition of direct labor and indirect manufacturing costs. The cost of materials can be divided into direct and indirect materials, as
follows: Direct materials: These are the materials that can be identified in the production of a finished article, which can be easily associated with the product, representing the main cost of materials in the production of that article. An example of direct material is the seed used in the cultivation of sugar cane.
Indirect materials: They are all the materials included in the manufacture of a product different from direct materials. Indirect materials are included as part of manufacturing overhead. An example of this are the consumption costs of parts in the repair shops for agricultural machinery in the cultivation of sugar cane.
Labor: It is the physical and mental effort spent in the manufacture of a product. The cost of labor can be divided into direct and indirect labor, as follows:
Direct labor: It is the labor directly involved in the manufacture of a finished product that can be easily associated with the product and that represents the main cost of labor in the manufacture of that product. The work carried out by agricultural workers in the cultivation of sugar cane constitutes an expense associated with direct labor.
Indirect labor: It is all labor involved in the manufacture of a product, which is not considered direct labor. Indirect labor is included in indirect manufacturing costs. The job of a lot manager is an example of indirect labor.
Indirect manufacturing costs: These are all the concepts included in the “Cost Pool” and which are used to accumulate indirect materials, indirect labor and all other indirect manufacturing costs. Such concepts are included in manufacturing overhead because they cannot be directly identified with specific products.
According to the Elements of expenditure.
The aggregation of the different types of expenses will be carried out in the following mandatory elements:
Raw materials and materials
Fuels
Energy
Wages
Other expenses of the workforce
Depreciation and amortization
Other monetary expenses
Content of the mandatory elements or aggregations of expenses.
Raw materials and materials
The expenses included within this element or aggregation are:
Raw materials, basic and auxiliary materials, completed articles and semi-finished goods purchased. These expenses include commercial surcharges and losses and deterioration within established standards, as well as identifiable freight and import expenses with material raw materials and tariffs.
Ancillary materials included in this item include those used for the maintenance and repair of buildings, facilities, constructions and equipment linked to production, as well as spare parts, tool wear, molds and dies, special clothing and low value items. Recoverable waste will be deducted from the total expenses included in this item.
Fuels
This item includes all expenses arising from the consumption of the different fuels purchased and used in the company for technological, auxiliary or service purposes, to produce energy in different forms such as: electrical, thermal, compressed air, industrial gases and others. This element includes commercial surcharges, losses and deterioration within the established norms of the fuels consumed, as well as the freight and import expenses identifiable with the fuels and tariffs.
Energy
It is made up of all the forms of energy acquired by the company, destined to cover technological needs and other business demands.
Wages
The wage element includes all the remuneration paid to workers from the wage fund. It includes accrued wages, accrued vacations, bonuses and salary bonus, abnormal conditions and seniority.
Other expenses of the labor force
The element Other expenses of the labor force includes payments for subsidies and for short-term social security contributions, as well as the amounts paid for the Use of Force Taxes. Job.
Depreciation and amortization
Depreciation and Amortization includes depreciation of tangible fixed assets and amortization of intangibles, of short and long-term deferred expenses; except in the latter, of those coming from the investment process.
Other monetary expenses
Includes, among others, expenses for service commissions, taxes, stipends, monetary rewards, payment for productive services (tickets, freight, repairs, among others) and non-productive services received.
According to the Cost Items.
Companies can establish the cost items and sub-items that are necessary according to the characteristics of their production process and the specific weight or significance that each group of expenses has within the total cost.
The items and sub-items that each company determines to include in a cost system must allow their aggregation in the following concepts:
Raw materials and materials
Labor force
expenses Other direct
expenses Indirect production expenses
The items or sub. - Cost items that each company determines to include in its cost system must allow its aggregation in the following concepts.
Raw Materials and Materials:
This includes:
Acquisition price of raw materials and direct materials used, including commercial surcharges and discounts paid to the supplier.
