Enterprise cost management - USUE Information and Library Complex. G

Date of: 29.09.2019

FEDERAL AGENCY FOR EDUCATION OF THE RUSSIAN FEDERATION

Leva O.V.
Cost management

Belgorod 2006

Federal Agency for Education of the Russian Federation
Belgorod State Technological
university. V.G. Shukhov

Leva O.V.
Cost management

Educational and methodological complex for students of the specialty 060800 - Economics at PSM enterprises (Specialization - Organization and production management) part-time education with the use of distance technologies
Belgorod
2006

UDC 657.01(075.8)

BBK 65.052ya73

At
L 34
cost management: Textbook - Belgorod: Publishing house of BSTU im. V.G. Shukhova, 2006. - 200 p.

The tutorial covers all issues of cost management in the enterprise. Represented theoretical basis: essence, systems, functions and comparative characteristics of managerial and financial accounting. Much attention is paid to the issues of costing and analysis of production costs to assess the cost of production and determine profits. Examples and practical situations are considered that demonstrate the possibilities of accounting management when making optimal decisions in economic activity enterprises.

The textbook is intended for students of specialties 060800 - Economics and management at PSM enterprises

Il. 23. Tab. 31. Bibliography: 29 titles.

UDC 657.01(075.8)

BBK 65.052ya73

 Belgorod State
University of Technology
(BSTU named after V.G. Shukhov), 2006
 Leva O.V., 2006

Theoretical foundations 10

1.1. Essence of costs 10

1.2. Cost management functions 12

1.3. Cost Management Principles 15

1.4. Place of cost management in the enterprise information system 16

1.5. The history of the development of the cost management system 19

2. Management and financial accounting: unity
and differences 25

2.1. Principles of financial and management accounting 25

2.2. Interaction between management and financial accounting 28

2.3. The difference between managerial and financial accounting 30

3. The concept of production costs, their classification 37

3.1. General concepts and provisions 37

3.2. Grouping and distribution of costs 38

3.3. Classification of costs according to the degree of dependence of the value of costs on the level of business activity
(production or sales volumes) 53

