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1
Baltic Journal of Economic Studies tt. . „ , -J--Vol. 5, No. 4, 2019
DOI: https://doi.org/10.30525/2256-0742/2019-5-4-116-121
APPLIED ASPECTS OF THE DISTRIBUTION OF SPENDINGS FOR MANAGEMENT ACCOUNTING AND CONTROL
Anna Kozachenko1, Oleksandr Panadiy2, Lina Ohudak3
Abstract. The article deals with questions of distribution of expenses of agricultural producers of goods for the purposes of management accounting and control. Methodology. In the course of the research, the arguments in support of the proof of the managerial nature of accounting of expenses and calculation of the prime cost of agricultural products are advanced. It causes the shift of emphases of management accounting to this section as to one of the key instruments of management of expenses of the agricultural enterprises. Results. Expense management on the basis of accounting tools is the main leverage over the administrative strategy of agrarian producers in the conditions of strengthening of the volatility of the market, aggravation of the competition, and the growing influence of the world prices for products of agricultural production on pricing at the subjects of the agrarian market. At the same time, cost accounting and calculation of product costs make a separate subsystem of management accounting, based on a combination of various elements of a method of accounting. This subsystem consists of its internal divisions and parts, and a segment of cost distribution for the maintenance of machines and equipment of agricultural enterprises is investigated in the article. In particular, the article demonstrates the statement about the discrepancy of the actual state of distribution of these expenses to the order provided by Ukrainian normative and methodical documents in the field of accounting, and the key reasons of this negative phenomenon are being established. The first of such reasons is insignificance of sanctions for violation of accounting legislation, which exists in Ukraine, and the international accounting rules, which according to the established statutory requirements or their own initiative are used by agricultural producers. The second reason lies in an optional character of methodical approaches, developed at the level of the relevant ministries and departments, to the accounting of expenses for cars and the equipment, at the low initiative of accountants with the PostSoviet style of thinking that is fatal to the idea of the reliable distribution of these expenses. Practical implications. To resolve the problem of reliability of information about costs of machines and the equipment negotiated in prime cost of agricultural products (works, services), an automatic algorithm of distribution of these expenses is offered, which is supposed to be realized via the corresponding accounting software. The point of use of the software is caused, on the one hand, by considerable by labour input of the process of accumulation and allocation of costs on the offered algorithm, and on the other hand, by technical capabilities of the agrarian enterprises which, according to data of the last researches in this sphere, point at the almost completed process of automation of accounting in agriculture on the basis of computer accounting programs. Value/originality. The methodological basis of such an algorithm is created by the developed suggestions for improvement of the distribution of costs for machines and equipment maintenance by ensuring the personified accounting of expenses on every object of these means of labour. It is proposed to carry out the further distribution of accumulated expenses on direct fuel consumption expenses on these objects when using active machines and mechanisms in terms of directions of expenditure and in proportion to productivity when using motorless mechanisms.
Key words: cost accounting, cost calculation, accounting of machines, equipment accounting, management accounting, control.
JEL Classification: M40, M41, M49, O21
Corresponding author:
1 Vinnytsia National Agrarian University, Ukraine. E-mail: sergeykozachenko@ukr.net
ORCID: https://orcid.org/0000-0002-8469-7081
2 National Scientific Center "Institute of Agrarian Economics", Ukraine. E-mail: alexpanadiy@gmail.com
ORCID: https://orcid.org/0000-0002-4771-812X
3 Vinnytsia National Agrarian University, Ukraine. E-mail: chudaklina@ukr.net
ORCID: https://orcid.org/0000-0002-9687-5148
1. Introduction
According to standard approaches, cost accounting and control and cost calculation are the main elements of management accounting. This is justified since the official cost accounting documents in international and Ukrainian accounting systems do not include precise step-by-step algorithms for such accounting and cost distribution. Even the most creative accountant will find such algorithms neither in the domestic Accounting Standard 16 Costs nor in the International Accounting Standard 2 Inventories.
This means that the functions and full powers of developing the methods of accounting and costing calculation in some enterprises are their own prerogative. That is why these questions belong to the field of managerial accounting as a direct complement to standardized accounting.
