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Section 3. Management
Urkayev M. H, Ph D., in economics Ganja State University
Karimov F. J.,
Ph D., in economics Ganja State University
Gurbanova KhV.,
candidate in economics, Azerbaijan Technology University
Karimova M. N.,
doctoral candidate, Azerbaijan Technology University
Karimova I. J.,
senior lecturer, Azerbaijan Technology University E-mail: f.kerimov@uteca.edu.az
METHODS OF MANAGEMENT ACCOUNTING AND ECONOMIC ANALYSIS
Abstract. Resolving the problems of effective utilization of resources, that is the actual records, the operational analysis and strict control of their use in every job, area, department, service and enterprise, requires the application of methods that meets the pursuance of the task.
As is well known, the manufacturing process of enterprises and organizations is characterized by quantitative and qualitative indicators. If the quantitative indicator determines the production volume, nomenclature and the loyalty of output of the whole enterprise and its sections, then the qualitative indicator of their performance characterizes the two interconnected stages of the living and material labour accounting.
Keywords: rational use, problems, costs, management accounting, calculation system, accounting balance, normative method, responsibility center, location, analytical bookkeeping.
Resolving the problems of effective utilization of nomenclature and the loyalty of output of the whole resources, that is the actual records, the operational enterprise and its sections, then the qualitative in-analysis and strict control of their use in every job, dicator of their performance characterizes the two area, department, service and enterprise, requires interconnected stages of the living and material lathe application of methods that meets the pursuance bour accounting.
of the task. Due to the main focus on improving the rate of
As is well known, the manufacturing process of working qualities of the entity and its structural sub-
enterprises and organizations is characterized by divisions, the methods of monitoring and analysis
quantitative and qualitative indicators. If the quan- of production resources accounting are particularly
titative indicator determines the production volume, relevant in transition to the market relationships, and
they have been required to comply with the market economy demands [1].
In the state practice, planning and accounting of production costs and calculation of cost of goods are based on the unique methodology.This methodology is based on "The Principle of Regulatory and Accounting of Product Costs in Industrial Enterprises", that isthe Tax Code which has been entered in force since 2000, as well as guidelines referring this issue.
Nevertheless, the level of mechanization of methodological, technological, organizational features and accounting records in the enterprise, as well as setting accounting targets on the basis of unique principles, has a significant impact on the selection of accounting, control and economic analysis systems.
Proper determination of the scope of one or another accounting method primarily requires its content and scientifically justified classification. First of all, this will allow clarifying the purpose and functions of management accounting, and also expand its application as an experience of the advanced and progressive methods.
First and foremost, it is required to summarize the experience gained in the country and abroad and the critical analysis of the regulatory and methodological materials in order to improve the methodological framework of manufacturing costs accounting.
In recent years, economic literature has focused on the cost accounting, manufacturing cost estimation methods and their application in various industries. In most cases, there are some opinions expressing the advances of the cost of goods estimation and accounting methods, step and the job order which are proposed by the normative documents.
Moreover, the other perspectives such as the independent methods are added to the forgoing methods. For example, A. S. Margulis noted that a simple method is used in industry, power stations and enterprises producing two or more types of products. I. M. Cantor has pointed out the widespread allocation of the details calculation in large-scale and mass production enterprises, which incorporates the cal-
culation of the cost of each detail, and has explained the addition of the method of calculating groups.
So, apparently, the above-mentioned authors are considering the cost accounting and the method of manufacturing cost calculation more thoroughly. Prof. Shenkov S. A. in his monograph titled "Accounts System and Accounting Balance of Enterprise» has recommended calling the entire method as a cost-accounting method. At the same time, the author believes it would help to simplify the terminology and preserve the integrity of the calculation methods. Thus, while considering the manufacturing costs and methods of calculations, these authors have meant this notion as having the same designation in the enterprise information system.