Actual cost of production of raw materials and direct input materials produced by the company.
Transportation, storage, insurance and handling expenses for raw materials and direct supplies, incurred until they are received in the company's warehouses. These expenses will be recorded as part of the price of raw materials and direct materials, as long as they are identifiable with them, avoiding unnecessary unnecessary apportions whenever possible. When they are not identifiable, they will be treated as indirect production expenses.
Tariffs paid for raw materials and direct materials used. Waste and deterioration of raw materials and direct materials used in the production process, provided they do not take a missing figure, in which case they are not included in production costs.
Raw materials and recovered materials from defective reproductions are deducted from this item.
Labor force expenses:
Accrued wages (include stimulations for productive compliance). Accumulated accrued vacation. Contribution to social security computed from the above concepts. Taxes for the use of labor power calculated on wages and accrued vacations.
Other direct expenses:
Direct measurable fuels and energies.
Diets and passages for workers and production technicians considered as direct expenses.
Productive services received for prevention.
Depreciation of tangible fixed assets that directly intervene in the production process or in a specific production or service.
Indirect production expenses:
These include, among others, the following general expenses of the factory or workshop, considering them indirect for not identifying with a specific production or service.
Production preparation or assimilation costs (includes product documentation costs, personnel preparation and qualification, start-up costs for new workshops and production lines and the assimilation of new products and technologies).
Maintenance and operation costs of equipment for the production process, loading, unloading and internal transportation.
Consumption of auxiliary materials in workshops and factories.
Salaries and vacations, contribution to social security and tax for the use of the workforce of factory or workshop personnel.
Fuel and energy consumption of the factory or workshop.
Depreciation of tangible fixed assets of the factory or workshop not associated with a specific production or service.
Administration, protection and surveillance expenses of factories and workshops.
Seniority payments to direct and indirect workshop or factory personnel.
Toll and ground transportation tax paid by vehicles associated with the production process.
Other taxes indirectly associated with the production process, for example:
Tax on documents paid for the acquisition of trademarks or patents, etc.
According to the function in which they are incurred:
Manufacturing costs: They are related to the production of an article. Manufacturing costs are the sum of direct materials, direct labor, and manufacturing overhead.
Marketing costs: They are incurred in the sale of a product or service.
Administrative costs: They are incurred in the direction, control and operation of a company; includes payment of salary to management and office staff.
Financial costs: They are related to obtaining funds for the operation of the company. It includes the cost of interest that the company must pay for the loans, as well as the costs of granting loans to clients.
According to its identification with an activity, department or product:
A cost can be considered direct or indirect depending on the ability of management to associate it specifically with orders or departments, they are classified as:
Direct Costs: These are the costs that management is able to identify with the specific items or areas. Direct material costs and direct labor for a specific product are examples of direct costs.
Indirect Cost: These are the costs common to many items and therefore are not directly identifiable with any item or area. Indirect costs are usually charged to items or areas using allocation techniques.
According to the time in which they were calculated:
Real or historical cost: It is the cost that is accumulated during the production process through the usual historical costing methods in contrast to the cost that has been determined in advance of the production process.
Standard, Planned, Default, Scheduled, or Specified Costs: Those that are expected to be achieved in a particular production process under normal conditions. Standard costing relates to cost per unit and essentially serves as a budget. These costs are objectives set by management, which function as controls to compare the actual results.
According to the time in which the income is charged or faced:
Cost of the Period: These are the costs that are not directly or indirectly related to the product and therefore would not be invented. Period costs are canceled immediately, as no relationship between cost and income can be determined.
Product Cost: These are the costs that are directly and indirectly identifiable with the product. These costs do not provide any benefits until the product is sold and therefore would be invented until the end of the product. When products are sold, their total costs are recorded as an expense called the cost of the items sold. The cost of items sold is matched against revenue for the period in which the products were sold.
