General production costs are associated with the maintenance of auxiliary, maintenance and main production facilities and are indirectly included in the cost of manufactured products. The classification and estimate of such costs are established by each enterprise independently, depending on the specifics of its activity. In this article you will learn how to determine the amount of overhead costs using the calculation formula.

How to calculate overhead costs

For accounting, account 25 “General production expenses” is used, analytics on which are carried out by workshops/divisions. Costs are collected over the course of a month in a cumulative manner, and at the end they are completely written off according to established standards for the main production. The write-off method is fixed in the accounting policy in accordance with the requirements of clause 7 of PBU 1/2008. The calculation of overhead costs (OPR) is carried out in terms of:

• Costs of inventories for repair maintenance of equipment.
• Earnings of workers engaged in repair work and social contributions.
• Costs for setting up or dismantling equipment.
• Rent payments for production space.
• Depreciation charges for equipment and intangible assets used in production.
• Costs for lighting and heating of production premises.
• Other similar costs.

As part of general production costs, there is a constant part (does not change with an increase/decrease in production volume) and a variable part (changes in proportion to production turnover). Calculating production costs based on variable costs is the preparation of cost estimates for cost elements. For example, for consumed materials, raw materials, spare parts, utilities, depreciation, etc.

Manufacturing overhead - formula

The mathematical formula for calculating overhead costs uses a basic value that maximally reveals the impact of pilot projects on the final cost of the product. Based on the indicator, the total amount of costs is transferred to the cost of products. The basis may be one of the following factors:

1. Wages of workers in primary production.
2. Volume of production area or cost of fixed assets.
3. Material costs.
4. Number of production workers.
5. Direct costs.
6. Production volume.

General formula for calculating the overhead cost ratio:

K = Amount of overhead costs / Base value.

How to calculate overhead costs - example

Suppose that the Kvant enterprise produces 2 types of products: A and B. For December, the total amount of overhead costs amounted to 220,000 rubles. How to calculate overhead costs using the distribution formula - proportional to earnings or direct costs? Two calculation methods are shown in the table.

Note! To reliably formulate the cost of production, it is important to correctly determine the method of distribution of HMOs. If the selected indicator is not related to product output, the resulting values ​​will be distorted and costs will not be allocated accurately.

General production costs from account 25 “General production expenses” are distributed to account 20 “Main production” in accordance with the accounting policy of the organization.

Question: Contractor company. We distribute the 25th count into 20. We read that there are several options for distributing the 20th count: according to direct criteria. And if it is impossible to determine expenses on a direct basis - in proportion to the direct costs of paying workers at specific construction sites or other economically justified distribution base. What does on a direct basis mean? What is the difference?

Answer: General production costs from account 25 “General production expenses” are distributed to account 20 “Main production” in accordance with the accounting policy of the organization. At the end of the reporting period, account 25 is closed to account 20, 23, 29 or 90 in proportion to the indicator established in the accounting policy.

The basis for the distribution of these expenses may be:

Salaries of main production workers;

Direct costs with a workshop structure;

The number of machine-hours worked for the equipment;

Size of production area;

Material costs;

Volume of production in natural or cost terms.

In our opinion, a direct indication is the expenses that are taken into account in account 20 (salaries of production workers, material costs), and another economically justified distribution base is, for example, production space, machine hours worked.

Rationale

How to write off general production and general business expenses

General production and general business expenses are associated with the production of different types of products (works, services), and also ensure the operation of the organization as a whole. Therefore, unlike direct (primary) costs, these costs are considered indirect (overhead).

At the end of the reporting period, accounts are closed. The expenses accumulated on them are written off to the debit of the accounts: “Main production”, “Auxiliary production”, “Servicing production and facilities” or “Sales” in proportion to the indicators that must be established in the accounting policy for accounting purposes (clause 7 of PBU 1/2008 ).

The basis for the distribution of indirect costs between main, auxiliary and service production can be, for example, the following indicators:

• wages of key production workers;
• direct costs with a workshop structure of the organization;
• the number of machine-hours worked for the equipment;
• size of production area;
• material costs;
• volume of production in natural or cost terms.