4. Calculation in the production cost management system 62

4.1. Production cost: its composition, types 62

4.2. The role of product costing
in production management 64

4.3. Principles of calculation, its object and methods 66

4.4. Production cost accounting methods and product costing 69

4.4.1. Standard method of cost accounting 69

4.4.2. Order-based costing method 71

4.4.3. Per-line method of cost accounting 72

4.4.4. Process method of cost accounting 74

4.5. Product costing
with the complex use of raw materials 74

4.6. Factors and reserves to reduce the cost of production 81

5. Cost analysis 85

5.1. Cost analysis when making short-term management decisions 85

5.1.1. Break even. Assumptions Used in Cost, Profit and Sales Behavior Analysis 86

5.1.2. Methods for calculating the break-even point 87

5.1.3. Impact of income tax 94

5.2. Determination of the break-even point when using cost meters of production volume 96

5.3. Information on costs for making decisions on the feasibility of production, its structure and volume 98

5.3.1. Choice of production volume 98

5.3.2. Margin approach taking into account the limiting factor 99

5.3.3. Choice of "buy" or "produce" option 100

5.3.4. The effect of structural shifts 102

5.4. Opportunity costs, relevance and managerial decision making 103

5.4.1. Opportunity costs, relevance 103

5.4.2. Stockpiling 103

5.4.3. Modernization of production 104

5.4.4. Actual data and forecasts 105

5.4.5. Relevance of historical costs 105

5.5. Cost-benefit analysis in decision making
for capital investments 107

5.5.1. Static methods of investment calculations 107

5.5.2. Dynamic methods of investment calculations 110

5.5.3. Capitalized cost method 110

5.5.4. Internal interest rate method 112

6. Cost management systems 115

6.1. The system "standard - cost" as a continuation of the normative method of cost accounting 115

6.2. Direct Costing System 119

6.3. Controlling 120

6.4. General system cost management 123

7. Cost control 125

7.1. Internal control, structure and functions 125

7.2. Efficiency of accounting and control systems 126

7.2.1. Formal and informal control systems 127

7.2.2. System goals, individual behavior and risk distribution 127

7.2.3. Technological, adjustable and fixed costs 128

7.2.4. Planning and control of regulated costs 129

7.3. Factors affecting internal control systems 130

7.3.1. Regulations on internal control 131

8. Operational analysis 134

8.1. Determining the strength of operating levers for each
of the analyzed factors 135

8.2. Profit sensitivity analysis to changes in the analyzed factors 136

8.3. Break-even analysis for each of the analyzed factors 137

8.4. Determination of a compensating change in the volume of sales when one of the analyzed factors changes 139

Course project 143

1. The purpose and objectives of the course project 143

2. The structure of the course project 143

3. Requirements for the design of the course project 144

4.1. Introduction 146

4.2. Theoretical part 147

4.3. Practical part 147

4.3.1. a brief description of selected enterprise 147

4.3.2. Description of the accounting policy of the enterprise 147

4.3.3. Product cost analysis 147

4.3.4. Economic and mathematical model 181

4.3.5. Calculation of the economic efficiency of the event 181

Examples of problem solving 185

Training tasks 188

Questions for the exam 197

Glossary 200

References 205

Introduction

Presented to readers tutorial corresponds to the course of the discipline of the specialization "Cost Management" of the training program for specialists in specialization
06 08 00 - "Organization and management of the enterprise."

The purpose of the tutorial is to acquaint the reader with the theoretical and practical aspects of costs (with this seemingly simple, but in fact complex and diverse economic category); the process of forming the costs of production and distribution both at the places of formation of costs, and for various types of products and on this basis the creation of information necessary for the manager when making decisions on planning, management and control.

Economic science comes to the need to improve the current cost management system, taking into account the significant changes taking place in production technology. However, even an excellent management accounting system cannot can guarantee competitive advantage if the company does not have good products, effective technologies, marketing, commercial activities. But an ineffective management accounting system, by providing late, distorted, or overly generalized information, can easily undermine the efforts of companies with superior R&D, manufacturing, and marketing.

The purpose of the cost management system is to increase the efficiency of the use of resources involved in production, therefore, the study of these issues is given a significant place in the proposed textbook.

It cannot be said that all issues related to the validity of attributing costs both by the places of their formation and by the carriers of the manufactured products. The distortion of production costs does not allow them to be used as a basis for making decisions on planning and control (management), for pricing purposes. The training manual presents sections on the use of information on costs in making managerial decisions in the short and long periods.

Operational analysis has a significant place in the management of production costs and product sales. This factor, as well as the specifics of formation, predetermined the expediency of their consideration in a separate chapter.

The study of the sections presented in the textbook will be useful for students and practitioners interested in state of the art theory and practice in the field of formation and management of production and distribution costs.

Tambov State Technical University

Department of Economics and Management

G.G. Serebrennikov

Abstract of lectures on the discipline

COST MANAGEMENT

for students of specialty 080502

Economics and management at the enterprise

Tambov 2005

Also many others I could collect evidence,

To further confirm the certainty of my reasoning;

But the traces that I have only outlined here are enough,

So that you can follow everything else with a sensitive mind.

Lucretius

Lecture 1

1. Comparative characteristics of financial, tax and management accounting.

2. The essence of the cost management process. Management accounting systems.

3. Traditional and non-traditional classification of costs in management accounting.

1. Comparative characteristics of financial, tax and management accounting

Let us consider the system of legislative regulation of accounting in Russia from the point of view of those of its provisions and characteristics that affect the possibility of the functioning of management accounting in Russia today.

With the adoption in 1993 State program the transition of the Russian Federation to the accounting system adopted in international practice, a number of normative documents that create the necessary prerequisites for the introduction of management accounting into the practice of Russian enterprises. These documents address issues of both accounting in general and management accounting in particular.

Currently, a four-level system of regulatory accounting regulation is being formed in Russia.

Level 1 - Civil Code of the Russian Federation (parts 1 and 2); the federal law Russian Federation "On Accounting" dated November 21, 1996 No. 129-FZ, Tax Code.

Level 2 - the system of national accounting standards - Regulations on accounting and reporting in the Russian Federation, approved by order of the Ministry of Finance of the Russian Federation of July 27, 1996 No. 34N, and regulations Government of the Russian Federation.

Documents of this level are designed to ensure uniform accounting of business transactions of organizations, timely compilation and presentation to interested users of comparable and reliable information on the property status of organizations, their obligations, income and expenses.

Level 3 - regulations, guidelines and recommendations, mainly from the Ministry of Finance of the Russian Federation. At the same level of regulatory regulation is the Chart of Accounts with instructions for its use (Order of the Ministry of Finance of the Russian Federation dated October 31, 2000 No. 94N). Generally accepted accounting rules are implemented in the development of accounting policies.

Level 4 - internal working documents of the enterprise, documents of organizations developed by them when forming an accounting policy on the basis of the Regulation "Accounting policy of an organization" RAS 1/98.

Thus, in the Russian legislation today there are no barriers to the development of accounting management accounting. Objective prerequisites for its formation and development at enterprises have matured, taking into account previously accumulated experience and traditions.