According to their behavior in relation to production volume:
Variable costs: These are costs that vary in total, in direct proportion to changes in volume and whose unit cost remains constant within the relevant range.
The relevant range is understood as the activity interval within which the total fixed costs and the variable costs per unit remain constant.
Fixed costs: Those costs that in their total remain constant throughout the relevant production range while the cost per unit varies with production.
Mixed costs: These costs contain both characteristics, fixed and variable, over several relevant ranges of operation. There are two types of mixed costs: semi-variable costs and tiered costs.
According to its relationship with production:
Prime costs: It is the one directly related to production, equivalent to the sum of direct materials and direct labor.
Conversion costs: These are the costs related to the transformation of direct materials into finished products. Conversion rates are made up of direct labor and indirect manufacturing costs.
According to the relationship to the degree of control:
Controllable Costs: They are those on which managers can exert direct influence during a certain period of time.
Non Controllable Costs: These are costs that are not directly regulated by a certain level of the management authority.
According to the relationship with decision-making:
Relevant Costs: These are expected future costs that differ between alternative courses of action and that can be eliminated if any economic activity is changed or suspended.
Irrelevant Costs: Are those that remain unchanged without interest in the chosen course of action.
Differential Costs: Are those increases or decreases in the total cost, or the change in any element of the cost, generated by a variation in the operation of the company.
Decremental Costs: When differential costs are generated by decreases or reductions in the volume of operation, they are called Decremental Costs.
Incremental Costs: These are those incurred when the variations in costs are caused by an increase in the activities or operations of the company.
Opportunity Cost: When a decision is made to pursue an alternative, the benefits of the other options are abandoned. The benefits lost in ruling out the next best option are the opportunity costs of the chosen action.
According to its relation to a decrease in activities:
Avoidable Costs: These are fully identifiable with a product or department in such a way that if the product or department is eliminated, said costs are suppressed.
Inevitable Costs: These are those that are not eliminated, even if the department or product is eliminated from the company.
Cost system and its peculiarities: Planning as part of cost accounting.
To design a cost system it is necessary to have a well-conceived idea of the type of entity or company for which it is designed; It is necessary to be able to identify the processes that are carried out and, in accordance with the theory of costs, propose the instruments that allow identifying and recording the elements of cost. The determination of costs additionally requires the use of apportionment methods in order to allocate, based on the most appropriate means possible, expenses that are not directly identified with a product or service.
There are two types of cost systems:
* Cost system for work orders.
* Process cost system.
The design of a cost accumulation system must be compatible with the nature and type of operations executable by the company.
As part of the objectives of cost accounting, planning is one of the most important, since it will be the starting point of any entity, it is the basis for the advance definition of the objectives to be achieved by an organization, analyzing the selection of alternatives, goals to overcome, the time, resources and methods of execution as well as the place of each link in the achievement of the proposed ends. It makes it possible to coordinate actions based on the proposed purpose, in such a way that consistency in performance is guaranteed.
The planning process is especially important for organizations, constituting a powerful control instrument that influences decision-making.
Planning must be carried out by analyzing the behavior of spending rules, their historical series, incurred in previous periods, the use of capacities, as well as the quantification of possible reduction measures to be applied.
The plan must compulsorily be based on the result of the analysis of the behavior of the economic efficiency of the companies in each work area and include the effect of the measures determined as a result of this collective analysis. The budget process tends to reflect in a quantitative way, through budgets, the objectives set by the company in the short term, by establishing the appropriate programs, without losing the perspective of the long term, since this will condition the plans that They will allow the achievement of the ultimate goal to which the management of the company is oriented.
1.3. Cost sheet:
The Cost Sheet or Price Sheet as its name implies is nothing more than the fruit of the predetermination of costs, the beginning and end of the planning process, and constitutes a powerful control instrument that influences decision-making helping to measure the efficiency in the use of resources. In order to guarantee the usefulness of this instrument, it is essential to have up-to-date information regarding consumption and labor standards, prices and tariffs, as well as duly supported application rates for indirect manufacturing costs.