Thus, I. I. Poklad indicating normative method as the most progressive one and predicting its future, he has finished his thought by stating "If the fields of industry applying the technique of single-step, step-by-step and job order methods do not use the basic principles of the normative method, those techniques will lose their significance in the development of modern techniques and economics, and therefore, it does not meet the requirements of various types of manufacturing cost accounting, its calculation and operational analysis" [2]. He has attempted to combine the principles of the normative method with single-step, step-by-step and job order methods by classifying them as single-step-normative, job order-normative and step-by-step-normative methods, and also to make additions to the manufacturing cost accounting and the methods of cost of goods calculation.
M. X. Iebrax tried to make classification according to the normative method in his books "Basic Elements of Industrial Accounting in the USSR and Abroad" (1931), "Fundamentals of Regulatory Accounting for Production" (1938), "Industrial Accounting Course" (1943)) and N. A. Blatov also tried to do the same in his "Basis of Industry Accounting" (1935).
N. G. Chumachenko describing the classification of manufacturing cost planning, accounting
and calculation (1955), states that "one of the most important adversaries in classification of methods of accounting for manufacturing costs costs and the calculation of cost of goods is its inability to cover all facilities and production. The absence of a single categorizing criterion is considered to be one of the other shortcomings. The method is determined by the principle of manufacturing cost accounting on the one hand, and also is considered by the principle of cost of goods calculation. In addition, there are different ways to calculate costs in case of similarities in production costs accounting."
The classification offered by N. G. Chumachenko is based on the fact that the costs accounting and the calculation of objects are not identical. According to the author, in some cases, similarity is observed, but it should not be considered legitimate, just an exceptional case [2].
Depending on the mentioned above, the author has provided a separate classification of accounting and calculation methods.
1) accounting of manufacturing costs on components;
2) accounting of manufacturing costs on goods;
3) accounting of manufacturin costs on product groups;
4) accounting of manufacturing costs on job order groups;
5) accounting of manufacturing costs on processes;
6) accounting of manufacturing costs on production;
In this case the standard method acts as the above-mentioned methods.
Prof. N. G. Chumachenko's calculation methods include the following ones;
1) calculation by way of a direct method;
2) calculation of expenses by way of collection;
3) calculation of expenses by way of exception;
4) calculation of the unit cost by a ratio method;
5) calculating of the unit cost by a proportional method;
6) calculation of the product by a combined method;
7) calculation of the product by a normative method.
It should be noted that this type of issue enables the diversity of manufacturing costs and cost estimation of the goods. The wide allocation of the ratio and proportional division methods, due to the fact that there is a difference between the objects of cost accounting and cost of goods calculations, which is related to the use without the exception of indexes and costs during the calculations, that in turn creates a reduction in the scope of costs directly referred to the object of calculations.
We should point out that the first four of the methods used by N. G. Chumachenko, related to the goods and the next two methods completely follow the requirements of the step method.
The suggestions made by N. G. Chumachenko on the method of calcification make it difficult for us to deduce indirect costs by technical means; they cannot afford to be economically return on as well as the cost calculation method. E. Gilde has given the following classification of the method of accounting for manufacturing costs:
1) The costs which are not applicable in accounting records: the job order and step methods;
2) By dividing the costs into norms and variances: job order-normative, step-by-step methods.
I.A Basmanov has reviewed the classification of costs and the methods of cost of goods calculation; he decided that one of the most significant adversaries was about mixing up the cost units with the accounting method. Here, basically, the cost accounting is recognized as a unit, in other cases, it is supposed to be a cost accounting method. Depending on it, he has decided that the information about the costs of a certain object can not fully describe them, which reflects the process of forming the methods' costs on the basis of norms and variances. Then he defines the classification of the cost accounting methods by two: comprehensive and accounting object.
Under this principle, separate authors agreed with the classification of the methods suggested by I. I. Poklad who has proposed to classify the existing method of cost accounting as normative and nonnormative methods. While non-normative method is referred as the method of job order, step and goods, the normative method should be reviewed as an independent method.