Currently, in the information field of the enterprise, there are three accounting subsystems associated with management, which together should contribute to improving the financial condition of the enterprise. The purpose of these subsystems is to meet the information needs of their users; financial accounting - shareholders, investors, credit institutions, business partners; tax accounting - the state tax service; management accounting - managers.

The main control mechanism is concentrated in the accounting policy. In turn, it should be divided into three parts:

1) financial (accounting) accounting;

2) tax accounting;

3) management accounting.

IN Lately in Russian theory and practice, the problem of identifying financial, tax and management accounting systems appears, which is relevant for the information field of the organization. This happened as a result of subjective and objective reasons: the integration of Russia into the global economic space required the harmonization of the language of business - accounting; dispersed interests of users of accounting data.

The need for separation, consolidation or separation of tax and financial accounting is disclosed in various sources.

Due to the inconsistency of regulatory legal documents, accountants are put in an uncertain state, in addition, due to the adoption by the organization of different accounting policies in the field of financial and tax accounting, the transition from accounting data to tax returns or double parallel accounting becomes a problem. The theory of tax policy and its correlation with accounting financial policy have not been worked out.

At present, neither in theory nor in practice, the issues of allocation of management and financial accounting systems, as well as aspects of their systemic relationship in the accounts, have been resolved.

Despite the discussions and problems associated with the functioning of the three accounting systems, their separation took place. There are the following types of accounting:

1) management accounting;

2) financial;

3) tax accounting.

Over time, the process of enterprise management has undergone significant changes both in terms of setting tasks and in terms of methods for solving them. Production accounting in modern conditions is not an end in itself. Its information is necessary for managers to make operational decisions. Therefore, management accounting includes production accounting. The relationship between types of accounting is illustrated in Figure 1.

Management accounting "does not fall out" of the accounting system, it remains in its composition and is maintained according to all the canons of accounting and maintaining the principle of double entry. At the same time, it is enriched by the fact that, linking with the regulation and planning of production costs, it expands the range of planned and accounted types of production costs. The management accounting system is complemented by economic analysis and preparation of draft management decisions.

Management accounting intersects with financial accounting in terms of cost accounting, the difference is only in cost accounting methods: in the first case, we are talking about analytical accounting, in the second, synthetic accounting. To date, it is generally recognized that tax accounting is separated into an independent direction. However, financial and management accounting information can be used in tax calculations.

The relationship between types of accounting is shown in Figure 1.

Budgeting

Management analysis

Adoption

management decisions

Internal reporting

A - production accounting

B - financial (accounting) accounting

B - management accounting

G - tax accounting

Figure 1 - The relationship of types of accounting.

Management accounting cannot replace or replace financial accounting. Opinions about the optionality of financial accounting, since there is tax and management accounting, are based on a misunderstanding or ignorance of the tasks and functions different types accounting.

Management accounting is needed specifically for internal management. It cannot solve the problems of corporate governance and serve as the basis for public accounting.

Table 1 - Options and methods provided for by accounting and tax legislation

Accounting

tax accounting

Method (method) of accruing depreciation of fixed assets

Linear way

Decreasing balance method

The method of writing off the cost by the sum of the numbers of years of the term beneficial use

The method of writing off the cost in proportion to the volume of production

Depreciation is charged over the entire useful life of the asset

Line method

Nonlinear Method

The selected depreciation method cannot be changed during the entire accrual period. Depreciation is calculated in accordance with the depreciation rate.

The procedure for accounting for the cost of repairing fixed assets

Immediately included in the cost of products, goods, works, services

Preliminarily accounted for as deferred expenses, and then evenly included in the cost price over a certain period of time

Taken into account as part of future expenses, while forming a repair fund

Recognized in the amount of actual costs in the reporting period in which they were incurred

Accounted for as part of the reserve for future expenses for their repair

Method for estimating inventories upon release into production and other disposal, as well as at the end of the reporting period

At the cost of each unit: including all costs associated with the acquisition of stock; including only the cost of stock at the negotiated price

By average cost

Weighted estimate

On a rolling basis

By cost per unit of inventory

By average cost

The procedure for recognizing (writing off) administrative expenses

(general expenses)

Partially recognized in the cost of products sold in the reporting period as expenses for ordinary activities

Administrative expenses (indirect expenses), fully related to the expenses of the current period

The procedure for recognizing (writing off) commercial expenses

Recognized in full in cost of goods sold as operating expenses

Recognized in part in cost of goods sold as expenses for ordinary activities

No method variant

For organizations that do not carry out trading activities - fully charged to expenses current period

For organizations engaged in trading activities - commercial expenses reduce the income from sales of the current month

The procedure for recording work in progress

In mass and serial production:

At actual cost

At standard production cost

For direct cost items

At the cost of raw materials, materials and semi-finished products

With a single production

Based on actual costs incurred

No method variant

For organizations whose production is associated with the processing and processing of raw materials. The amount of direct costs is allocated to the balance of work in progress in a share corresponding to the share of such balances in the feedstock, minus technological losses.