However, the influence of the Soviet and post-Soviet system of social relations, which shows itself in the reluctance of domestic accountants to develop their own accounting and calculation methods, which is based on the expectation that such a state will provide such development, results in the official methodological instructions issued by various ministries and other executive bodies in Ukraine with regard to cost accounting and costing calculation. However, today, more and more large enterprises start to work on the development of their own methods of accounting for costs and calculations.
The methodical recommendations issued by various authorities contain developed and summarized on the basis of the research of achievements of best practices approaches to cost accounting and calculation of the cost price of products, works, and services in certain areas of the national economy. These approaches are selected for logic, the stage of public discussion, and further testing at pilot enterprises.
In Ukraine's agriculture, cost accounting and costing of products, works, and services of enterprises of the area are contained in the Methodological Recommendations on Planning, Accounting and Calculation of Pricing of Products, Works, and Services of Agricultural Enterprises, which were approved by the Ministry of Agrarian Policy and Food of Ukraine in 2001 (Nakaz Pro zatverdzhennja Metodychnykh rekomendacij z planuvannja, obliku i kaljkuljuvannja sobivartosti produkciji (robit, poslugh) siljsjkoghospodarsjkykh pidpryjemstv, 2001). Implementation of the requirements of these Methodological Recommendations provides the management services of agrarian enterprises with information on the costs of their various re-parts and incisions.
Consequently, at a certain level of experience and organization of accountants, the requirements of the Methodological Recommendations are necessary for their implementation in the day-to-day work of
agricultural enterprises. But the question remains whether there is a correlation between the real approaches to cost accounting and agricultural cost accounting in official recommendations. Its relevance is valid given two points, related not only to the accounting but also to the control:
1. The insignificance of fines and other penalties for violating the accounting procedure, which solves the hands of accountants in order not to take care of the implementation of complicated accounting rules in practice.
2. Optional nature of the methodological recommendations, including in terms of cost accounting and calculation of the cost of production, works, services of agricultural enterprises.
2. A brief overview of the literature
Management accounting in agriculture in Ukraine in its conceptual positions was the subject of research by such scientists as V M. Zhuk (Zhuk, 2009), V. B. Mossakovskyi (Mossakovsjkyj, 2013), etc. The accounting and distribution of indirect costs in agricultural enterprises were investigated by J. P. Ishchenko (Ishhenko, 2005), T. Y. Kodimskaya (Kodymsjka, 2013), T. M. Ostapenko (Ostapenko, 2013), O. L. Primachenko (Prymachenko, 2011), etc. Accounting ofmaintenance costs for machinery and equipment was the subject of O. V. Borovich (Borovych, 2009), S. O. Mikhailovina (Mykhajlovyna, Shajko, Oljadnichuk, 2015), L. I. Stadnik (Stadnik, 2015). However, these publications do not include studies on the compliance ofthe accounting of these costs in agricultural enterprises with methodological requirements and scientific proposals for its improvement.
In foreign practice, among the latest researchers on management accounting in agriculture, it is necessary to distinguish Fatih Abubakar, Zeki Dogan, Lisa Jack, Philipp Johnson, and Nora Zardi. These authors were developing management accounting in the agrarian sphere from sociological, fundamental, and applied positions; however, they do not possess improved methodology and concrete methodical approaches to the accounting of expenses and calculation of product cost, especially in a segment of costs for machines and equipment maintenance. Therefore the purpose of the article is justification of need of putting accounting and distribution of costs for maintenance of machines and equipment of the agricultural enterprises in order which is required by the standards and methodical recommendations on accounting of expenses and calculation of product cost (works, services) in agriculture and also development of suggestions for improvement of this accounting and distribution with identification of expenses on objects of capital assets used for production of agricultural products, for improvement of management and control of prime cost of agricultural products.
3. The results of justification of improvement of accounting and distribution of costs for machines and equipment maintenance
One of the proofs of the reliability of the accounting data on the costs of agricultural enterprises and the cost of agricultural products is a regulation, according to which transfers of the cost of these products carries out costs for the maintenance of working machines and equipment. According to the existing methodological approaches, these costs are spent on the accounts of "Production Costs" and "Total Production Costs".