In order to ensure the correct analysis of the behavior of productive efficiency in each unit of product produced or in process, it is necessary to calculate the unit cost, which must be carried out taking into account the consumption standards of raw materials and materials, as well as workforce and production overhead. The unit cost is an economic indicator of great importance in the analysis of the productive results of an entity, showing the effectiveness achieved in the process and the efficiency in the use of resources by analyzing its variations.
In the basic terminology of the cost of production, unit cost is defined as the relationship between total cost and physical units, which can be finished products, hours worked or planned, and can also refer to an area, department, factory, that is,, to organizational units.
The cost sheet is the document that reflects the information related to the components of the unit cost of production or service.
The cost sheets according to López (2008) can be classified according to the time of making it, according to the criteria of the specialists and the purposes pursued, therefore according to the objectives in the calculation of production, also López (2008) states that they can be classified in different ways, summarizing them below:
Planned cost sheet: represents the maximum magnitude of the expected expenses in the production of a unit of product. They are made using rules and regulations that guarantee the optimal possible situation of production for the year that is planned. It will reflect the planned cost for a given production, being issued whenever it is necessary to determine an estimated cost, taking into account existing variations in quality, measures and prices of materials and qualification of the workforce when necessary, as well as the characteristics specific of the workshop that manufactures, being able to give the case of an equal production, having different costs given the workshop that produces them or the service that they provide.
Regulatory cost sheet: it is calculated based on the rules in force in a specific sheet and characterizes the technical, organizational and economic situation of production, its difference with the planned ones is that they are much more dynamic, that is, they change to the same extent in that the rules change.
Budgeted cost sheet: it is a variant of the planned one and is made for those types of products whose production is not representative and is generally coordinated with the consumer to support the calculation of expenses, since this sheet is necessary to establish the prices of these products. For its elaboration it is necessary to take into account:
1. The establishment of the norms of material consumption and work for the different products in their phases or stages of manufacture.
2. The correct delimitation of direct and indirect expenses grouped into the corresponding cost items.
3. The determination of the application fees of indirect costs for each product.
4. Its structure and content show the breakdown of expenses by direct and indirect item of the cost of production of a unit of product, considering the consumption and physical labor norms and value for direct items and application fees and their basis. unit for indirect items.
5. It will also contain technical specifications of the materials to be used and the qualification of the workers who must participate and others according to the production requirements for their execution.
Partial Conclusions
The cost information and its correct classification constitutes the central axis on which the planning process gravitates.
The value of the information does not lie in the quantity but in the utility, quality, opportunity and accuracy of the same.
Costs are essential for any economic activity, since they properly determine the value of the product.
All this is closely related since there is a great correlation between costs, especially standard costs, which form the basis for determining the price of products.
Chapter II: Characterization and general Diagnosis of the UEB of Electricity Generation.
2.1. Particularities of the UEB of Electricity Generation.
The Distributed Generation UEB is a Branch of the Villa Clara Electric Company belonging to the Ministry of Basic Industry, which endorses the central objective of the economic policy of the Revolution. It is located in the Finca el Angora, e / Feed factory and Sub. Station, in Santa Clara, Villa Clara and has the following structure:
Diagram 1: Structure of the UEB Distributed Generation.
Source: self made.
The mission of the UEB under study is to generate, transmit, distribute and market electric energy efficiently and in a timely manner, to satisfy all its customers, by using advanced methods and techniques, with a level of professionalism that guarantees the success of planned objectives.
So they have implemented as a vision to provide electric service for the full satisfaction of all their clients, combining cutting-edge technology with a highly professional workforce, that is:
* Leading in Cuba the quality of service provided to our clients by having minors affected indices.
* Be the fastest and most efficient in attending to our claims.
* Provide the best personalized attention to our clients that guarantees their well-being and be the best with our efforts.
