The planning process is especially important for organizations, constituting a powerful control instrument that influences decision-making.
Management Accounting is present in this process since one of its fundamental purposes is linked to it through the preparation of expense budgets and predetermined cost sheets.
This work addresses the problem of cost sheets, where the unit cost of products or services is reflected, whether real or predetermined, helping to measure the efficiency in the use of resources.
To guarantee the usefulness of this instrument, it is essential to have up-to-date information regarding consumption and labor standards, prices and rates, as well as duly substantiated rates of application of indirect manufacturing expenses.
Its proper preparation is vital, that it collects all the information related to the product / service it responds to.
Introduction:
At present, the quality of the information intended for the management of the company is one of the basic aspects, which determines that the organization achieves its short and long-term objectives, by guaranteeing an adequate selection among the possible options of a certain course of action.
Management Accounting as an information system is responsible for the accumulation and analysis of information for decision-making, which is reflected in its basic functions:
- Inventory valuation Planning and control Decision making.
The integration of these purposes in the cost systems allows obtaining the information that guarantees the most appropriate analysis to achieve more efficient results.
Each of these functions requires a set of procedures that guarantee the quality of the information provided as a result of the process and are based on the particularities of the organizations.
This work addresses one of the procedures used in calculating the cost of products and / or services, the Cost Sheet, a basic element in calculating the unit cost, so it is necessary to be clear about its objectives and contents, to guarantee its correct elaboration.
The Cost Token
In order to ensure the correct analysis of the behavior of productive efficiency in each unit of product manufactured or in process, it is necessary to calculate the unit cost, through the regulations on the consumption of labor force and other expenses, of the products or groups of homogeneous products produced by the company.
The unit cost is an economic indicator of vital importance in the analysis of the results obtained, showing the effectiveness achieved in the process and the efficiency in the use of resources.
In the basic terminology of the cost of production, unit cost is defined as the relationship between the total cost and the 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 complexity of calculating the unit cost will depend on the cost calculation system that is adopted, since this is in charge of determining the total cost of production and the physical units resulting from this production process.
The cost sheet is the document where the information related to the components of the unit cost of production or service is reflected.
The cost sheets can be classified according to the time of preparation of the same, according to the criteria of the specialists and the purposes that are pursued, therefore according to the objectives in the production calculation they can be classified in different ways, such as is summarized below:
- Planned Cost Token: Represents the maximum magnitude of expected expenses in the production of a unit of product. They are made using standards and regulations that guarantee the optimum possible production situation for the year that is planned. It will reflect the planned cost for a given production, being issued each time it is necessary to determine an estimated cost, taking into account the existing variations in quality, measurements and prices of materials and qualification of the workforce when necessary, as well as the characteristics of the workshop that manufactures, being the case of an equal production, having different costs given the workshop that produces them or the service that provides.It is calculated based on the standards in force in a given file and characterizes the technical –organizational and economic situation of production– its difference from the planned ones is that they are much more dynamic, that is, they change to the same extent that the standards 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 substantiate the cost calculations, as this sheet is necessary to establish the prices of these products. Real cost sheet: it characterizes the real cost of the production produced in the reporting period. When preparing this file it is necessary to take into account that the calculation objectives,the unit of calculation and the classification of expenses will be the same as those that serve as the basis for the planned cost sheet, which makes it possible to carry out the plan's compliance with respect to cost reduction. The real cost file is an important source for economic analysis and is content with the indicators that should be used to prepare the cost plan, as is obvious. The items contained in this cost card are not exactly the same as those contained in the planned cost card, as the real card includes losses and expenses not foreseen in the planned one, which does not alter the verification character of the same.The real cost file is an important source for economic analysis and is content with the indicators that should be used to prepare the cost plan, as is obvious. The items contained in this cost card are not exactly the same as those contained in the planned cost card, as the real card includes losses and expenses not foreseen in the planned one, which does not alter the verification character of the same.The real cost file is an important source for economic analysis and is content with the indicators that should be used to prepare the cost plan, as is obvious. The items contained in this cost card are not exactly the same as those contained in the planned cost card, while the real card includes losses and expenses not foreseen in the planned one, which does not alter its verification character..with which the character of verification of the same is not altered.with which the character of verification of the same is not altered.
In the Electronic Manual of the Accountant, it is stated that the cost sheets are prepared by items and reflect the unit cost of each product or service and can be prepared for both final products and intermediate or semi-finished products, thus making it possible to establish market prices. and internal as appropriate.
By correctly determining the unit cost, the most adequate comparison of the real costs of the different periods is guaranteed by reducing them to a common unit of measure, thereby eliminating the incidents that introduce fluctuations in the volume and structure of the production.
The cost of production and the measurement of results are based on obtaining the cost of each unit of product, and therefore, its prior determination, ensures the subsequent analysis of the behavior of productive efficiency by type of production.
This document must be prepared for each product produced by the company and in the event that the complexity and assortment of production is significant, it must be formulated for the most important articles or homogeneous groups of products.
The elaboration of the same requires:
- The establishment of material and labor consumption standards for the different products in their manufacturing phases or stages The correct delimitation of direct and indirect expenses grouped in the corresponding cost items Determination of the application fees for expenses indirect of each product.
Its structure and content show the breakdown of expenses by direct and indirect item of the cost of production of a product unit, considering the norms of consumption and physical labor and value for direct items and application fees and their unit basis for indirect games.
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.
The alternatives will be given by the quality of the materials, their measurements, price, quantities to produce, qualification of the workforce, manual labor, equipment to be used, etc.
