What does production cost include?

The "production costs" account is used to account for industrial production, including the production of various products (e.g., finished goods.). Self-made semi-finished products). Provision of labor. Self-made materials. Homemade tools. Homemade equipment and other production costs incurred. Accounting entries are divided into direct materials. Direct labor. Manufacturing costs of three categories. Product costing procedures 1. Determine the costing method. Before carrying out costing, it is necessary to determine which costing method to use. Usually used methods are varieties of method, batch method, step-by-step method. This should be based on the characteristics of the production process and production organization, combined with the requirements of cost management to make a choice.2. Set up the relevant costing accounts. In order to calculate the cost of products, the need to set up a special account, that is, "production costs" account. The debit side of the pool for the production of products and the various costs incurred, the credit side to reflect the completion of the product transferred out of the manufacturing costs. For a certain costing object, the costs incurred are only two kinds: ① direct costs. ② indirect costs, that is, **** the same nature, not directly for the production of this - the object of the service costs. If the enterprise only produces a product, the direct and indirect costs are not different, they should be charged directly to the cost of the product. However, an enterprise generally produces a variety of products. In this case, the direct costs can still be charged directly to the product cost, while the indirect costs have to be pooled and then allocated to the different costing objects. In this way, the need to set up a separate account, that is, "manufacturing overhead" account, "manufacturing overhead" account is the role of a variety of indirect costs, and then reasonably allocated to the costing object up. If more scrap and stoppage of work, it is necessary to collect the scrap and stoppage of loss information, and set up a special "scrap loss" and "stoppage of loss" account, the loss of these losses to the "scrap loss" and "stoppage of loss" account of the debit side, and then make the appropriate treatment and transfer out of the credit side: if it is a normal loss, it should be allocated to the product cost; otherwise, it should be transferred to the administrative costs or Non-operating expenses. According to the requirements of the accrual system, expenses incurred in production do not necessarily have to be charged to production costs, and the period of expenditure may not coincide with the costing period. There are two situations when expenses are incurred: ① The costs incurred in production realize their full benefits in the current period and the benefits are not deferred to the next period. In this case, the expenses should be charged directly to the "production costs" or "manufacturing costs" account. ② Costs incurred in the current period should not be borne by the current period. There are two kinds of situations: ① Expenditure first, and then charged to the cost. This should be set up "amortized expenses" account, the expenditure is debited to "amortized expenses" account, amortized to the cost of amortization and then credited to the "amortized expenses" account. (ii) The first cost, then expenditure. This situation should be set up "withholding costs" account, the current cost of debit the relevant cost account, credit "withholding costs" account, pay and then debit the "withholding costs" account. 3. Accounting for the costs incurred and categorized by purpose. The process of costing is a collection and distribution of costs (amortization) process, or vice versa, the cost of accounting is ultimately the cost of accounting. Costing is a multi-step process of dealing with costs. To do a good job of costing, the first step is to accurately reflect the total **** expenses, expenses of what nature. This step to solve two problems: First, the enterprise in the current period in the end what expenses, what expenses. This is the basis for good costing work. Such as how much raw materials consumed, to use the first-in-first-out method and the last-in-first-out method and other methods of proper measurement; such as due to the equipment to play a role in the value of wear and tear, to use the appropriate method of depreciation. Secondly, the costs incurred, in the end, what role. In the costing process, not only to reflect the expenditure of some of what costs, but also to further clarify the cost of spending what role. On who played a role in the utility. Costs incurred after the role is summarized in three cases: ① costs incurred did not play a role in the current period, should be deferred to a later period. Such as prepaid rent, etc., should be included in amortized expenses. ② expenses occur in the current period, and its utility occurred in the previous period. If the entire rent of the previous year is paid at the beginning of the year, it cannot be treated as a current expense, but should be debited to an accrued expense account. (iii) Most expenses, which are incurred in the current period and whose utility is also in the current period, should not only be charged to the cost of the current period, but should also be classified according to their specific purpose. Regardless of the object of costing, generally speaking, it is necessary to pay the following cost items; or, after the cost is incurred, it is nothing more than the role of the following: First, the consumption of all relevant materials, these materials constitute the entity of the product, which is called the direct material costs; Second, the consumption of all relevant labor costs, the labor of these production workers are directly used in the manufacture of the product, which is called the direct labor costs; Third, the consumption of A variety of materials and labor and other costs, these costs are not directly used in the production of products, but only in the production process to play an auxiliary role, or to provide the necessary production conditions, this cost is called manufacturing costs. In order to reflect the incurrence of costs and classification by purpose, it is necessary to make an accounting entry, that is: debit: the relevant cost and expense account credit: the relevant assets and liabilities account in this accounting entry, the credit of the relevant assets and liabilities account to reflect the specifics of the cost expenditure. These accounts are cash, raw materials, accumulated depreciation, wages payable, benefits payable and other accounts, reflecting the business in the end spent some of what costs. The debit side of the relevant cost and expense accounts include amortized expenses, accrued expenses, production costs, manufacturing costs, etc., reflecting what role these costs play. Production cost is the main account for costing, and eventually all the expenses have to be collected into the production cost account. Recorded to the production cost account costs are further classified by purpose, generally divided into direct materials, labor costs and manufacturing costs of three items.4. Allocation of auxiliary production costs." Production costs" general ledger has two sub-accounts: one is the basic production, used to account for the cost of production of products; the second is auxiliary production, used to account for the production of products for the production of services related to the cost of the production sector. Auxiliary production is also a production activity, it is the basic production activities to provide the necessary products and services, but also to consume a variety of production costs, the same to calculate the cost of the product. The calculation of auxiliary production costs need to set up "auxiliary production" ledger account, the debit side of the aggregation of the various costs incurred, the credit side of the auxiliary production plant to calculate the cost of finished products, while transferring to the basic production ledger. This account generally does not have a balance.5. Allocation of manufacturing costs. Product cost by direct materials, direct labor and manufacturing costs of three parts, which occurred in the direct materials and direct labor is a direct cost, directly into the "production costs" account, incurred manufacturing costs are indirect costs, not directly into the "cost of production" account, but first in the "manufacturing costs" account, and then allocated to the "cost of production" account.6. Calculation of the cost of finished goods. Through the above steps, all production costs incurred during the period have been brought together in the "production costs" account on the debit side, if the enterprise does not have the product, the cost of finished goods is the opening balance of the production cost account plus all production costs incurred during the period. However, in general, enterprises have both products in process and finished products, and therefore need to allocate the cost of production between finished products and products in process, and calculate the cost of products in process and the cost of finished products at the same time.". Cost of production" account has the following relationship between the relevant data: opening balance + all production costs incurred during the period = the end of the cost of products + cost of finished goods cost of finished goods = opening balance + all production costs incurred during the period - the end of the cost of products, that is to say, the cost of finished goods, that is, to allocate the total cost of the end of the period between the products in the product and the finished product. Generally, the allocation is made by methods such as the Approximate Yield Method or the Flat Rate Method. After the cost of finished goods, but also with the total cost of finished goods divided by the total production, the unit cost, so that product costing is all over.