* The specific objectives of the generation UEB are as follows:
* Maintain the availability of 92% in Emergency Generation.
* Achieve zero accidents in human beings and technology
* Achieve a mismatch of maintenance to obtain a flat unavailability curve for this reason at the country, province and site level.
* Use only approved service materials for the operation and fulfill the necessary requirements for their reception, storage and handling.
* Establish quality and control criteria of the production process by means of the physical-chemical characterization of the service materials in use and monitoring of the performance used in the treatment processes and conditioning of the service materials
* Achieve a technologically efficient and planned operation to minimize production costs.
* Perform the planning and control of service materials before and during the operation of the equipment
* Control the efficiency of the operation of the equipment by calculating daily consumption rates of service materials.
* Achieve a clean production process that is not aggressive to the environment or people.
* Achieve a correct disposal and control of waste materials from production, the mitigation of polluting effects and monitoring of the parameters of regulated emissions.
The Organizational Structure of the UEB Distributed Generation is made up of two exploitation groups, a maintenance and breakdown group, a group of materials and services, a maintenance brigade, with 4 Fuel-oil sites, they are as follows (Annex # 3):
* Santa Clara 110,
* Santa Clara Industrial,
* Calabazar,
* Sagua.
And 7 Diesel locations which are:
* Ranchuelo
* Santa Clara 110
* Santa Clara Industrial.
* Remedies.
* Placetas.
* Sonto Sunday.
* Cifuentes
Characterization of the production process for the generation of Electric Power in Diesel Sites.
One of the most common utilities is that of generating electricity in those places where there is no electricity supply, generally they are remote areas with few infrastructures and very little habitation. Another case would be in public places, hospitals, factories, etc., which, in the absence of electricity from the grid, need another alternate energy source to supply themselves.
Description of the flow of the UEB production process:
The production process in the generating sets is basically the generation of electricity located as close as possible to energy consumption where the raw material is an energy carrier of the non-renewable type, that is, it is generated from fossil fuels, we can explain in a Detailed way as the fuel travels through different areas until it reaches the internal combustion engine so that the same I did useful work which in this case is to move a generator and provide electrical energy.
2.3. Diagnosis of the Cost System used in the UEB.
The cost system in the company uses cost as a normative instrument and evaluates the results, working on updating it in accordance with the company's requirements and in order to achieve greater effectiveness in controlling all the elements and cost items that affect in the value of the productions in which the company intervenes, it requires mastery by the leaders of the essential aspects, for its planning, determination and analysis, so the distributed generation UEB does not have a cost sheet to carry out the correct analysis of them as well as to carry out the correct operational and strategic planning process in it.
The accounting system has an accounting-financial area that is responsible for performing the functions of registering, classifying, controlling and integrating the financial statements of the entire company, as well as planning, prices, cost, finance and statistics.
Characterization of the Cost System.
Cost is the monetary expression of the expense incurred in the production and realization of a merchandise or in the provision of a service. Its usefulness in the management and direction of the production of goods or services is of singular importance, since it is not only necessary to know the general results, but also the efficiency with which these results.
* Main objectives covered by the system.
* Measure the behavior of the resources used in the main, auxiliary and support production.
* Facilitate the assessment of the decisions to be made that allow the solution of the major variants with the minimum of expense.
* Classify expenses according to their nature and origin.
* Analyze the cost of production and, in general, all the expenses of the organization for each structural subdivision.
* Analyze the possibility of reducing expenses.
* Analyze the expenses and their behavior with respect to the norms established in the use of the labor force as the main element in the cost of the activity.
* The company accumulates its production costs based on its actual expenses.
* Accumulation is done through a cost center of the same name.
The cost system that is applied in the company is maintained during Business improvement, and it must work to update it according to the company's requirements, in order to achieve greater effectiveness in controlling all the elements and cost items that affect in the value of the productions in which the company intervenes, ensuring that the principles and guidelines for planning, calculating and recording the costs in force in Cuban Accounting Standards for all companies in the country are met.