For example, in industries with a significant share of labor costs, it is advisable to distribute indirect costs in proportion to the salaries of the main production workers. Distribute indirect costs in proportion to material costs (cost of raw materials, materials, spare parts, etc.) if they constitute a significant share of the cost of manufactured products.

An example of the distribution of indirect costs associated with fulfilling a production order. The organization uses the custom costing method

In April, LLC "Production Company "Master"" accepted and completed two production orders (No. 1 and No. 2) for the manufacture of special transport equipment. The accounting policy of “Master” stipulates that general production and general business expenses are distributed in proportion to the salaries of production workers involved in fulfilling each order.

In April, the actual amount of expenses was:

• general production - 100,000 rubles;
• general business - 125,000 rubles.

Direct costs for order No. 1 were:

• cost of materials used - 82,300 rubles;
• salary of production workers - 68,500 rubles;
• the amount of contributions for compulsory pension (social, medical) insurance and contributions for insurance against accidents and occupational diseases from the salaries of production workers is 20,687 rubles.

Total for order No. 1 - RUB 171,487.

Direct costs for order No. 2 were:

• cost of materials used - 151,500 rubles;
• the amount of accrued wages of production workers is 55,000 rubles;
• the amount of contributions for compulsory pension (social, medical) insurance and contributions for insurance against accidents and occupational diseases from the salaries of production workers is 16,610 rubles.

Total for order No. 2 - RUB 223,110.

The total salary of production workers for both orders was 123,500 rubles. (RUB 68,500 + RUB 55,000).

The share of wages of production workers in the total amount of their wages is equal to:

• for order No. 1 - 55% (RUB 68,500: RUB 123,500);
• for order No. 2 - 45% (55,000 rubles: 123,500 rubles).

The cost of order No. 1 includes:

• part of overhead costs in the amount of RUB 55,000. (RUB 100,000 ? 55%);
• part of general business expenses in the amount of 68,750 rubles. (RUB 125,000 ? 55%).

The actual cost of order No. 1 was:
RUB 171,487 + 55,000 rub. + 68,750 rub. = 295,237 rub.

Relevant to the cost of order No. 2.

Increasingly, chief accountants and management of planning and economic departments of industrial companies have a huge number of questions regarding the distribution of general production and general economic expenses. The situation is caused primarily by problems in the area of ​​pricing. During the early stages of production, it is important to calculate the total cost of a product item using standard pricing methods.

When the “cost and rate of return” method is used, then the methods for distributing general production and general business expenses play a major role in determining the cost. When the price is set by the market, you need to compare the market pricing of the product with the costs required to produce it. This will help eliminate losses.

In reality, it often happens like this: the planned cost is calculated according to the “cost plus profit margin” scheme (information on costs is taken from planned calculations), then all indicators are compared with the actual price on the market and the final price of the product begins to change, taking into account the company’s situation in the industry.

As a result, methods of accounting and distribution of indirect expenses, namely general production and general economic expenses, are of interest both for monopolistic companies and for small industrial enterprises.

Concepts of general and production expenses

General production expenses are targeted expenses aimed at maintaining, organizing and controlling production (auxiliary, main, servicing).

Accounting and distribution of overhead costs includes:

• The price of materials, parts necessary for maintenance and repair of industrial equipment;
• Payment of labor to enterprise employees whose task is to maintain production (production/shop manager, foreman, technologist, employee responsible for technical repairs and inspection of production equipment), taking into account social contributions;
• Depreciation payments and expenses used to repair fixed assets and other property used for production;
• Expenses for disposal/dismantling of technical units, expenses for materials, parts, purchased semi-finished products necessary for setting up and repairing equipment;
• Payment for rent of premises, transport, equipment and other types of fixed assets required for the production of the product;
• Expenses aimed at the process of using units of fixed assets directly involved in production (fuel, electricity, etc.);
• Depreciation of intangible assets used for production;
• The total amount of losses and shortages from downtime, breakage of valuables during the production process or during storage in warehouses.

