What are the traditional cost calculation methods under ERP?

Parallel carry-forward step-by-step method is one of the basic methods to calculate product cost. Its key is to calculate the part of the production cost of each mechanical production step that should be included in the finished product cost. Because of this, it is necessary to correctly allocate the production cost of each mechanical production step between finished products and generalized products at the end of the month.

For this work, the key is to accurately understand the meaning of generalized WIP and correctly determine the quantity of generalized WIP and its equivalent output or fixed working hours.

Step by step method

The step-by-step method is the cost of each production step. After synthesis, it will be recorded into the cost items of direct materials, raw materials or semi-finished products in the product cost subsidiary ledger of each step. The cost of semi-finished products can be carried forward step by step according to the actual cost or planned cost.

Therefore, the step-by-step carry-forward method can be divided into the actual cost step-by-step carry-forward method and the planned cost (or norm cost) step-by-step carry-forward method.

Step-by-step carry-over method according to actual cost means that when this carry-over method is adopted, the cost of semi-finished products consumed in each step should be calculated by multiplying the number of semi-finished products consumed by the actual unit cost of semi-finished products, and in the specific calculation process.

Because the unit cost of semi-finished products produced each month is different, the unit cost of semi-finished products consumed should be calculated by FIFO or weighted average method. Step-by-step carry-over method according to planned cost means that when this carry-over method is adopted, the daily receipt and delivery of semi-finished products are accounted for according to planned unit cost. After calculating the actual cost of semi-finished products, calculate the cost variance rate of semi-finished products and adjust the cost variance rate of consumed semi-finished products.