To achieve a correct analysis of production costs, one must start from an efficient use of the primary data and established registry and thus avoid super-loose results that provide subjective, cost-effective and do not allow a correct evaluation between what is produced and the results obtained.
Chapter III: Calculation of the Cost Sheet for the generation of electrical energy in the Diesel Sites of the UEB Distributed Generation.
In this chapter, the determination of the Cost Sheet for the Generation of Electric Power in the Diesel Sites of the UEB Distributed generation whose purpose is to serve for the planning, determination and analysis of production costs is carried out.
3.1 - Determination of the Cost Sheet for the generation of electrical energy in the Diesel Sites of the UEB Distributed Generation.
For the determination of the cost sheet, the procedures followed for the elaboration of the Cost Sheets according to the Joint Resolution No. 1/2005 of the MEP-MFP are taken into account. With the preparation of this work we can carry out a correct process, planning, recording and calculating the cost, it also constitutes the indispensable basis, which allows cost control and ensures comparative analysis of the results actually achieved with the forecasts made, with with a view to modifying administrative action as necessary in order for the company to achieve the basic objectives of efficiency.
The calculation of the unit cost allows:
* To measure the economic efficiency with which the production process has been operated in a given period, allowing its comparison against what was planned and what was obtained in previous periods.
* Analyze the effectiveness in the use and exploitation of the installed capacities.
* To know the behavior of the norms of consumption of materials and time, providing the revision and permanent update of the same.
* Serve as a basis for the correct valuation of products in process, semi-finished, finished and delivered (sold).
* Serve as a basis of analysis for the formation of product prices and service rates, as well as to assess the causes of the deviations experienced by the real costs in relation to those used when defining the price and which originate a high or low profitability in the company.
The purpose of calculating the cost of the product is:
* To facilitate the analysis of price formation.
* Contribute to the correct foundation of the planned indicators.
* Guarantee the analysis of production efficiency, facilitating the adoption of appropriate measures to correct deviations from the planned cost.
For the preparation of the Cost Sheet, the following questions were taken from the methodological point of view.
Raw materials and materials.
This heading contains the raw materials and fundamental materials used in the production process. These are considered as variable costs since their consumption is a function of production. For their determination, the material consumption norm was taken into account for one hour of work multiplied by the price in MN and CUC.
Direct labor.
This accumulates as they are incurred, for this, the actual hours were taken into account by the hourly rate that each operator belonging to the Generation UEB accrues.
The Direct Labor item includes the salaries of the direct production personnel and also the expenses associated with social security (12.5% for the execution), the provision for vacations (9.09%) and the Tax for the use of Force of Work (25%) and the Special Contribution on the Workforce (5%).
For its calculation, it is based on the basic salary of each worker directly linked to production, to which is added 9.09% of accumulated vacations and is divided between the 30 working days of a month and then between the actual hours worked daily, obtaining as As a result of the real hourly wage, 12.5% is applied to this to determine the amount to be paid as a contribution to social security and 25% for the calculation of the Tax for the use of the Labor Force, and the Special Contribution on Workforce 5%.
Auxiliary Materials
The consumption norms of each one of the auxiliary materials of production support were analyzed and we multiplied it by the price in MN and CUC in each of the cases, managing to determine the total amount for one hour of work.
For the analysis of Other direct expenses we consider the following items.
Depreciation of Tangible Fixed Assets. The depreciation of the tangible Fixed Assets of the UEB is considered, for a month and then for a work day considering that the UEB works 24 hours.
Electric power. The consumed energy of the UEB is considered, for a month and then for a work day taking into account that the UEB works 24 hours.
