II.1.- Importance, control, and recording of raw materials.

Importance of controlling raw materials and materials. This is based on the theory.
that all purchases of raw materials and materials equivalent to money
reversed and therefore their custody, safekeeping, and accounting must be carried out
with the same care that is taken in the control of a company's funds,
avoiding unnecessary waste as much as possible due to possible deterioration or well
misuse of them. Adequate control and accounting will allow for the
reasonable financial statements company, data on the consumed resources used in
the production and above all allows for complete information regarding the cost
of manufactured products.

Principles governing the accounting and control of raw materials and materials.

1.- all transactions involving purchase, receipt, and storage and

consumption of raw materials must be authorized by officials or
responsible executives based on express orders.

2.- all movements of incoming and outgoing materials and deliveries to

production must involve at least two people in order to prevent theft,
frauds or embezzlements.

3.- all raw materials or materials whose use is not in a way

immediate in production, they must be stored in a safe place and under
adequate surveillance.

4.- both the class and the quantity of raw material used in the
productive departments or in the production of a specific order,
They should be easily obtained.

5.- At any time, they should be able to be discovered, counted, and verified.
quantities and values of all raw materials and materials that are in stock.

6.- all cost and inventory accounts related to the materials

premises and materials must be subject to verification regarding the
accuracy of its totals through main accounts in the general ledger.

These principles aim to prevent waste and loss in the consumption of materials.
and materials, prevent theft, establish responsibilities, promotes the completion
appropriate shopping, set consumption standards, allows for decision making
inventories and keep an accurate record of the cost of raw material
used in the production process, facilitating audit tasks.
Stages required for its accounting:

A.- Purchase and reception

B.- storage

C.- consumption

D.- accounting.

Accounting: the accounting department upon receiving the invoice from

supplier and checking the entry of raw materials and calculations
corresponding to the invoice, in accordance with the respective purchase order,
formulate a journal entry.

I load a 'raw materials warehouse'

Payment to 'suppliers' or accounts payable.

Due to the aforementioned consumption and according to the valuation method that is imposed
there will be a daily policy of:

I charge to "work in progress"

Debit to: 'raw materials warehouse'.

We must not forget that depending on how the production account is used in
process will be:

As a general ledger account 'work in process raw materials' or as

major 'production in process'

Subaccount 'raw materials'.

When production ends:

Cargo a: Finished goods warehouse

Contribution to: work in progress.

Subaccounts, each of the elements of cost.

For the outgoing of finished products:

Cargo a: cost of goods sold.

Warranties: finished goods warehouse.

Subaccounts, each of the control cards that are affected and their cost of
production according to the adopted valuation method.

BACK TO TOP

II.- Control of accounting for cost elements

II.2. The importance, control, and record of the workforce.

Cost accounting is responsible for measuring in monetary units the amount of

the remuneration to the personnel and apply them to the accounting periods in which
conventionally, an entity is divided, that is, with the period in which you are
they occur or are accrued, being recorded in parallel to the income that caused them
regardless of the date they are paid.

Labor can be distinguished into wages and salaries, therefore it

explain the terms used.

Salary: it is the compensation of an employee, a military person, a public official, etc., that
In exchange for regular work, generally, payment is made.
biweekly.

Salary: it is the payment that an employer must make to an employee for their work.
it can be set by time units, by work units, by commission, or by
any other way; generally, plant workers are paid
per week.

For your study, wages and salaries are divided into two groups:

A) Direct wages and salaries. Second cost element, which is part of,
along with the direct raw material, the direct cost, or prime cost (primary),
It is the one used directly in production operations.

The human element and payroll accounting are so

intertwined that there is a need to develop a great deal of detail for
that the payments made are done accurately since both the payments of
but since the less harmful ones increase the cost of
production, and the second generates dissatisfaction among the staff, reducing productivity
in the development of its function, even when mistakes are corrected.

B) Indirect salaries and wages. Although they are absolutely essential for
the operation of the factory cannot be attributed and charged directly to
no specific task, batch or production process of items, but in form
indirectly since personnel are usually employed in surveillance tasks,
maintenance and supervision of the entire industrial plant as occurs in the
work of:

factory supervision or management

heads or deputy heads of area or department.

Crane or forklift operators

Technician in control and measurement devices

Electronic equipment engineers or supervisors.

Mechanics and electricians

Time takers

Cost employees

Doormen, watchmen

Conservation staff.

The wages and salaries paid to the described personnel are part of the cost of
production and for its study are framed within the indirect costs of
production. Third element of cost.

Even though there are marked differences in direct and indirect wages and salaries.
Differences between them, many aspects of their control and accounting are similar.
How are the payrolls and cards used to record the work time?

Objectives of labor accounting (Salaries and wages).