For organizations whose production is associated with the performance of work. The amount of direct costs is allocated to the balance of work in progress in proportion to the share of work in progress.

For other organizations. The amount of direct costs is distributed to the balance of work in progress in proportion to the share of direct costs in the planned cost of production.

The order of reflection in the accounting of finished products

According to the actual production cost - in single and small-scale production

According to the standard production cost - in mass and serial production with a large range of finished products

At negotiated prices - with the stability of such prices

For other types of prices

No method variant

Estimation of finished product balances in the warehouse is determined as the difference between the sum of direct costs attributable to the balance of finished products at the beginning of the current month, increased by the amount of direct costs attributable to the release of products in the current month (minus the amount of direct costs attributable to the balance of work in progress), and the sum of direct costs attributable to products shipped in the current month.

The procedure for reflecting in the accounting of shipped products

At actual full cost

At standard full cost

Evaluation of the balances of products shipped but not sold at the end of the current month is determined as the difference between the sum of direct costs attributable to the balances of shipped but not sold finished products at the beginning of the current month, increased by the amount of direct costs attributable to shipped products in the current month (minus the amount direct costs attributable to the balance of finished products in stock) and the amount of direct costs attributable to products sold in the current month.

So, the “divorce” between tax and accounting is officially formalized (Chapter 25 of the Tax Code of the Russian Federation). However, based on the foregoing, it can be argued that official registration does not at all mean their actual separation. Their relationship is obvious. Tax accounting cannot yet do without accounting. However, accounting also depends on the tax. So, without calculating income tax, it is impossible to determine the profit remaining at the disposal of the taxpayer (retained earnings) shown in the income statement.

Table 2 - Comparison of financial and management accounting

Financial Accounting	Management Accounting
Mandatory record keeping
Accounting is mandatory. Efforts should be made to collect data in the required form and with the required degree of accuracy, as required by law and standards, whether or not the management of the organization finds the data useful.	Keeping records depends entirely on the will of the management: no outside bodies or organizations have the right to indicate what should or should not be done. Therefore, there is no point in collecting and processing information, the value of which for management is lower than the cost of obtaining it.
Purpose of accounting
This accounting is official, its maintenance is mandatory for all enterprises and organizations without exception. Financial reporting documents are submitted to the tax authorities, are the object of an audit, can and should be published.	This accounting is necessary for the management, specialists of the enterprise to make managerial decisions, quickly respond to changing production conditions, its materials may be a trade secret.
Sources of information
This is practically only the data of the accounting system of the organization that accumulates financial information, as well as elements of the taxation system.	In addition to the data of the accounting system of the enterprise, there is information on the consumption rates of material resources, technological waste, research on the market situation, reports on the conduct of research work, the possibility of using their results in existing production conditions, the amount of penalties for non-fulfillment of contracts.
Degree of information accuracy
The data must be sufficiently accurate and reliable, otherwise external users will be distrustful of the content of published reports.	Approximate operational information sufficient for making managerial decisions
The degree of openness of information
The reporting is not a trade secret. It is open and public.	The information is usually a trade secret of the enterprise. It is not subject to publication and is confidential.
Users of accounting results
Shareholders, investors, suppliers, buyers, credit institutions, tax authorities, statistical authorities, operating enterprises and other external users.	Managers of different levels (president, shop manager and others) and employees who help them in collecting and analyzing information.
Forms of presentation of reporting information
Financial information is submitted to the tax authorities in the forms recommended by the Ministry of Finance of the Russian Federation, the Ministry of Taxes and Duties and other central departments, they are the same for all enterprises, regardless of their organizational and legal form.	The results of management accounting can be presented in a production form, there are no mandatory forms and forms. Moreover, it is up to the management of the organization to decide whether or not to keep management records.
Accounting information meters
Monetary meters are used, they are universal, expressed in rubles.	Specialists in their work use all types of meters in kind, labor, monetary
Reporting frequency
For financial statements, strictly defined deadlines are established; they are submitted at the end of each quarter and for the year.	Reports prepared for managers are not limited by strict time frames, but it is obvious that they should be issued much more often. The deadline for submission of such reports is set directly by the management of the enterprise. They can be compiled daily, weekly, decade, monthly, upon request.
Accounting scale
Activities of the whole organization	The objects of accounting are the so-called responsibility centers, cost centers, income center, profit center. They can be the enterprise as a whole, individual workshops, sections, divisions, etc.
Method of calculation
The materials of the financial statements are based primarily on the initial accounting data.	Calculations are focused primarily on departments within the organization, based on a combination of initial data, analysis of materials for the past period and predictive estimates for the future.
Methodology for calculating financial results
Two concepts are possible. The first provides for the calculation of profit as the difference between the proceeds from the sale of products and its full cost. The second concept - profit is calculated as the difference between the proceeds from the sale of products, its production cost and recurring costs	In management accounting, other approaches to the definition are possible. In accordance with the "direct costing" system, the indicator of marginal income is calculated.
Grouping costs
Costs are grouped by economic elements	Costs are grouped by cost carriers in the context of costing items
Accounting principles
Financial statements are prepared on the basis of generally accepted accounting standards. They use the principle of double entry, the principle of enterprise isolation, comparability and comparison of data	It has no generally accepted principles, the main thing is simplicity and ease of use. Those accounting rules that are considered the most useful for making a decision are selected.
Relationship with other disciplines
Accounting is mainly based on own method	Associated with disciplines - microeconomics, finance, economic analysis, mathematical statistics
Application in practice
Registers business transactions on the basis of documents confirming their completion, i.e. deals with the facts of the economic life of the organization that have already occurred.	A selection of recommendations for the future based on an analysis of past events.