Indirect manufacturing costs apply to production, the objective of which is to assist the Company in the production of a usable unit, product or service, at the lowest possible cost in accordance with predetermined quality standards, these standards allow The Company makes periodic comparisons of real costs with standard costs, in order to measure execution and correct inefficiencies in a given period of time, as well as to carry out a correct analysis at the end of the accounting period, for which it was considered the total Indirect Production Expenditure,recorded in account 731 where unidentified indirect costs with a specific production are analyzed, for which an application rate or coefficient is determined to include in the Cost Sheet the part corresponding to the UEB of distributed generation.
3.2. Calculation of the Cost Sheet for the generation of electrical energy in the Diesel Sites of the UEB Distributed Generation.
RAW MATERIALS AND MATERIALS ELEMENT.
In this element we take into account the direct materials Diesel and Extra-diesel (15W / 40), which is used first for the transformation of electrical energy and the second to effect the lubrication of engine parts with a view to achieving viability to the time to generate electric power.
Below we list the calculations made to obtain this element.
DIRECT LABOR ELEMENT:
Direct labor costs are those wage expenses and their associated elements that are directly related to production and identifiable in the product, by participating directly in the final product.
The Direct Labor item includes the salaries of the direct production personnel and also the expenses associated with social security (12.5% for the execution), the provision for vacations (9.09%) and the Tax for the use of Force Labor (25%), Special contribution to the workforce (5%).
AUXILIARY MATERIALS ELEMENT.
Ancillary materials are considered to be those used to support the production process, we list them below.
OTHER DIRECT EXPENSES.
This item shows the expenses for the Depreciation of Tangible Fixed Assets, the electric energy consumed, these are classified as a fixed expense.
In the case of expenses for the Depreciation of Tangible Fixed Assets amount to $ 2 779.40 for a month which means for one day $ 92.64 so for one hour it represents $ 3.86 and the energy consumed amounts in the period of one month $ 861.00 which represents for a day $ 28.70 and for an hour $ 1.19.
ITEM INDIRECT PRODUCTION EXPENSES.
This item is the most complex for its determination, since it includes the concepts of factory general expenses, considered indirect because they are not identified with a specific production.
In the company, the total indirect costs of the service departments are assigned to the production departments through the Direct Allocation Method. In this method, the total indirect costs of the service departments are directly assigned to the production departments, ignoring any service provided by one service department to another.
The determination of the coefficient or application rate to be included in the Cost Sheet is predetermined, through the relationship between the amount of the indirect item with the selected base. For this, the cost of Direct Labor is selected since it contains an accuracy of the data of both the rate used and the hours worked in said process.
For this, it will be necessary to calculate the application rate of the indirect item that is created.
The cost of indirect items per unit of product is obtained by multiplying the predetermined application rate for each corresponding item, taking into account the selected unit base.
The calculation of the distribution coefficient for indirect expenses is carried out based on the expenses recorded in the month of April of 2011.
The total of the Indirect Production Expense, recorded in account 731, amounted to $ 46 047.35 while the expense Total for direct salary for this month was $ 9,903.10 The
following equation is used to calculate the result:
The amount obtained is $ 13,220.75 from the item indirect production costs for a month, which represents $ 18.36 for an hour in which 1.4 MW / H is generated per hour since the generator sets work 24 hours a day and every day of the month itself.
MINISTRY OF FINANCE AND PRICES
MINISTRY OF ECONOMY AND PLANNING
PRICE SHEET AND ITS COMPONENT IN CONVERTIBLE PESOS
COMPANY: ELECTRICA VILLA CLARA. UEB DISTRIBUTED GENERATION. CODE: 105.0.9087
In the Cost Sheet, the element that has the greatest incidence is raw materials and materials, which represents 80%, followed by indirect production expenses, which represent 7%, and lastly, direct labor items., other direct expenses and energy represent 1% respectively.
4. General Conclusions
1. The determined cost sheet complies with the formal requirements established in Joint Resolution 1/2005 of the MEP and the MFP, in addition the amounts it reflects are demonstrated and understood as annexes to it, which allows its subsequent updating.