All described expenses are posted to the debit of account 25 “General production expenses”. It is in correspondence with the loan according to the following standards:

When indirect expenses associated with servicing the main or additional production are recorded on the 25th account, auxiliary subaccounts are used, for example, 25-1 “Overhead production expenses of the main production” or 25-2 “Overhead production expenses of auxiliary production”. At the end of the month, the twenty-fifth account is completely closed. Expenses recorded on certain sub-accounts are transferred to the debit of the corresponding accounts:

If the expenses of the general production plan cannot be immediately attributed to the main or additional production, the entire amount must be allocated to the appropriate accounts.

It is also possible to calculate general production losses on separate accounts opened for additional divisions or by type of goods produced. If such a division is not provided, then the agreed expenses when written off are allocated to the types of product produced.

There are different distribution options - in proportion to the earnings of workers in the production service, in proportion to the volume of direct spending, in proportion to the quantity of goods produced (in physical or price equivalent), in proportion to the income from the sale of a product, and so on. As a result, the amount of spending on different types of products depends on the chosen method of distributing specific expenses.

Of all those mentioned, the most popular is the method of distributing expenses in proportion to the salaries of production employees.

Example

A furniture factory produces two types of products. The total volume of expenses of the general production plan, which should be written off to the account of the main production, is equal to 300 thousand rubles.

Accounting for general business expenses

To control expenses aimed at the needs of enterprise management and not directly related to the production process, account 26 “General business expenses” is used. It reads:

• Administrative expenses;
• Expenses for maintaining personnel for general business work not related to the production process;
• Depreciation write-offs and expenses for repairs of OS units used for management processes and general business procedures;
• Lease payments for buildings of general economic use;
• Expenses on payment for consultations, information, audit and other services of a similar nature;
• Alternative, similar in purpose expenses for enterprise management.

All listed losses are summarized by the debit of the 26th account “General business expenses” in combination with the credit of other suitable accounts. Table:

The chart of accounts and guidelines for its application, based on Order No. 94, regulate only 2 options for writing off expenses for general business needs.

First option

All expenses taken are written off to production expense accounts and taken into account when creating the production or full cost of the product.

Second option

If the company adheres to the plan of accounting for expenses in the cost of the product sold, then the entire volume of general business expenses goes to the debit of account 90 “Sales” in the “Cost of sales” calculation.

In such a situation, an incomplete cost of the product is created, and the cost of goods sold increases.

General production costs fall into the category of indirect, indirect costs.

Their records must be kept in each department of the enterprise.

General production expenses are included in the production cost of manufactured products.

Such expenses include:

1. Depreciation of fixed assets.
2. Depreciation of other non-current tangible assets involved in the work of the management department.
3. Costs of fuel and electricity used to operate the equipment.
4. Costs of spare parts and materials needed to repair equipment. This item does not include expenses related to the improvement and modernization of means of production.
5. Costs of low-value and quickly worn-out items that were used for production and administrative needs.
6. Defective goods.
7. Unforeseen and hidden costs of paying employees.

Types and calculation of overhead costs

This type of expense can be variable or fixed.

The variable type includes costs proportional to the growth of production turnover.

This is due to an increase in the wear rate of equipment, the need to increase the operating power of devices and the resulting energy costs.

Cost growth can be directly dependent on the increase in production volumes, inversely, or increase ahead of schedule.

Fixed general production expenses include expenses that are unchanged or little subject to change as the volume of activity increases; they are associated with management and accounting work.

The general indicator of overhead costs consists of the following indicators:

Annual depreciation of fixed capital.
It is determined by the amount of monetary assets spent on the complete restoration of all means of production and management apparatus.

It is calculated using the formula:
A=(PS*Na)/100,
where A is depreciation, PS is the initial cost of equipment and other assets, Na is the depreciation rate.

Costs of raw materials and supplies.
The formula used for calculation is:
Р=К*∑(Н*Ц),
where P is the general level of expenses, N is the cost rate, C is the price for the material necessary to repair equipment or maintain its operation (energy), K is transportation costs.