Although there are differences, most of the elements of financial accounting can be found in management accounting. There are two reasons for this.

1. Factors that determine the value of generally accepted principles for financial accounting also apply to management accounting. For example, the management of the organization's management apparatus cannot be based in their activities solely on unverifiable, subjective opinions and assessments.

2. Operational information is used both for the preparation of financial documents and in management accounting. Therefore, the collection of primary information should be carried out in accordance with uniform rules. A different procedure would lead to the need to duplicate the collection of primary information.

The most important determinant of similarity is perhaps the fact that data from both financial and management accounting are used to make decisions. Thus, financial accounting data helps investors in assessing the prospects of the organization, i.e. in making decisions about investing in the organization. Management accounting data is used by managers to solve a wide range of management tasks, for example, when determining prices, the need to purchase any components on the side or produce them within the organization.

Thus, significant differences between financial and management accounting are confirmation of their right to exist separately.

2. The essence of the cost management process. Management accounting systems

The diagram shows a direct relationship between the general functions of cost management: planning, organization, and control. Feedback: according to the results of the control, changes are made to the planning and organization of costs at the enterprise.

Scheme 1 - Cost management process.

Planning

Organization

Control

1. determination and calculation of consumption rates of raw materials, materials, energy carriers, etc.

2. planning of overhead costs, calculation of the rates for the distribution of these costs by accounting objects

3. Production planning

1. definition of the object of cost accounting

2. definition of responsibility centers

3. forms of documentation and the procedure for their passage at the enterprise

1. by cost accounting objects

2. by responsibility centers

3. by deviations of actual costs from planned

Management accounting originated in the West in the middle of the 20th century, as accounting no longer met the needs of managers. The task of management accounting was to prepare specific information for the head of each department of the enterprise. This information increased the efficiency of decisions made.

Over time, most management accounting systems have become embedded in enterprise accounting. Those. these systems have become very detailed cost and revenue accounting.

The more advanced the management accounting system, the more clearly the competitive advantage of the enterprise can be determined. However, there are management accounting systems that are not subject to accounting standards. Management accounting systems are directly related to costing systems - for example, "direct costing", "absorption costing". These include the system of operational cost accounting or cost accounting by type of activity, by type of work. The ABC (Activity Based Costing) system is used by Western corporations and requires a computer network and related software products for its maintenance.

Management accounting systems are divided into:

a) autonomous and integrated into the management accounting system.

Autonomous - these are systems whose accounting rules do not comply with accounting standards.

Integrated systems are systems that fully comply with accounting standards.

b) systems based on the accounting of normative and actual data.

The advantage of normative systems: there is an idea of the cost standard; it is possible to calculate the cost of products not yet mastered by the enterprise.

Disadvantage: do not allow employees to open production reserves, i.e. improve the efficiency of your work.

In systems with actual cost accounting, costs are not planned at all, but general trends in cost changes are monitored.

Disadvantage: There is no idea about what costs are bad and what are good.

c) systems with full and partial distribution of costs.

Complete systems ("absorption costing") require that all costs be allocated to accounting objects and, therefore, the corresponding revenues for these objects can then be determined. However, there are indirect costs that are not specifically related to a particular accounting object. Therefore, the distribution of indirect costs is in many cases artificial, which is a disadvantage of these systems.

