How to carry forward production costs?
Cost carryforward mainly includes: allocating and carrying forward manufacturing overhead, calculating and carrying forward the production cost of completed products, and calculating and carrying forward the sales cost of sold products.
1. Allocation and carryover of manufacturing expenses
1. Calculate the manufacturing overhead allocation rate. Manufacturing overhead allocation rate = total manufacturing overhead/total working hours of production workers.
2. Calculate the manufacturing costs borne by various products. The manufacturing costs borne by a certain product = working hours of workers producing the product × distribution rate
3. Prepare the carry-forward entries based on the calculation results. The accounting entries are: Debit: Production costs Credit: Manufacturing expenses
2. Calculation and carry-forward of manufacturing costs of finished products
1. The total manufacturing cost of completed products this month = the cost of work in progress at the beginning of the month + the production cost of this month – the cost of work in progress at the end of the month
2. Unit manufacturing cost of completed products = Total manufacturing cost of completed products this month/Quantity of completed products this month
3. In order to reflect the increase or decrease in finished goods, a "finished goods" account needs to be set up. Debit: finished goods Loan: production costs
3. Calculation and carry-forward of cost of sales
1. When finished products are completed and put into storage, the amount is the cost of the finished products in the previous period and this period. The finished products sold may be completed and put into storage in this period, or in the previous period or previous period. The unit production cost of each batch of finished products is different, so it must be calculated and determined using a certain pricing method. During each accounting period, the company must allocate the cost of finished goods in inventory at the beginning of the period and the cost of finished products in the current period between the finished goods sold in the period and the finished goods in inventory at the end of the period.
2. The cost of products received, issued, and in balance during the month can be expressed by the following formula: cost of finished goods in inventory at the beginning of the month + cost of finished goods in storage this month = cost of finished goods sold this month + cost of finished goods in inventory at the end of the month
3. If the finished product sales cost is calculated at the end of the month after determining the inventory balance cost of finished products, the following formula can be used:
Cost of finished goods sold this month = Cost of finished goods in inventory at the beginning of the month + Cost of finished finished goods in storage this month – Cost of finished goods in inventory at the end of the month
Specific calculation methods include individual pricing method, weighted average method, first-in-first-out method, and last-in-first-out method.
The sales cost of finished goods determined according to the above method shall be transferred from the credit of the "finished goods" account to the debit of the "main business cost" account.
