Budgetary costs (per item) in the cost management system
Budgeting means to calculate the estimated amount of sales and expenses in advance, and to forecast the profit.
An important task in accounting is the closing of accounts and the budget, and the closing of accounts is done after the company's business activities for one year are completed, while the budget is made before the company starts its business activities for one year.
The actual cost is the actual product manufacturing cost, the standard cost is the standard product manufacturing cost, and the budgeted cost is the budgeted product manufacturing cost.
Product manufacturing cost can be grouped into direct material cost, direct labor cost and manufacturing overhead cost, which can be calculated deductively by accumulating the total average unit cost and allocation cost or functionally by the trichotomy method.
In the cost management system, direct material cost is calculated by multiplying the deduced total average unit cost by actual input results. Direct labor cost is allocated directly to the manufacturing department, and manufacturing indirect cost is allocated from the indirect department to the direct department on a primary basis, and the result of the above calculation is allocated to the product (work in progress).
In the cost control system, the difference between the standard cost and the actual cost is analyzed by breaking it down into the difference in price and quantity for direct material cost, and the difference in labor rate and working hours for direct labor cost.
By replacing the master values for standard costing (standard purchase price, wage rate, efficiency, allocation rate) with arguments for budget costing, scheduled direct material cost and scheduled direct labor cost can be calculated.
- Standard purchase price ⇒ Planned purchase price (Table of Planned Purchases)←Master value
- Standard input quantity ⇒ Scheduled input quantity (Table of Planned Input Quantity)←Automatic calculation
The scheduled input quantity (input schedule table) is automatically calculated from the scheduled production quantity (production schedule table) and BOM.
- Standard wage rate (how much per minute) => Scheduled wage rate (scheduled allocation cost/allocation rate table)
- Standard efficiency (number of minutes per piece) ⇒ Scheduled efficiency (table of scheduled direct operating hours)
Budgetary costing is performed by replacing the actual production results argument with a budgetary costing argument.
- Production performance => Planned production volume (Table of Planned Production)
In addition, you can predict the gross profit by setting the estimated sales volume in the sales schedule table and calculating the sales budget. With the cost management system, the budgeted sales and the budgeted product manufacturing costs are calculated and the actual results (actual cost calculation results) are managed.
- Sales results => Expected sales volume (Expected sales table)
Accounting system budget management (departmental and account units)
The major difference between accounting system and cost control system in terms of master data is the existence of an item master.
Since the accounting system does not have an item master, item information is required to aggregate transactions by item from ledger (G/L), but this appears in the difference between budget control in the accounting system and budget control in the cost control system.
On the other hand, the budget management system of the accounting system allows you to set the budget for each department in the budget entry screen for each item on the profit and loss statement (P/L) and balance sheet (B/S), and then the budget for the entire company is automatically calculated and displayed in the accounting module. It has the function of pre-trial control which compares P/L and B/S figures with those of finalized financial results.
In order to perform pre-track control by department, it is necessary to set up the department to aggregate P/L and B/S items of G/L data of accounting system to the department after the closing of accounts.
In Japan, the biggest expense for a company is usually labor, but in Indonesia, labor costs are so low that depreciation of machinery is the biggest cost, and in some cases, materials account for the majority of the cost.
Project budget management
In case of a long project, the cost of materials, subcontracting and other expenses are transferred to the work-in-progress account or construction in progress account and managed as "non-sales assets" during the project period.
However, in Indonesia, inflation and unpredictable additional costs tend to exceed the original cost estimates, so it is important to divide the cost items into three major groups, such as material, subcontracting and others, in order to balance the books. The initial estimated profit is protected to the death by the "Job Costing" system.
Since the estimated costs are roughly fixed at the time of order entry, the job costing function allows you to register the estimated costs by project, and to manage the actual costs by issuing purchase orders (P/Os) for material purchases and subcontractor services to be performed during the construction period.