In systems with incomplete distribution of costs ("direct costing"), costs for objects are calculated only in terms of direct costs. Indirect, which are not related to this accounting object, are written off in the total amount to the financial results of the enterprise. Therefore, the profit for each product in these systems remains unknown.

3. Traditional and non-traditional cost classification in management accounting

The traditional classification of costs is carried out according to the following objectives.

Table 3 - Traditional classification of costs.

Purpose of cost accounting	Cost classification
1. Calculation and cost planning	1. incoming and outgoing 2. periodic and distributed between the balances of the SOE, WIP and sold products 3. direct and indirect 4. basic and overhead 5. ODA, OCD, commercial
2. Decision making	1. variables and constants (conditionally variable, conditionally constant, progressive and digressive variables) 2. accepted and not taken into account when making decisions (relevant and irrelevant) 3. imputed 4. irrevocable (irreversible) 5. marginal and incremental
3. Cost control and regulation	1. controlled and uncontrolled 2. adjustable non-adjustable 3. normative (estimated) and actual

The manual is devoted to modern cost management systems in the enterprise. It details the differences in expenses, costs and payments of the enterprise, presents different kinds cost, content and composition of indirect costs of the enterprise, the essence of budgeting, methods of cost accounting and calculation. Edition contains a large number of schemes and tables that contribute to a better assimilation of the materials of the manual.

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ANNOTATION

Presented the main theoretical material for the cost management course. Particular attention is paid to modern methods of production accounting, theoretical provisions are illustrated with examples of problem solving. Contains tasks for self-solving and a test for self-examination.
It is intended for students of the specialty 080502 "Economics and management at the enterprise" and bachelors in the direction 080500 "Management".

The tutorial is an electronic version of the book:
Cost management at the enterprise: textbook / G.G. Serebrennikov. - Tambov: Tambov Publishing House. state tech. unta, 2007. - 80 p. - 100 copies.

1. THE CONCEPT OF COST MANAGEMENT IN THE ENTERPRISE
1.1. Financial, tax and management accounting at the enterprise
1.2. Cost Management Process
1.3. Cost classification
2. PLANNING AND COSTING
2.1. Systems and methods of costing
2.2. Mixed costing methods (AV costing and JIT costing)
2.3. Order-based costing method
2.4. Linear costing method
2.5. Costing Methods: Absorption Costing and Direct Costing
2.6. Normative costing method
3. SOME ASPECTS OF DECISION-MAKING IN THE FIELD OF COST MANAGEMENT
3.1. Problems of choosing the base for distribution of indirect costs
3.2. Problems of choosing a costing system
3.3. Making decisions on production volumes in the presence of limiting factors
4. TASKS FOR INDEPENDENT SOLUTION
5. SELF-TEST
BIBLIOGRAPHY

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Tambov State Technical University

Department of Economics and Management

G.G. Serebrennikov

Abstract of lectures on the discipline

COST MANAGEMENT

for students of specialty 080502

Economics and management at the enterprise

Tambov 2005

Also many others I could collect evidence,

To further confirm the certainty of my reasoning;

But the traces that I have only outlined here are enough,

So that you can follow everything else with a sensitive mind.

Lucretius

Lecture 1

1. Comparative characteristics of financial, tax and management accounting.

2. The essence of the cost management process. Management accounting systems.

3. Traditional and non-traditional classification of costs in management accounting.

1. Comparative characteristics of financial, taxmanagement and management accounting

With the adoption in 1993 of the State Program for the Transition of the Russian Federation to an Accounting System Accepted in International Practice, a number of regulatory documents have been developed that create the necessary prerequisites for the introduction of management accounting into practice. Russian enterprises. These documents address issues of both accounting in general and management accounting in particular.

Currently, a four-level system of regulatory accounting regulation is being formed in Russia.

Level 1 - Civil Code of the Russian Federation (parts 1 and 2); Federal Law of the Russian Federation "On Accounting" dated November 21, 1996 No. 129-FZ, Tax Code.

Documents of this level are designed to ensure uniform accounting of business transactions of organizations, timely compilation and presentation to interested users of comparable and reliable information about the property status of organizations, their obligations, income and expenses.

The main control mechanism is concentrated in the accounting policy. In turn, it should be divided into three parts:

financial (accounting) accounting;

tax accounting;

Management Accounting.

Recently, in Russian theory and practice, the problem of identifying financial, tax and management accounting systems has appeared, which is relevant for the information field of the organization. This happened as a result of subjective and objective reasons: the integration of Russia into the global economic space required the harmonization of the language of business - accounting; dispersed interests of users of accounting data.