All records that are used must be planned with great care, along with the
object of satisfying the following minimum requirements that must be met with
object of properly controlling everything related to the personnel working in
an industry:

all the worker's data, related to their category, their position, escalation of
sueldo o salario

time spent by each worker in the factory

accrued in the period.

The order, the task, the process, the department to which the amount must be charged
total worked.

The record of your absences, vacations, illnesses, punishments, permissions, etc.

Time spent on operations carried out during normal hours and

extraordinary.

Payment system for remuneration for each type of work developed.

Total hours worked in each department, batch, or work order,

during the cost determination period, in order to determine the basis of
applications of indirect costs.

The total amount of the payroll during the cost determination period.

The previous objectives can be achieved by establishing according to size and

need of each company, specific departments for each of the
following functions:

Personal

Waste of time

Payroll

Cost application

Accounting. Using the account 'salaries and wages to be applied' this is a

transitory account or bridge account that is settled immediately when the
The cost department allocates its amount to the cost accounts.
corresponding.
The payroll for week #12 amounted to $360,000; the overtime $
40,000; las deducciones al seguro social $25,000; el impuesto $65,000; por caja
from savings $30,000; and for the loan there was a discount of $20,000; the amount
The liquid amount remained at $260,000.

Salaries and wages to be applied .............................................$400,000

Banks
$260,000

Various creditors
................................................................................................................ 120,000

Social security ............................................$25,000

Impuestos ..................................................65,000

Savings account .........................................30,000

Various debtors
20,000

Details

Summations.
$400,000
$400,000

The idea of using the wages and salaries account to be applied is when making the
payroll, it is generally not possible to have immediate distribution at the same time
the cost accounts, the check is made out for the net amount for the payment of
the workers and that later when the cost office has determined
which account should be affected according to the distribution of the cards
time, formulate a daily journal entry in the following way:

Work in progress ............................................................................$400,000

Salaries and direct wages

(Details)

salaries and wages to be applied

$40
0.000

sums
$400,000

In the biweekly payroll, the same procedure will be followed; however, the
the application would affect the accounts of:

Work in progress

Wages and direct salaries.

Indirect production costs.

Salaries and indirect wages

Distribution costs

Wages and indirect salaries

Administrative costs

Indirect wages and salaries.

It will also apply to the benefits of workers:

Freight at costs
Social security contribution

Payments to: Various creditors.

I.M.S.S.

BACK UP

II. Control and accounting of cost elements.

II.3 The importance, control, and records of indirect costs.

The theorists agree that the indirect cost is the most important factor.
complex in its study, due to the difficulties involved in its equitable distribution
to the units produced, which brings with it the problem of its previous and
adequate accumulation.

They can be known by the following names: manufacturing costs, expenses of

production, manufacturing costs, operating expenses, expenses of
transformation, indirect costs. For your study, we will use the term more
suitable that is indirect production costs.

Definition.

From an accounting perspective, all indirect expenses must be understood.

essential for the factory to be in a position to carry out the
production and which cannot be directly applied to the unit
produced, such expenses are the expression of money of productive capacity and
they mainly refer to the indirect expenses for operating, maintaining,
protect and efficiently safeguard the plant and its equipment.

These expenses can be:

direct work, which encompasses the human effort dedicated to management,

supervision, inspection, and monitoring of the production process in general and that does not
can be applied directly to the unit produced, just like the work
performed by the production manager or superintendent, the inspectors or
supervisors, the factory watchers, timekeepers, etc.

Indirect material, which encompasses various items that cannot be charged.

directly to the cost of the item because they are used for the benefit of the
general production, such as fuels, lubricants, etc.

Indirect costs, which includes a set of related services, such as

of the occupied space, conservation and maintenance of physical assets of the
production, depreciation, and insurance against risks of the same
goods, from the contributions, such as the most prominent items, all of them
incurred for the benefit of production as a whole.

It is important to classify indirect expenses as fixed and variable, especially

when they are controlled by budgets and for the determination of the graph of
break-even point in a company, likewise it will be necessary to maintain if it is used
the technique of historical or estimated valuation. (Cost of production statements
or the defaults).

Accounting:

Indirect costs have a peculiar characteristic in their accounting according to the

historical or estimated valuation technique and whether or not the department exists
mentalization or if primary or secondary proration is carried out.

1.- If there are no departments and actual historical indirect costs are used,
has:

a) Major. "Indirect production costs"

Subaccount. Cost concepts.

That at the end of the month it is settled and its amount is charged to the work in process,
indicating that they are indirect production costs.

b) Major. "production in process". Indirect production costs

Subaccount. Department X (productive or service).

Subaccount. Cost concept

c) Mayor. "Production in process". Indirect costs departments X.

Subaccount. Cost concept.