Workshop 11

Topic 14. Accounting for expenses for ordinary activities

1. Topics of abstracts and/or reports

1. Expenses for ordinary activities and their classification.
2. The procedure for accounting and distribution of direct and indirect costs for production.
3. Accounting and distribution of costs of auxiliary production.
4. Methods of accounting for production costs.

2. Guidelines for preparing reports and/or abstracts

When preparing a report on the topic “Expenses for ordinary activities and their classification,” it is necessary to disclose the concepts of the organization’s main activities and expenses associated with these activities, noting that the expenses attributable to the main activities depend on the organization’s production activities.

The report must disclose the content of expenses attributed to ordinary activities, based on the legal form and scope of the organization.

Particular attention should be paid to the question in what period expenses for ordinary activities are accepted for accounting. Since the ordinary activities of the organization are related to the production of products, works and services, the report must disclose the classification of expenses for ordinary activities in the context of cost elements.

In relation to a specific industry, provide a classification of costs by costing item.

When preparing a report on the topic “Accounting procedures and distribution of direct and indirect costs of production,” it is necessary to disclose the economic concepts of “direct costs” and “indirect costs.” Outline the procedure for preparing overhead cost estimates. Pay special attention to the technique of processing primary documentation for accounting for direct and indirect costs.

Using a specific example, consider the procedure for distributing indirect costs between types of manufactured products.

When preparing a report on the topic “Accounting and distribution of costs of auxiliary production,” it is necessary to consider the workshops classified as auxiliary production, outlining the features of cost accounting in each workshop.

As an example, it is advisable to consider accounting for the costs of a repair and construction workshop of auxiliary production, which provides services to the main production workshops for the repair of fixed assets. The material will be presented on the basis of existing accounting registers and applicable primary documentation.

When preparing a report on the topic “Methods of accounting for production costs”, it is necessary to emphasize that, in accordance with current practice, an enterprise can account for production costs using one of the following methods:

1. Translational method of accounting for production costs.
2. Order-by-order method of accounting for production costs.
3. Standard method of accounting for production costs.

The use of one or another method of accounting for production costs is determined by the specifics of the technological process and the current procedure for accounting for production costs, which should be reflected in the accounting policy of the organization.

When revealing the organization of cost accounting using the redistribution method, it is necessary to disclose the concept of “redistribution” and the industries where this cost accounting method is applied. Using the example of an enterprise belonging to this industry, disclose the accounting of direct costs, indirect costs and methods of their distribution between processing stages and types of products. As an industry, you can use enterprises for the extraction of coal, peat, and shale. The cost per unit of production with this method is determined by dividing the costs of the redistribution by the amount of products produced by the redistribution.

When revealing the organization of cost accounting using the order-by-order method, it is necessary to disclose the concept of “production order”, as well as the documentation of opening an order, the procedure for maintaining the “Order Cost Accounting Card”, the procedure for accounting for direct and indirect costs and methods for their distribution between orders. The cost per unit of production with this method is determined by dividing the costs of the order by the quantity of products accepted for execution according to the order.

When revealing the organization of cost accounting using the standard method of accounting for production costs, it is necessary to highlight the following issues:

1. The procedure for drawing up standard calculations.
2. Cost accounting according to standards.
3. Documentation and recording of deviations from standards.
4. Documentation and accounting of changes in standards.

When preparing the report, it is necessary to emphasize that this method of accounting for production costs is used at mechanical engineering enterprises, the finished products of which are formed from parts, assemblies, and subassemblies. Standard calculations are developed on the basis of current standards, costs for each part, unit and product as a whole. Within a month, recording of deviations from the norms is organized on the basis of primary documents with a signal strip. Deviation from the norms is timed to coincide with the first day of the month and is issued with a notice of change in norms.

The cost per unit of production with this method is determined as the sum of costs according to norms (±) deviations from norms (±) changes in norms.

3. Terms and concepts to learn

Students need to define and learn the terms given below using special dictionaries.

Terms: costs, prime cost, incremental method of accounting for production costs, order-by-order method of accounting for production costs, standard method of accounting for production costs, auxiliary production, costing, cost standards, changes in standards, deviations from standards.