The need for separation, consolidation or separation of tax and financial accounting is disclosed in various sources.

Despite the discussions and problems associated with the functioning of the three accounting systems, their separation took place. There are the following types of accounting:

Management Accounting;

financial;

tax accounting.

Management accounting "does not fall out" of the accounting system, it remains in its composition and is maintained according to all the canons of accounting and maintaining the principle of double entry. At the same time, it is enriched by the fact that, by linking with the rationing and planning of production costs, it expands the range of planned and accounted types of production costs. The management accounting system is complemented by economic analysis and preparation of draft management decisions.

Management accounting intersects with financial accounting in terms of cost accounting, the difference is only in cost accounting methods: in the first case, we are talking about analytical accounting, in the second - about synthetic accounting. To date, it is generally recognized that tax accounting is separated into an independent direction. However, financial and management accounting information can be used in tax calculations.

The relationship between types of accounting is shown in Figure 1.

Budgeting

Management analysis

Adoption

management decisions

Internal reporting

A - production accounting

B - financial (accounting) accounting

B - management accounting

G - tax accounting

Figure 1 - The relationship of types of accounting.

Management accounting is needed specifically for internal management. It cannot solve the problems of corporate governance and serve as the basis for public accounting.

Table 1 - Options and methods provided for by accounting and tax legislation


Accounting	tax accounting
Method (method) of accruing depreciation of fixed assets
Linear way Decreasing balance method Write-off method based on the sum of numbers of years of useful life The method of writing off the cost in proportion to the volume of production Depreciation is charged over the entire useful life of the asset	Line method Nonlinear Method The selected depreciation method cannot be changed during the entire accrual period. Depreciation is calculated in accordance with the depreciation rate.
The procedure for accounting for the cost of repairing fixed assets
Immediately included in the cost of products, goods, works, services Preliminarily accounted for as deferred expenses, and then evenly included in the cost price over a certain period of time Taken into account as part of future expenses, while forming a repair fund	Recognized in the amount of actual costs in the reporting period in which they were incurred Accounted for as part of the reserve for future expenses for their repair
Method for estimating inventories upon release into production and other disposal, as well as at the end of the reporting period
At the cost of each unit: including all costs associated with the acquisition of stock; including only the cost of stock at the negotiated price By average cost Weighted estimate On a rolling basis	By cost per unit of inventory By average cost
The procedure for recognizing (writing off) administrative expenses (general expenses)
Partially recognized in the cost of products sold in the reporting period as expenses for ordinary activities	Administrative expenses (indirect expenses), fully related to the expenses of the current period
The procedure for recognizing (writing off) commercial expenses
Recognized in full in cost of goods sold as operating expenses Recognized in part in cost of goods sold as expenses for ordinary activities	No method variant For organizations that do not carry out trading activities - are fully charged to the expenses of the current period For organizations engaged in trading activities - commercial expenses reduce the income from sales of the current month
The procedure for recording work in progress
In mass and serial production: At actual cost At standard production cost For direct cost items At the cost of raw materials, materials and semi-finished products With a single production Based on actual costs incurred	No method variant For organizations whose production is associated with the processing and processing of raw materials. The amount of direct costs is allocated to the balance of work in progress in a share corresponding to the share of such balances in the feedstock, minus technological losses. For organizations whose production is associated with the performance of work. The amount of direct costs is allocated to the balance of work in progress in proportion to the share of work in progress. For other organizations. The amount of direct costs is distributed to the balance of work in progress in proportion to the share of direct costs in the planned cost of production.
The order of reflection in the accounting of finished products
According to the actual production cost - in single and small-scale production According to the standard production cost - in mass and serial production with a large range of finished products At negotiated prices - with the stability of such prices For other types of prices	No method variant Estimation of finished product balances in the warehouse is determined as the difference between the sum of direct costs attributable to the balance of finished products at the beginning of the current month, increased by the amount of direct costs attributable to the release of products in the current month (minus the amount of direct costs attributable to the balance of work in progress), and the sum of direct costs attributable to products shipped in the current month.
The procedure for reflecting in the accounting of shipped products
At actual full cost At standard full cost	Evaluation of the balances of shipped but unsold products at the end of the current month is determined as the difference between the amount of direct costs attributable to the balances of shipped but not sold finished products at the beginning of the current month, increased by the amount of direct costs attributable to shipped products in the current month (minus the amount direct costs attributable to the balance of finished products in stock) and the amount of direct costs attributable to products sold in the current month.