2. The concepts related to Cost Accounting, the elements that make it up and the categories of expenses associated with the cost of production, Cost Sheets to carry out planning are adaptable to the Distributed Generation UEB.
3. There is no Cost Sheet in the UEB Distributed Generation that can be used to carry out a correct foundation of the planned indicators.
4. The preparation of the Cost Sheet contributes to the Strengthening of Internal Control, which favors a correct analysis of the economic results.
5. From the proposed procedures it is possible to make the corresponding accounting records.
5. Recommendations
1. Propose the future use of the Cost Sheet determined to carry out the planning process in the Distributed Generation UEB.
2. Train managers in order to carry out a correct foundation of the planned indicators.
3. Periodically carry out a revision of the cost sheet to adjust the cost concepts that suffer variations in the period.
4. Raise the proposal made in the UEB so that they are applied to similar companies in the territory.
6. Bibliography
1. Berthier, A. (2005). "The Harvard Reference System".. Available at: http://www.knowledgeandsociety.com
2. Castro Ruz, F. (2006), Speech given on the occasion of the 47th anniversary of his entry into Pinar del Río, at the ceremony for the completion of the assembly of the generator sets in that province. Shorthand Versions - Council of State
3. García Sánchez, IM (2010). Synthesis of accounting science. EUMED. Available at: http://www.eumed.net/libros/2010b/686/indice.htm.
4. García Sánchez, IM (2009) Introduction to accounting. EUMED. Available at:
5. Gómez López, R. (2004). THE ACCOUNTING SCIENCE: scientific and methodological foundations. EUMED. Available at: http://www.eumed.net/cursecon/libreria/2004/rgl-conta/index.htm.
6. Generator set (2011). on Wikipedia., available at: http://es.wikipedia.org/wiki/Grupo_electr%C3%B3geno#Descripci.C3.B3n_general
7. Gutiérrez Pérez, SD (2006). "The formation and control of prices in Cuba". Eumed. Available at: http://www.eumed.net/libros/2006c/195/1j.htm.
8. Hernández Sampier, R. (2004). Investigation methodology. Vol. 1. First Edition of Mc Graw - Hill. Second reproduction. Havana. Editorial Félix Varela, 2004.
9. Iglesias Sánchez, JL (2011). Cost accounting versus management accounting. Iberoamerican Observatory. Available at: http://www.observatorio-iberoamericano.org/paises/Spain/Art%C3%ADculos%20diversos%20sobre%20Contabilidad%20de%20Gesti%C3%B3n/INDICE.htm.
10. López Rodríguez, M. (2008). "What is a cost token?" Gestiopolis. Available at: http://www.gestiopolis.com/finanzas-contaduria/que-es-una-ficha-de-costo.htm.
11. MINISTRY OF ECONOMY AND PLANNING, MINISTRY OF FINANCE AND PRICES, (2005). JOINT RESOLUTION No 1/2005. Havana. Cuba.
12. MINISTRY OF FINANCE AND PRICES, (1997). Resolution No. 54-97. Havana. Cuba.
13. Polimeni, R., Co-authors. Cost accounting. Havana. Editorial Félix Varela, 2005.
14. Reina Chang, SR (2011). Proposal for a methodological procedure aimed at preparing Cost Sheets, email to S. Reina ([email protected]), February 6, 2011.
15. Rodríguez Domínguez, L.; Gallego Álvarez, I. and García Sánchez, IM (2009). Accounting for non-economists. EUMED. Available at: http://www.eumed.net/libros/2009c/581/indice.htm.
16. “Marta Abreu” Central University of Las Villas, (2011). Guidelines for the preparation of Diploma Works in the Bachelor's degree in Accounting and Finance. Villa Clara. Cuba.
17. Valdez Román, LB (2011). COSTS FOR DECISION-MAKING.. Available at:
