Gross average unit price and production cost
Current month's production cost of the product
- Accumulated amount based on the total average unit price of input work in progress + own process processing cost
Gross average unit price of work in progress
- (Amount of inventory of work in progress at the beginning of the month + Cost of production of work in progress during the month)/(Quantity of work in progress at the beginning of the month + Quantity of production of work in progress during the month)
Current month's production cost of goods in process
- Accumulated amount based on the total average unit price of input materials + own process processing cost
Total average unit price of input materials
- (amount of materials in stock at the beginning of the month + amount of materials purchased in the month) / (amount of materials at the beginning of the month + amount of materials purchased in the month)
In other words, when an item is placed at the highest level (Level 0), "(Total average unit price of input items x actual quantity of input items) + own process processing cost" is the manufacturing cost, and then the input amount when the item becomes an input item is calculated based on the previous manufacturing cost and the total average unit price calculated from the amount of inventory at the beginning of the month.
Portion Management
Manufacturing costs flow along the account liaison chart in the following manner
- Material amount at the beginning of the month + material purchased in the month - material amount at the end of the month = direct material expenses in the month
- Month-end pegged product amount + (current month's direct material cost + current month's processing cost) - month-end pegged product amount = current month's manufacturing price
- Product value at the beginning of the month + Product cost of the month - Product value at the end of the month = Cost of sales for the month
If you manage Portion directly by separating the material cost portion from the labor cost portion, the material cost portion starts with the material and flows through the work in progress to the product.
- Materials at the beginning of the month + materials purchased in the month - materials at the end of the month = direct materials for the month
- Work in progress at the beginning of the month + Direct material cost of the month - Work in progress at the end of the month = Product manufacturing cost of the month (direct material cost)
- Product of the month + Product of the month - Product of the month end = Cost of sales for the month (direct material cost)
The processing cost starts from the work in progress and flows to the product.
- Work in progress at the beginning of the month + Work in progress during the month - Work in progress at the end of the month = Product manufacturing cost for the month (part of processing cost)
- Product processing fee at the beginning of the month + current month's product manufacturing price (processing fee portion) - product processing fee at the end of the month = current month's gross-up (processing fee portion)
Types of Transfer to other account
A deduction is a "minus of too much of the cost of production or cost of sales", which is a deduction from the cost of production when using Transfer to other account (work in progress) and a deduction from the cost of sales when using Transfer to other account (products).
Recording in cost of production (loss) and removing it from cost of sales
When a material failure or loss occurs, the material, work in process, or product is not reduced directly, but is indirectly transferred to another account (loss due to spoiled work) through a transfer to another account.
- Production cost = Work in progress at the beginning of the month + (Production cost of the month + work in progress at the end of the month) - Work in progress at the end of the month
- Cost of sales = Products at the beginning of the month + Cost of production during the month - (Other accounts + Products at the end of the month)
（借） Disposal loss 2 （貸）Transfer to other account (product) 2
Posted in manufacturing cost (work in process) and removed from manufacturing cost (work in process)
The amount of loss is directly transferred from material cost to material loss within the manufacturing cost.
- Manufacturing cost = Work in progress at the beginning of the month + (Manufacturing cost of the month + work in progress at the end of the month) - (Other accounts + work in progress at the end of the month)
（借） Disposal loss 2 （貸）Transfer to other account (work in process) 2
Posted in SG&A expenses and removed from manufacturing costs (work in process)
In this case, if the amount of the customer return is large, the claim is removed from the manufacturing cost and recorded as SG&A expenses or extraordinary loss.
- Manufacturing cost = Work in progress at the beginning of the month + Manufacturing cost in the current month - (Other accounts + Work in progress at the end of the month) ⇒ Manufacturing cost reduction
- Cost of sales = Products at the beginning of the month + Manufacturing cost - Products at the end of the month => Cost of sales reduction
- Gross profit = Sales - Cost of sales => Increase in gross profit
- Operating income = Gross profit - S.G. & A. expenses => S.G. & A. expenses to reduce operating income
（借） SG&A expenses 2 （貸）Transfer to another account 2
Recorded as an asset and removed from the cost of sales (product)
In the case of transferring the production of our own products to assets, the inventory of products at the end of the month has decreased by the amount of prototypes, and the cost of goods sold has increased by that amount, so it is indirectly deducted from the cost of goods sold through other account transfers (products).
- Cost of sales = Products at the beginning of the month + Cost of production during the month - (Other accounts + Products at the end of the month)
（借）Trial expense 2 （貸）Transfer to Other account (products) 2