Later I. A. Basmanov explained widely this point of view in his research and agreed with it. He supposed that the classification of the manufacturing cost was rather complicated in two ways (comprehensive and accounting method), and proposed that the cost accounting method should be restricted as a normative and non-normative method; the object of costs accounting would be considered as a separate concept. Let us point out that it is impossible to agree with this type of classification of the cost accounting method. The classification of shown methodology is compared with not just real-time accounting, but also on the margins of the job order and step methods increasing their conductivity and efficiency. Such a classification is based on the grouping of costs on objects, not on the comprehensive method [3].
The classification of group, information, one-step methods of manufacturing costs accounting and calculation cost of goods are based on the object of cost accounting. In the organization of production, accounting facilities can be scaled up and detailed depending on the accounting objects, the analytical accounting technology and the level of accessibility. In this regard, the job order method is called product, details, group method; the step method transitional, one-step method.
Thus, these methods detailing the job order and step methods, their types and the nomenclature of analytical accounting are considered to be a conventional form of manufacturing costs accounting.
There are also different points in determining the method of calculation.
N. G. Chumachenko, I. A. Basmanov considered the calculation of cost of goods as a separate stage of
production accounting, believing it as a method of calculation of cost of goods.
In connection with this, N. G. Chumachenko has offered to calculate the cost of goods by one ofthe following; direct indication, collecting costs, costs variances, ratio, index, the joint and normative methods. I. A. Basmanov also defends this classification which applies to the concept of calculating the cost of the whole goods in the entity and its structural units. He explains this proposal by the fact that in most cases the method of cost of goods computation is incompatible with the calculation of manufacturing cost formula. He supposed it was appropriate to use the same normative method to calculate only the cost of the object and unit when justifying the application of each method of calculation and its various principles.
It should be noted that in the classification which these authors have mentioned, the calculation methods are based on the organization of manufacturing costs accounting (normative and non-normative). However, as the practice of most enterprises shows, the calculation ofactual cost ofgoods and accounting of the determined variance in operational terms can be applied in all methods of calculation of cost of goods.
The standard method of calculating is based on the computation of the variances and adjustments to count normative costs for obtaining the actual cost. At the same time, the calculation exceeds the sys-tematization of the variance, which is documented or defined by counting and the registration of the variance over the first norm [3].
Hence, the standard method of calculating under the normative cost of goods can be used for the calculation of actual costs without any explicit variance. In this case, the calculation does not refer to the system of determining current expenses, variances and any deformations.
The ultimate sort of method for accounting and calculation creates an overall simplified accounting.
Thus, there are numerous conflicts in the classification of the widespread application of the standard method, the accounting of cost of goods and calcu-
lation methods. Here's the point of what new issue the classification can give to the normative method.
In this regard, let us discover what determines the development of manufacturing costs accounting and the calculation method of cost of goods. The method incorporates the study of the ways of acceptance in which the subject is studied. The investigated object defines how the methods of its perception have been formed. Under such circumstances, the subject acts as a real cost and a specific object i.e. the product is released by an entity.
In this regard, the definition of accounting and calculating methods is affected by the area and type of production. The cost of a particular facility is perceived by the method of accounting and calculation of manufacturing costs.
The step method covers the step and final process of the product. The job order method combines the order and the method of accounting. The object of the accounting or a sequence of steps has been acting in the normative method, as well as in the object of calculation - the step product or the entire enterprise, product and order.
On the other side, the application of the normative method is possible with the accounting of manufacturing costs and the calculation of cost of goods under the job order and step methods. This situation have resulted in the classification of manufacturing costs accounting which allows reviewing the relationship between the standard method and the previous ones used before, and the methods of cost of goods calculation.
Thus, the normative method hasn't got any independent significance of the cost accounting and the cost of goods calculation methods; on the other hand it is used in accordance with all other valid methods including the mentioned ones. The normative method is an option of managing the manufacturing costs differently from the perspective of reality and promptness.
The projected cost management system foresees the existence of an annual plan of calculation based
on the average norm that made it difficult to manage manufacturing costs and to arrange operational control over them. In contrast, the normative calculation is applied in strict compliance with the existing norms and creates significant opportunities for operative determination and elimination ofvariances in comparison with planned calculations [2].