4. Tasks

1. Based on the data below, distribute general production and general business expenses by type of product.

Guidelines

The distribution of general production and general economic expenses by type of product should be made in proportion to the basic wages of production workers by type of product.

Problem 1

Initial data.

1. General production expenses of workshop No. 1 for the reporting month amounted to 600,000 rubles.
2. by type of product
   • products “A” - 40,000 rubles.
   • products “B” - 60,000 rubles.
   • products “B” - 20,000 rubles.

Solution.

The distribution of overhead costs is carried out in proportion to the basic salary of production workers and is presented in a table.

** The amount of overhead costs attributable to product A is calculated as:

.

Problem 2

Exercise.

1. Distribute general business expenses between:

a) work in progress and finished products;

b) types of products.

Initial data.

1. General business expenses of the organization for the reporting month amounted to 840,000 rubles.
2. Work-in-progress assessed at shop cost – 400,000 rubles.
3. Finished products assessed at shop cost – 800,000 rubles.
4. • products “A” - 40,000 rubles.
   • products “B” - 60,000 rubles.
   • products “B” - 20,000 rubles.

Solution.

The distribution of overhead costs is carried out in two stages.

At the first stage, overhead costs are distributed between work in progress and finished products in proportion to their workshop cost and are compiled in a table.

.

** The amount of general business expenses attributed to work in progress is calculated as:

.

The amount of general business expenses attributable to finished products is calculated as:

.

At the second stage, general business expenses allocated to finished products are distributed between types of products in proportion to the basic wages of production workers and are drawn up in the table:

* The percentage of general business expenses is calculated as:

.

** Amount of general business expenses attributable to:

products A -

products B -

products B -

Task 2

Problem 1

1. Prepare cost accounting sheets using unfinished and semi-finished cost accounting methods.
2. Determine the actual cost of manufactured finished products.
3. Prepare a cost estimate for a unit of finished product “A”.

Initial data.

In the manufacture of product “A”, the incremental cost accounting method is used. The production process consists of three stages. The first two stages are carried out in workshop No. 1, the last stage - in workshop No. 2.

a) Actual direct costs for redistributions for October 200_g. are given in table. 1.

Table 1

b) General production expenses for October 200_g. amounted to:

• in workshop No. 1 - RUB 85,850.
• in workshop No. 2 - 22,200 rubles.

e) 1500 units were manufactured in October. finished products.

Guidelines

In accordance with the accounting policy, general production costs of workshop No. 1 are distributed between production stages in proportion to processing costs, which include:

• basic wages for production workers;
• additional wages for production workers;
• UST from wages accrued to production workers.

General business expenses are distributed between processing areas in proportion to the amount of processing costs and general production expenses.

To account for semi-finished products of own production, account 21 “Semi-finished products of own production” is used, the cost of which is determined as the sum of the costs of the 1st and 2nd stages.

Solution.

1. Distribution of overhead costs of workshop No. 1 by redistribution.

* The percentage of overhead costs is calculated as:

** Amount of overhead costs attributable to:

repartition No. 1 -

repartition No. 2 -

2. Distribution of general economic expenses between divisions.

* The percentage of general business expenses is calculated as:

repartition No. 1 -

repartition No. 2 -

repartition No. 3 -

3. The calculation sheet for the unfinished version of cost accounting has the form:

4. The cost of finished products is 702,274 rubles.

5. The cost per unit of finished product will be:

6. The calculation sheet for the semi-finished version of cost accounting has the form:

Calculation sheet

Semi-finished products of own production are included in the costing sheet in the amount of actual costs for stages 1 and 2.

The cost of finished products is 702,274 rubles, which is determined as .

The cost per unit of finished product will be:

Problem 2

1. Prepare a cost accounting sheet for orders.
2. Distribute general business expenses.
3. Determine the cost per unit of product order No. 1.

Initial data.