In the account "Production Costs" in the context of analytical accounts, wages the cost for the maintenance of those funds that are directly used in the production of one particular culture. If machines and equipment are used to grow several crops, the cost of their maintenance is kept on the account of "Total Production Costs". At the same time, the last account is accounting for other costs that cannot be directly attributed to the cost of agricultural products, and existing methodological recommendations for each type of such total production costs include their own separate distribution bases.
For example, for the cost of renting land, the base of distribution is the area of these lands, for the cost of salaries of general staff - direct labour costs for the objects of accounting in the account "Production Costs", etc. For the costs of machines and equipment, such a base is the number of machine-days of work and conditional reference hectares for a machine-tractor park or ton-kilometres for a motor-vehicle park.
But in practice, accountants often do not want to determine the cost of production (works, services) for labour-intensive algorithms. This leads to the fact that all expenses that are subject to distribution are transferred to the cost using a single universal basis. This describes the distortion of cost indicators in the context of objects.
A practical example of the foregoing can be considered the definition of the cost of production of one of the agricultural enterprises of the Kyiv region. This enterprise distributed all indirect costs, including
expenses for the maintenance of machinery and equipment, in proportion to the area of agricultural land occupied by the respective crops.
There were no aggregated data on the quantitative indicators of the work of the vehicle fleet and machine-tractor park at the enterprise. Therefore, data for the calculation of the amount of distributed costs were used for the article "Fuel and Lubricants" for each crop. The choice of this indicator is grounded on the fact that it more universally characterizes the intensity of the use of machines and equipment.
Therefore, the distribution of the cost of maintaining these machines for fuel consumption is much more logical than for the area in the context of crops. After all, the cultivation of different crops involves a different amount of technological operations. In addition, at the disposal of the same company are often lands of different viscosity, litter, etc.
That is why crops with a much smaller crop area often require much more technology resources than crops with a larger crop area. And this, in turn, is reflected at the level of costs of fuel and lubricants.
The results of the recalculation of costs and the comparison of their sums by crops before and after transfer are presented in Table 1.
This example is far from being unitary. Similar distortions with the wrong choice of distribution centres for indirect costs occurred at the enterprises of Vinnytsia, Kyiv, Odesa, and other regions of Ukraine. Observing this fact, it must be admitted that reliable information on production costs and cost of agricultural products is neither owned by the state nor by owners of agricultural enterprises. It is impossible to solve this problem through administrative means. Ukrainian agricultural enterprises are already overloaded with an excessive number of inspections by official bodies. This leads to the conclusion that in order to ensure the correct allocation of costs to the cost of products (works, services), it should be anticipated in automatic mode. It is possible to realize this by laying the appropriate software algorithms for allocating costs to the accounting products provided for
Table 1
Recalculation of the distribution of costs for maintenance of machines and equipment at the enterprise "X" for crops
Crop Amount of actually distributed costs for cultivating areas, UAH The total cost of spent fuel, UAH (the sum of direct costs for the article "PMM" The share of distribution by fuel consumption The amount of distributed costs Overcharge (+) or understatement (-) of actual costs of crops compared with the estimated, UAH (3-5)
1 2 3 4 5 6
Wheat 743454,19 235895,58 0,15146772 589577,54 +153876,65
Sugar beet 537155,39 393693,53 0,252789227 983964,45 -446809,06
Sunflower 1568649,41 431946,16 0,277351106 1079569,85 +489079,56
Soybean 953645,42 451925,60 0,290179834 1129504,78 -175859,36
Winter barley 89525,90 43937,50 0,028212114 109813,69 -20287,79
Total 3892430,31 1557398,37 1,0 3892430,31 X
Source: own calculations
accounting automation. This offer has sense even for the reason that accounting software, according to scientists, is used by approximately 90% of accountants of agricultural enterprises (Pavljukovecj, 2014). Given the availability of a clear, automated tool for allocating the cost of crops to accountants, such a distribution will not be a big challenge.
However, in order to implement such automation algorithms, it should be recognized that the current procedure for distributing costs for maintenance of machinery and equipment of agricultural enterprises between the objects of accounting provided for by the methodological documents of the Ministry of Finance of Ukraine also needs to be improved and revised.
Accounting for the costs of maintaining machines and equipment in a generalized manner for all homogeneous objects also does not ensure the accuracy of assigning these costs to the relevant objects of costing. According to the results of the reporting period, various obj ects of fixed assets have different performance, but for objects of cost accounting, these costs are averaged over the method.