The variances occurring in the planned management system of manufacturing costs are determined once a month or quarterly. In most cases comparison with planned costs has allowed the timely identification of negative variances, as well as the objective estimation of real costs for several years.
One of the main principles of the normative method is to provide that the planned calculation has a prior task to reduce the cost and to record a variance during the turnover, which enhances the operational management capabilities of the organizational and technical measures and creates conditions for controlling them. Achievements resulting from the application ofprogressive norms, technological processes and organizational measures into production are reflected in the cost, and consequently the control over manufacturing costs is simplified.
Therefore, the concept of a normative method is broader than costs accounting and calculation of the manufacturing cost. It is considered to be one of the methods of manufacturing cost management, which also implies that it is necessary to use it in all entities.
In our opinion, it is desirable to envisage such classification in the cost accounting and calculation of cost of goods for the job order and step methods.
As regards the normative method, it is necessary to classify it as a method of operational costs management. In this case, a complete and restricted management method should be considered separately.
In most petrochemical enterprises of the Republic of Azerbaijan the accounting of manufacturing entities is registered in the following manner. Depending on the annual program, all the issued kinds of goods are assigned with a registration code. The costs incurred in the workshop are recorded in the
first-line documentation, as well as the codes granted in the shop. Then the costs spent on units are summarized. Once in a quarter the cost of the goods is calculated by the method of gathering costs and also compared in order to determine the actual cost which is turning out to be a variance. It is included in the commodity goods of the entity, regardless of whatever reason or who is responsible for it. In this case, the accounting of manufacturing costs and the calculation of cost are considerably simplified.
It is significant that the control over the use of funds, as well as the operational detection of loss, damage, and other negative events in the production process are often violated. Certain variances show just the final result, which does not characterize the positive and negative aspects of the variance.
At the same time, labor attitudes are significantly higher in the analysis of defining variances, since it is also necessary to study and collect the information from the original documents in order to identify the reasons and perpetrators of the variance. The management decision making and its effectiveness, the truthfulness of production regulation, the search for economic resources and its timely implementation are not able to give their impressive character.
In this regard, the most important task of accounting is to find out accurately the variance of manufacturing costs in the entity, its workshops and brigades, by the way of comparing them with the norms and budget. This task is of particular importance in the context of modern economy, which commonly focused on the use of domestic production facilities. It is impossible to analyze the manufacturing costs as well as identify and correct mistakes without having any operational information about production progress.
Variance management is directly dependent on standardization, planning, production planning, technical process, inventory, the organization of storage, the provision of accounting machinery and other management tools.
Therefore, the normative approach should be seen as a system that ensures the production man-
agement of the technological constructions, materials and the connection between other processes.
V. Petrov clearly shows how positive have been the systematic changes in the planning and the assessment of economic activities and establishing a cost-revenue management system based on the standard method of planning, accounting and analysis of manufacturing costs. It is of great urgency to apply the issue referred accounting of manufacturing costs and the calculation of cost of goods based on the normative method that fully meets the requirements of modern conditions [4].
Despite the success of this method in management, it was unable to take the widest place in real life. Because of the following reasons; the formation of false ideas about the growth in the volume of accounting works, the lack of willingness to determine the errors of production and labor in the technological process under centralized planning and management, as well as summarizing the information about costs and submitting it to the higher organization after the end of turnover.
In the current practice, the grouping and accounting of expenses are not usually carried out on areas, brigades and shifts, but on workshops and entities. That's why each shop is interested in meeting the challenges on monthly indicators and gives little insight into the daily records of costs and the determination of the variance. In such a case, not only significant advantages of the normative method, allowing for operational control over the level of manufacturing costs, the determination of the variance, and the improvement of the cost standard based on the accurate calculation of the variable norms, but also the cost of a separate product are essentially distorted. One of the reasons for the delay in the application of normative accounting is the deficiencies in the normalization of material and labor costs.
For example, the average monthly production rate in individual oil and gas engineering entities is about 150-170%. Reducing the employment rate by more than 60% is driven by an increase in the pro-
duction rate that ultimately leads to the decline in the quality and accuracy of accounting data, which does not allow the determination of actual expenses defaults.