In the main production workshop, order No. 1 has been opened for the production of 5 lathes with numerical control, and in workshop No. 2, an order has been opened for the production of an automatic line for the production of pallets.

a) Actual direct costs for orders for October 200_g. are given in table. 2.

table 2

b). General production expenses for October 200_g. amounted to:

• in workshop No. 1 – 85,850 rubles.
• in workshop No. 2 – 22,200 rubles.

c) General business expenses of the enterprise amounted to 54,260 rubles.

d) There is no work in progress at the beginning and end of the reporting period.

Guidelines

According to the accounting policy, general business expenses are distributed among orders in proportion to the basic wages of production workers.

Solution.

Solving the problem includes the following steps:

1. Distribution of general expenses of workshop No. 1 according to orders.

* The percentage of general business expenses is calculated as:

** The amount of general business expenses attributed to:

order No. 1 -

order No. 2 -

2. Cost accounting sheet for orders.

4. The cost of finished products of the workshop is 742,801 rubles.

5. The cost per unit of finished product (machine) for order No. 1 will be:

6. The cost of an automatic line for the production of pallets according to order No. 2 will be 293,732 rubles.

Test

Task 3

Exercise.

1. According to the log of business transactions for the month, indicate the correspondence of accounts.
2. Reflect business transactions on accounting accounts.
3. Distribute indirect costs by type of product in proportion to the total amount of direct costs.
4. Allocate selling expenses in proportion to sales proceeds.
5. Determine the actual production cost per unit of each type of shoe.
6. Determine the total cost per unit of shoes sold for each type.

Initial data.

The shoe factory produces four types of shoes. There are no work in progress balances at the beginning of the month.

Data on costs and volume of production and sales for the month are given in table. 3.

Table 3

Data on production costs, production and sales volumes

Business transaction log for the month

Guidelines

The distribution of indirect costs by type of product is carried out in proportion to the total amount of direct costs and is presented in table. 4.

Table 4

List of distribution of indirect costs by type of product

Selling expenses are distributed in proportion to the proceeds from the sale and are presented in table. 5.

Table 5

List of distribution of sales expenses in proportion to sales proceeds

The actual production cost per unit of each type of footwear is determined in table. 6.

Table 6

Actual production cost per unit

The total cost per unit of sold shoes of each type is determined according to the data in Table. 7.

Table 7

Total cost per unit of shoes sold

Literature

1. Federal Law of the Russian Federation “On Joint Stock Companies” dated July 18, 2009 No. 181-FZ.
2. Federal Law of the Russian Federation “On Limited Liability Companies” dated 02.08.2009 No. 217-FZ. Federal Law of the Russian Federation “On Accounting” dated November 21, 1996 No. 129-FZ.
3. The regulations on maintaining accounting and financial statements in the Russian Federation were approved by order of the Ministry of Finance of the Russian Federation dated July 29, 1998 No. 34n.
4. Chart of accounts for accounting financial and economic activities of organizations and instructions for its application, approved by order of the Ministry of Finance of the Russian Federation dated October 30, 2000 No. 94n.
5. The accounting regulations “Accounting for inventories” PBU 5/01, approved by order of the Ministry of Finance of the Russian Federation dated 06/09/2001 No. 44n.
6. The accounting regulations “Income of the organization” PBU 9/99, approved by order of the Ministry of Finance of the Russian Federation dated May 6, 1999 No. 32n.
7. Accounting Regulations “Organization Expenses” PBU 10/99, approved by order of the Ministry of Finance of the Russian Federation dated May 6, 1999 No. ZZn.
8. Accounting Regulations “Accounting for Fixed Assets” PBU 6/01, approved by Order of the Ministry of Finance of the Russian Federation dated March 30, 2001 No. 26n.
9. Accounting Regulations “Accounting for Intangible Assets” PBU 14/2007, approved by Order of the Ministry of Finance of the Russian Federation dated December 27, 2007 No. 153n.
10. V.A. Erofeeva, G.V. Klushantseva, V.B. Kemter. Accounting with elements of taxation. – St. Petersburg: Legal Center Press, 2006.
11. Kondrakov N.P. Accounting. – M.: INFRA-M, 2005.

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