It will also be used to calculate the sale price, once the total cost and the percentage of profit to be achieved has been determined.
The cost sheets are prepared for both final and intermediate products, allowing the establishment of commercial and internal prices as appropriate.
Procedure for the preparation of the Planned Cost Sheets.
An important aspect for calculating the cost is the identification of direct and indirect costs. This classification of expenses is closely linked to the cost object, that is, it will be a function of what the cost, the product, the service, the area, the activity will be calculated for.
In Cuba, to calculate the cost, the classification into expense items is used, which group them according to their origin and destination.
The procedures to be used to calculate the unit cost for direct and indirect items are shown below.
Direct Games:
Direct items generally group normal and variable expenses according to the company's main production, so there must be rigorous work in determining them, ensuring maximum consideration of existing reserves and that the management has an important instrument of measurement of results that helps the company to obtain an optimal use of resources in its economic-productive activity
Its calculation is carried out as follows:
Items of material consumption are obtained by:
- The multiplication of the gross standard of each type of material by its corresponding prices, offering the cost of each material per unit of product, the sum of which will allow it to be associated with the defined material consumption item, that is, fundamental materials.
Wage items are determined by:
- The multiplication of the time norms by the corresponding hourly rates of the different work operations that are contemplated in the manufacture of the product and whose result expresses the basic salary cost per unit of product. The existence of additional payment concepts whose behavior of their expenses responds to the direct and variable nature will follow similar treatment and inclusion as basic salary.The established percentages of complementary salary and social security will be included at the hourly rates of the basic and total salary, respectively. obtaining their corresponding rates, which are multiplied by the time standards used in the calculation of the basic salary and in this way the unit costs are obtained.
For both concepts, if they want to be explicitly shown in the cost card, if they are included within the same item, their figures are added to the planned unit cost of the designated salary item.
Indirect Games:
The expenses included in these items are not associated with production, as is the case with auxiliary materials, fuel, energy, and salaries of workers not directly linked to production, among others. This characteristic makes it necessary that when more than one product is made, application rates or quotas must be established to charge each product the proportion of the indirect items that corresponds to it.
The determination of the rate or application fee to include in the planned cost card is predetermined, by:
- The relationship between the budgeted amount of the indirect item and the selected base (generally linked to work, that is, cost of direct labor or hours worked).
The foregoing makes it necessary:
- Prepare the budgets of indirect expenses referring to all those expenses that are estimated for the areas of services of auxiliary productions, management and even within the basic productive areas not directly associated with their production Carry out the Secondary Distribution of the indirect costs budgeted, applying the method that is considered convenient as well as the selection of the basis for the apportionment of expenses and the establishment of the most logical order of distribution. In this sense, there must be a correspondence in the selection of these aspects and the procedures for the distribution of real expenses, because precisely in this way the planned and actual cost figures obtained for indirect items will be comparable.The final result of the secondary distribution offers the budgeted figures of the indirect items that are formed. Calculate the application rate of each indirect item. Obtaining the cost of indirect items per unit of product is done by multiplying the predetermined application rate of each corresponding item by the selected unit base. The total unit cost of each product will be obtained by adding the selected unit costsThe total unit cost of each product will be obtained by adding the selected unit costsThe total unit cost of each product will be obtained by adding the selected unit costs
It should be noted that the procedure described is the one traditionally used, but currently it is necessary to refer to the existence of activity-based costing (ABC).
"ABC is a new cost model that aims to assign direct costs and distribute indirect costs over the cost of products, with the characteristic that these costs must be distributed through the true causes that generate them, that is, through the activities necessary for its preparation and sale ”(Carlos Mallo, 1993).
The fundamental objective of this system is to make the Management and in general the entire organization aware of the role that indirect costs play within the production process, based on two ideas, the first is that it is not the products but the activities that originate the costs; the second is that it is the products that consume the activities.
"Activity is all that action or set of actions that are carried out in the company, aimed at obtaining a good or service; describing, in this way, what is done in the company, how time is invested and the different inputs and outputs ”.
The operation of the system consists of the allocation of the different costs to the activities and after these to the products through the generators or cost drivers (cost-drivers). The aim is to minimize indirect costs, identifying them directly with the activities that cause them, avoiding distributing them among all products using the volume of activity measured by the hours of direct labor as a distribution basis, as has been done. traditionally.
In this system, different phases are developed to be able to arrive at the calculation of the cost of the product or service, a phase in which the costs that can be assigned directly to the product and the costs of the activities are added, the latter through cost generators.
Whichever system is chosen for calculating the cost, the card plays the same role, that is, it reflects the cost per unit of production, a different objective from the so-called “price card”, where all the given expenses are reflected. that its objective is the formation of the price of a product or service.
Another aspect to be highlighted is the need for expenses to be properly classified into Direct and Indirect according to the cost object, as well as selecting the method for the distribution of indirect costs to the product.
Due to the information that is reflected in the files and the bases that are taken for the calculation of each game, it is essential to keep this information up to date, carrying out periodic reviews for that purpose.
Conclusions:
The fundamental way to guarantee the increase in the efficiency of social production is given by the reduction of costs, which allows with the same resources to produce a greater quantity of products that more fully satisfy the needs of society. This is only possible by achieving an adequate use of material, labor and financial resources and the efficient exploitation of the means of production, guaranteeing adequate control.
The unit cost of production is the indicator that reflects the efficiency in the use of resources, hence the importance of its control and correct calculation.
The Cost Sheet reflects the unit cost of production, its proper preparation and continuous updating depends on the veracity of the information provided to management to make decisions.
Bibliography
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