One of the most important conditions for the future cost accounting and the calculation of cost is the revision of this process directly by splitting budget into units and structural divisions of the service cost; to arrange operative determination of expenses derived from existing (current) norm; systematic recording of the variance in the norm; a compilation of a substantiated calculation of manufacturing costs which results in the lower cost of the product.
The western economists also support the cost accounting and the calculation ofcost ofgoods by a universal method. For example, the American companies use two systems of accounting costs and calculation. These systems are called the accounting and processes system (the Process cost system) and the job order accounting system (The Job order cost system).
The accounting and processes system in the country is generally compatible with the cost accounting and calculation of cost of goods by job order and step methods. However, the system of costs accounting involved in the production of the US industrial firms is more extensive than the cost accounting method in our country. It is up to the fact that the system of costs accounting and calculation of cost of goods perform the function of ensuring analytics and control over manufacturing costs [4].
According to the main purpose, it is important to manage the process of revenue generation when calculating the limited cost in our country. This purpose primarily depends on the fact that the accounting system is in compliance with the requirements of financial accounting, i.e the revenues accounting, as it is a function of management accounting by the "Cost-Product output-Result" system, depending on the taxation system or the forms of the capital account. The production volume of an individual product depends on the variable costs - raw material, employee's wage and conditionally variable costs,
but the fixed costs are not dependent on the extent ofwhat the entity produces. From this point ofview, it is of great importance the costs are divided into variable and fixed costs [1; 2].
For example, if the sale value of a product does not cover its full cost, then that production is considered to be negative. However, if we match variable and fixed costs as well as just variable costs can cover only one portion of fixed costs, then it can be considered profitable due to the entity is able to compensate the unpaid fixed costs. Therefore, the production of such goods allows for the minimization of fixed costs, even though it is profitable. The limited cost of the accounting system creates conditions for determining the revenues that can cover the costs and generate the income. There is no way to get such an indication when the cost grouping is operated only on material costs. The main disadvantage of the system mentioned above is that the calculation of cost of goods has got quite a difficult character.
Under the conditions of market economy, the implementation of methods referred the cost accounting and the calculation of cost of goods should be clear to maintain efficiency. At that time the efficiency of the information is more important, to be precise. The accuracy of accounting information on manufacturing costs once again confirms and proves its effectiveness.
The cost accounting together with full cost may be applied in the case of a long-term management decision. The cost accounting of a limited cost can be effective to make an explicit decision-making on regulating the ending cost calculation and the control over the sales costs related to the change in the market conditions.
The cost accounting of a limited cost can be considered as an acceptable option both on the overhead entity and its structural subdivisions. It is more effective in organizing domestic accounting operations in the form of internal costs.
In this case costs are grouped according to the location and responsibility centers, depending on
their granularity capabilities. According to the variable costs, their location and responsibility centers are established. Fixed costs are also accounted by the center of responsibility. For this purpose, the fixed costs of the definite unit are directly attributable, but the entity's fixed costs are included together with the interest rate.
Domestic accounting costs are determined on the basis of a unit of the product or the overhead products (services), depending on the variable unit costs, the fixed unit costs, the fixed costs of the entity's permanent share and the profit. For example, it has been proposed to cluster the costs spent for oil and machinery industry entities under the responsibility centers (shops, areas). Variable and fixed costs accounting of these shops and areas should be monitored on the basis of responsibility centers. Meanwhile, the internal costs include: the variable costs for each responsibility center; the fixed costs of responsibility centers and the possibility to cover fixed costs of the entity as a single set. Such an accounting arrangement provides the profitability of the product or service, the share of the unit into the entity's last financial result, the assessment of existing resources (raw materials, equipment strength, employee qualifications) and the validity of the information about the final cost regulation.