This statement is illustrated quite simply. For example, two tractors of the same capacity are in operation at the plant, but one of them is domestic, and the other one is imported. The monthly amount of expenses for maintenance of the tractor purchased abroad is 30000 UAH, domestic - 7000 UAH. At the same time, for a particular reporting month, the purchase of a tractor abroad had a production of 500 hectares, and domestic -600 hectares. The works were carried out: under the crop of wheat - 300 hectares, under corn crops - 200 hectares, soybean crops - 600 hectares. The costs of maintenance of tractors were carried out on a separate subaccount
of the account "Total Production Costs" and carried by the objects of cost accounting in proportion to the conditional reference hectares (Table 2).
According to the results ofthe analysis ofthe production of these machines, according to the summary data of the work of the machine-tractor park, it was established that the imported tractor has performed on works on wheat 100 hectares, on works on corn - also 100 hectares, on soybeans - 300 hectares. If the maintenance costs of these machines were distributed among crops in proportion to the production of each of the cars, the rates of these costs would be (Table 3).
According to the data of the table, the sum of costs on the supply of agrimotor compared with the first variant (Table 2) differs a lot. When distributing costs with its identification on each agrimotor, there is also distribution of costs on maintenance of machines, for instance, on wheat are 13169-10101=3068 UAH by more accurate distribution than by general.
How is it possible to provide with the more exact distribution of costs on the maintenance of machines and equipment?
Accountants should open "Total Production Costs" sub-account "Maintenance ofmachines and equipment", in its limits-analytical cards-accounts on each object of the main means. These cards-accounts are suggested to be elaborated in such structure:
1. First table: it accumulates the costs of maintaining each specific machine in a layer of expenses (depreciation, repair costs, other maintenance costs).
2. Second table: the display of fuel consumption by machine (mechanism) in terms of directions of fuel
Table 2
Distribution of costs for maintenance of tractors
Crop Amount of completed works, hectares Percentage of distribution on conditional reference hectares, % Distribution of expenses for the maintenance of a tractor, UAH
1 2 3 4
Wheat 300 27,3 10101,00
Corn 200 18,2 6734,00
Soybean 600 54,5 20165,00
Total 1100 100,0 37000,00
Crop Imported agrimotor Domestic agrimotor Total costs, UAH (4+7)
Amount of completed works, master hectares Percentage of distribution, % Sum of distributed costs, UAH Amount of completed works, master hectares Percentage of distribution, % Sum of distributed costs, UAH.
1 2 3 4 5 6 7 8
Wheat 200 40,0 12000,00 100 16,7 1169,00 13169,00
Corn 100 20,0 6000,00 100 16,7 1169,00 7169,00
Soybean 200 40,0 12000,00 400 66,6 4662,00 16662,00
In all 500 100,0 30000,00 600 100,0 7000,00 37000,00
Source: own calculations
Source: own calculations
Table 3
Distribution of costs for maintenance of tractors with identification of costs for each of them
consumption (directions of work execution). This accumulation is required to determine the proportion of distribution ofcosts from Table 1 between cost accounting objects. Fuel costs are easily tracked according to the records of tractor drivers, combine harvesters' records, truck traffic letters, passenger car travel letters.
3. Third table: displays the amounts of distributed costs from Table 1 according to the proportions defined in Table 2, with corresponding allocation of expenses from the account "Total Production Costs" to the accounts of expenses accounting for the objects that were consumers of the services of these machines.
4. Conclusions
The results of the study carried out in this article indicate the following:
1. The current practice of distributing the costs of maintaining machines and equipment in agrarian enterprises does not correspond to the rules established by the Ministry of Finance of Ukraine.
2. The distorted distribution of costs for the maintenance of machines and equipment of agricultural enterprises distorts the cost of agricultural products, which leads to the unreliability of this information, which is provided for management at the level of the enterprise and the state.
3. The current procedure for distributing the costs of maintenance of machines and equipment between the objects of accounting has its disadvantages since it does not provide for the exact assignment of costs for the maintenance of specific machines and mechanisms precisely at those facilities where the actual use of these machines took place.
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