Table 2 - Comparison of financial and management accounting


Financial Accounting	Management Accounting
Mandatory record keeping
Accounting is mandatory. Efforts should be made to collect data in the required form and with the required degree of accuracy, as required by law and standards, whether or not the management of the organization finds the data useful.	Keeping records depends entirely on the will of the management: no outside bodies or organizations have the right to indicate what should or should not be done. Therefore, there is no point in collecting and processing information, the value of which for management is lower than the cost of obtaining it.
Purpose of accounting
This accounting is official, its maintenance is mandatory for all enterprises and organizations without exception. Financial reporting documents are submitted to the tax authorities, are the object of an audit, can and should be published.	This accounting is necessary for the management, specialists of the enterprise to make managerial decisions, quickly respond to changing production conditions, its materials may be a trade secret.
Sources of information
This is practically only the data of the accounting system of the organization that accumulates financial information, as well as elements of the taxation system.	In addition to the data of the accounting system of the enterprise, there is information on the consumption rates of material resources, technological waste, research on the market situation, reports on the conduct of research work, the possibility of using their results in existing production conditions, the amount of penalties for non-fulfillment of contracts.
Degree of information accuracy
The data must be sufficiently accurate and reliable, otherwise external users will be distrustful of the content of published reports.	Approximate operational information sufficient for making managerial decisions
The degree of openness of information
The reporting is not a trade secret. It is open and public.	The information is usually a trade secret of the enterprise. It is not subject to publication and is confidential.
Users of accounting results
Shareholders, investors, suppliers, buyers, credit institutions, tax authorities, statistical authorities, operating enterprises and other external users.	Managers of different levels (president, shop manager and others) and employees who help them in collecting and analyzing information.
Forms of presentation of reporting information
Financial information is submitted to the tax authorities in the forms recommended by the Ministry of Finance of the Russian Federation, the Ministry of Taxes and Duties and other central departments, they are the same for all enterprises, regardless of their organizational and legal form.	The results of management accounting can be presented in a production form, there are no mandatory forms and forms. Moreover, it is up to the management of the organization to decide whether or not to keep management records.
Accounting information meters
Monetary meters are used, they are universal, expressed in rubles.	Specialists in their work use all types of meters in kind, labor, monetary
Reporting frequency
For financial statements, strictly defined deadlines are established; they are submitted at the end of each quarter and for the year.	Reports prepared for managers are not limited by strict time frames, but it is obvious that they should be issued much more often. The deadline for submission of such reports is set directly by the management of the enterprise. They can be compiled daily, weekly, decade, monthly, upon request.
Accounting scale
Activities of the whole organization	The objects of accounting are the so-called responsibility centers, cost centers, income center, profit center. They can be the enterprise as a whole, individual workshops, sections, divisions, etc.
Method of calculation
The materials of the financial statements are based primarily on the initial accounting data.	The calculations are focused primarily on departments within the organization, based on a combination of initial data, analysis of materials for the past period and predictive estimates for the future.
Methodology for calculating financial results
Two concepts are possible. The first provides for the calculation of profit as the difference between the proceeds from the sale of products and its full cost. The second concept - profit is calculated as the difference between the proceeds from the sale of products, its production cost and recurrent costs	In management accounting, other approaches to the definition are possible. In accordance with the "direct costing" system, the indicator of marginal income is calculated.
Grouping costs
Costs are grouped by economic elements	Costs are grouped by cost carriers in the context of costing items
Accounting principles
Financial statements are prepared on the basis of generally accepted accounting standards. They use the principle of double entry, the principle of enterprise isolation, comparability and comparison of data	It has no generally accepted principles, the main thing is simplicity and ease of use. Those accounting rules that are considered the most useful for making a decision are selected.
Relationship with other disciplines
Accounting is mainly based on own method	Associated with disciplines - microeconomics, finance, economic analysis, mathematical statistics
Application in practice
Registers business transactions on the basis of documents confirming their completion, i.e. deals with the facts of the economic life of the organization that have already occurred.

Although there are differences, most of the elements of financial accounting can be found in management accounting. There are two reasons for this.

Thus, significant differences between financial and management accounting are confirmation of their right to exist separately.

2. The essence of the cost management process. Management accounting systems

Scheme 1 -- Cost management process.

Over time, most management accounting systems have become embedded in enterprise accounting. Those. these systems have become very detailed cost and revenue accounting.

The more advanced the management accounting system, the more clearly the competitive advantage of the enterprise can be determined. However, there are management accounting systems that are not subject to accounting standards. Management accounting systems are directly related to costing systems - for example, direct costing, absorption costing. These include the system of operational cost accounting or cost accounting by type of activity, by type of work. The ABC (Activity Based Costing) system is used by Western corporations and requires a computer network and related software products for its maintenance.