Advantages and disadvantages of traditional cost process

Advantages of batch method: setting the secondary account of basic production cost. The distribution of overhead costs has been simplified. In addition to the cost of finished products, the basic production cost breakdown of each batch of products does not reflect the project cost of indirect expenses, but only reflects the direct material cost and the production hours at the end of the month.

Disadvantages of batch method: First, it can not reflect the cost structure of finished products from the perspective of the whole enterprise, which is not convenient for cost analysis.

Two, the cost calculation period of the batch method is consistent with the production cycle of the product, but it is inconsistent with the accounting reporting period. Cost generally refers to all kinds of capital expenditures in the production and operation of enterprises. The cost of an enterprise, in terms of its economic essence, is the value equivalent of c+v in the product value composition, which is expressed in monetary form, that is, the sum of the funds spent by the enterprise on product management.

First, when the batch method is adopted, the production cost should be summarized monthly. However, due to the inconsistent production cycle of each batch of products, it may not be completed at the end of the month, and the actual cost of each batch of products can not be calculated until all products are completed. Therefore, the cost calculation of batch method is irregular.

Second, the product cost is calculated by batch method, because the cost of this batch of products is generally calculated when all products are completed, so if all products are completed at the end of the month, the total production cost of this batch of products is the finished product cost of this batch of products; If this batch of products is not completed, it is the cost of work in progress.

3. Cost accounting refers to the allocation and collection of various expenses incurred by an enterprise in the process of production and operation according to certain objects, so as to calculate the total cost and unit cost. Cost accounting is usually based on accounting and takes currency as the unit of calculation. Cost accounting is an important part of cost management, which has a direct impact on enterprise's cost forecast and business decision.

Fourth, cost accounting First, the production and operation management expenses are audited to see whether they have occurred, whether they should occur, and whether they should be included in the product cost, so as to realize the direct management and control of the production and operation management expenses and product cost. Secondly, the expenses incurred are allocated and collected according to the purpose, and the total cost and unit cost of various products are calculated to provide real cost information for cost management.