In such a case, the results of the turnover are set out below:
1) the revenue from goods sold at the current accounting cost;
2) the variable costs of the controlled sections; raw materials and wages;
3) the costs of management and service, packaging, transfer (sale) and other semi-variable costs (repair, energy, water and cooling);
4) the section's fixed costs; amortization total management costs;
5) revenue;
6) the share of fixed expenses controlled by the entity;
7) profit (4, 5, 6)
In general, the profit of the entity can be determined by calculating the profit and loss of the structural units - responsibility centers. In this case, the outcome of structural units' activities and the entity overhead should be assessed by taking into account the dependence and independence from the activity, i.e., the control over structural units' costs.
In the meantime, the variable costs are taken into consideration in terms of norms and variances, perpetrators and locations, as well as the fixed costs are considered the budget, variances of budget and their location. The fixed costs of the entity related to a particular section are those which do not refer to its activity. In this case, there is no need to carry out labor-cost calculations and allocate separately the fixed costs among the structural subdivisions.
The comparative analysis of the standard-cost and normative method of accounting systems (Appendix 4) indicates that the manufacturing costs are accounted by one method or the other in accordance with the norms in terms of the cost of goods calculation. However, whilst the application of the standard-cost system, excessive costs relate to a perpetrator and the result of an operation, they are not included in manufacturing costs. All of this takes place if there is a change in the norm, particularly if this change is initiated by the perpetrators and their attitudes [2].
It should be noted that the Standard-Cost System is not defined by law, and there is no single standard to be accounted and registered. In this respect, different standards are applied within the firm. As the costs frequently change in the market, the inflation process makes it difficult to calculate the costs of the materials and the remains of unfinished products. Under such circumstances, in order to determine the cost of the product it is necessary to identify the average cost of the product.
The norms or basis are valid for material and labor costs for a specified period of time (for a number of years and determine the market value); ideally divided into norms (creating the ideal environment for technology production and labor
organization). Thus, in the process of standardization, first of all, the purpose of the norms is their identification. The standards of material costs depend on two elements: the quantity and value of the material. The standards in the oil engineering industry are defined according to the necessary standards by specifying the components of the finished product. In this case, the inevitable losses which are possible in raw materials are also shown separately in connection with the technology of product preparation. The variance due to the value formed on the material waste is determined as the difference between actual and standard prices. The standard price may consist of the average, current and expected values, but currently the market value is dominating. In addition, the expenses are included in the standard costs. Variances may occur as well as the difference between the standard costs being a result of the product warranty and the actual volume of the finished product.
In the case of standard-cost systems, the cost accounting is conducted by two options. The costs in the first option are estimated by the standard cost and written down to the debit of the "Production" account.
The output written down to the credit of the "Production" account by a standard cost is erased. Unfinished production is estimated with the standard cost too. In the second option, the costs in the debit of "Production" account are recorded with the actual cost and the finished product is erased from the credit of mentioned account with the normative cost. The remains of unearned production taking into account the variance from the actual expenses are determined with the standard cost. [4]
Table 1.- The differences between standard-c<
The normative method of accounting was primarily took place in the 1925-30s and intended to be documented as the variance and their allocation among all types of products. But then, it was adopted and used in the documentation of all actual costs and organizing accounting ofvariances on workshop, information or the same kinds of group on the basis of general principles.
M. Kh. Iebrax said that the variances made by accounting had nothing to do with information or information groups, and therefore he suggested these variances should be equally distributed among the all types ofproducts. Thus, the deviances so far included in the manufacturing cost. In this case, the variances connected with majority of raw materials used in the production are defined by a shop inventory throughout the whole turnover. Costs and service management depending on production volumes are not grouped into accounting systems. Therefore, no variance made without taking the impact ofthe change in production, and the total cost ofproduction management and service is distributed in proportion to the wages of key production workers, which significantly reduces the informative function of the accounting.
The differences between standard-cost and normative methods in accounting system are broadly showed in the table. (Table 1)
In the direct-cost accounting system, the cost of the products emerged during the turnover is not included in all costs with regard to the both options. In the first option, indirect costs are not considered a component of the cost, in the second option; the entity's fixed expenses of a definite period are erased as a result of the activity.
: and normative methods in accounting system
Indicators Standard-cost Normative method
1 2 3
The applied norms Basis Current Ideal Simple Plan (basis) Current
2
3
The accounting of
variance
Current record is kept
The variance is caused by the current account and from the initiators' point ofview.
Accounting of variances on independent expenses_
The identified variance is documented and referred to the perpetrator and outcome.
The identified variance is documented and referred to the perpetrator and the cost of the product._
Calculation of variances from the budget expenses in manufacturing cost management and service
Amounts within the budget are considered to be expenses and the variances are determined by taking into account the volume of production as the difference between the standard product of the norm and the actual expenses. The variance is the result of activity._
The part of the actual cost amount is considered to be a cost. The variance from the budget is made in absolute amounts and included in the manufacturing costs.
Arrangement
There is no method about the determination of unarranged standards, registration records, etc.
The general and area standards of the normative method are regulated. In the case of concrete production conditions, the norms of the general rules defining the general standards, the type of material production and the specific weight of the labor costs shall be determined by a group of entities, except of individual norms._
The option of keeping accounts
Option 1) Expenses on the debit of «Production» account. The standard cost and finished products for «Production» account are valued at the standard cost. Unfinished production is valued at the standard value too. Option 2) The costs in the debit of «Production» account shall be recorded with the actual costs and the finished products shall be erased in the credit with the normative cost. Remains of unfinished production are determined by the standard cost taking into account the variance.
Option 1) The unfinished production and product output are estimated by the existing norms and the variance from the current norm is identified. Option 2) The unfinished production and product release are estimated by the existing norms, but the variance is not identified from the current norm, just provided by the plan calculations. Option 3) Unfinished production, product output and variance are recorded by current norms.
Commonality
The standard-cost and normative methods of accounting are based on accounting standards and non-standard variances. Management anticipates a perspective mechanism from retrospective mechanisms that means the registration of historical events, the ways to envisage the future in accordance with the plan, and the transition_
Hence, the permanent non-current costs are not definite period are erased from the result of activi-considered an item of unfinished cost along with ties. Thus, permanent non-expenditure costs are not inventory, and secondly, the fixed expenses of the reflected in inventory and the cost of unfinished pro-
1
duction. Consequently, a part of the manufacturing costs is emerged without dividing in accordance with the principle of grouping of variable and partially variable fixed costs. The standard-cost along with the normative system does not include the amount of fixed and variable costs, and require additional calculation to determine their impact on earnings. Such a demand is related to the fact that a market manager is interested in operational information.
The integrated management and financial reporting information is available in the direct-cost accounting system to create the internal reporting for operational forecasting, current analysis of planning costs, production volume and the result of activities. All this allows the manager to identify the structural
As it can be seen from the provided information, the net profit of the second-option sales was 100.000 manats, compared to the first option was less than
units required to obtain information about his or her activity. The elements of the Direct-Cost System increase the analytical and operational efficiency of the implementation of information in the country's experience, reduce the complexity and labor intensity to account the costs associated with the production management and service, as well as provide a result of activity among the entity and its structural units through the system "Cost-Output-Result" in order to get mutual beneficial relationship.
There are some difficulties in transition from the system of full cost allocation to the limited cost price accounting system (Direct-Cost), the determination of tax burden on the budget and calculating the profitability of the turnover (Table 2)[2].
200.000 manats. It may cause the decrease in the transit balance of this unsold product.
Table 2.- The net profit calculation by three options of price cost calculation
Indicators Option 1 The system of spending all price costs Option 2 The system of spending constant price costs Option 3 The system of spending direct price costs
Revenue from Sales of products. 10000 10000 10000
Direct raw materials 6000 6000 6000
Direct wages, production management and maintenance costs 2000 2000 2000
Variable 500 500 —
Fixed 1000 — —
Total cost of sold product 9500 8500 8000
Total revenue 500 1500 2000
Is deducted - — —
Inventory expenses 200 200 200
Production management and maintenance costs - — —
Variable — — 600
Fixed - 1100 1100
Net revenue from sale 300 200 100
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