What are direct material costs? Accounting for direct material costs

Home → Accounting consultations → Income tax

Material costs in most organizations are one of the main cost items, along with labor costs and contributions, and depreciation of fixed assets. In this case, the terms “costs” and “expenses” are usually considered synonymous. We will look at what material costs are in accounting and tax accounting.

What refers to material expenses in accounting and tax accounting

Material costs are named as one of the types of expenses for common types activities in PBU 10/99 (clause 8 of PBU 10/99). At the same time, the list of material costs in terms of accounting not revealed.

If we turn to tax legislation, then in Art. 254 of the Tax Code of the Russian Federation provides a list of costs that can be attributed to material costs in tax accounting. This list is open.

What are material costs?

Material costs include:

• costs of purchasing raw materials, materials and components;
• costs for the purchase of fuel, water, energy of all types spent for technological purposes;
• costs of purchasing works and services of a production nature;
• losses from shortages and damage to goods within the limits of natural loss;
• other costs.

We can say that material costs in accounting are the same costs mentioned above, taking into account the specifics of a particular activity.

The accountant should enshrine the list of material expenses in the organization’s accounting policies for accounting and tax accounting. Compose accounting policy Our accounting policy designer will help you.

Material costs under the simplified tax system

Despite the fact that the list of expenses taken into account under the simplified tax system is closed, material expenses during the simplification are similar to the costs that are taken into account by income tax payers and which are named in Art. 254 of the Tax Code of the Russian Federation (clause 5, clause 1, clause 2, article 346.16 of the Tax Code of the Russian Federation).

Direct material costs

The concept of direct material costs can be found in Tax Code(Clause 1 of Article 318 of the Tax Code of the Russian Federation). Thus, direct material costs include:

• costs for the acquisition of raw materials and supplies that are used in the production of goods (performing work, providing services), form their basis or are a necessary component (clause 1, clause 1, article 254 of the Tax Code of the Russian Federation);
• costs for the purchase of components undergoing installation, or semi-finished products undergoing additional processing (clause 4, clause 1, article 254 of the Tax Code of the Russian Federation).

At the same time, the organization has the right to independently establish a list of direct material costs (paragraph 10, paragraph 1, article 318 of the Tax Code of the Russian Federation).

Analysis of direct material costs

Because straight material costs- these are expenses that are directly related to the production of goods (performance of work, provision of services) and can be directly attributed to their cost, then managing direct costs is the key to reducing costs and increasing profitability. By analyzing direct material costs, determining their share in the cost and price of the final product, as well as specific gravity material costs for individual divisions and types of activities, it is possible to study indicators over time and identify reserves for increasing profitability.

Used
for salary indexation

Is used for
wage regulation

Note

Bid
refinancing

Is used for
calculation of individual indicators

ACCOUNTANT'S DESK SURVEY Would you like to open your own business?

To material costs include the costs of raw materials, main and auxiliary materials, fuel, purchased semi-finished products and components, spare parts. When analyzing, detailing by costing items is important, which makes it possible to conduct analysis by cost accounting objects.

The costs of material resources and their storage consist of two components:

• 1) expenses for the acquisition and storage of material resources;
• 2) costs associated with the use of material resources.

The procurement cost of purchasing materials consists of the purchase price, commissions paid to supply organizations, customs duties, cost of services commodity exchange, fees for transportation, storage, delivery, if they are carried out by third parties.

The tasks of analyzing material costs include justifying their estimate, assessing the implementation of this estimate, finding the culprits, the reasons for the overconsumption of materials and developing measures to reduce costs.

The main indicators characterizing direct material costs are:

• 1) the level of direct material costs per 1 ruble of marketable products;
• 2) direct material costs in the cost of production;
• 3) direct material costs per unit of production (material consumption per product, material intensity).

Factors influencing the dynamics of direct material costs include:

• 1) change in production volume;
• 2) change in product structure;
• 3) changes in the consumption of materials for the product, including due to deviations from standards, changes in the standards themselves and replacement of materials;
• 4) factors in the formation of the procurement cost of materials, including transportation and procurement costs and changes in prices, tariffs, and other markups.

Factor analysis is based on the method of chain substitutions: the influence of the “norms” factor is assessed first, and then the influence of the “prices” factor. It is important to carry out factor analysis promptly, promptly identifying deviations from the norms and finding out the reasons for these deviations.

Such reasons include low-quality raw materials, non-compliance of materials with standard requirements, malfunction or low technical level of equipment, low qualifications of workers, failure to comply with the organizational and technical measures plan, and violation of technology. One of the most effective methods of controlling material costs is the standard accounting method, which allows timely detection of deviations from the norms.

When analyzing transport and procurement costs, the value of transport and procurement costs is compared with the plan designed for actual cost purchasing materials at the purchase price.

When analyzing returnable waste, two assessments are used: at the purchase price and at the price of possible use. Above-plan returnable waste is recalculated from the price of possible use at the price of raw materials. Then the lost products are determined as a result of the presence of excess returnable waste.

The analysis of costs associated with storage and maintenance of inventories is carried out in the following areas:

• 1) reducing losses associated with storing inventories and paying staff;
• 2) minimizing the loss of working time due to the lack of Material resources (downtime of facilities);
• 3) prevention possible losses materials from damage and theft.

When analyzing the costs associated with storing inventory, the optimal size of the order and stock of materials is assessed.

The consumption of materials from stock is usually determined by demand or the rate of their use, i.e. not subject to regulation by those managing inventory. Therefore, they must focus on managing the flow of materials into inventory.

Thus, when managing any inventory, you constantly have to make two decisions:

• 1) decision on the time of issuing an order for the purchase or production of material to replenish stock;
• 2) decision on the quantity or volume of the order.

Ordering costs include office expenses for placing a purchase or production order. This also includes fare and expenses for receiving goods. For production orders, these costs include the cost of setting up equipment to produce the ordered batch.

In addition, when analyzing inventories, the costs of their storage are assessed, including:

• a) the cost of capital invested in inventories;
• b) storage costs (warehouse space, energy supply, personnel);
• c) taxes and insurance fees, depending on the value of the stock;
• d) decline in the value of inventories due to aging, spoilage, and theft.

If there is no inventory, the company may experience the following types costs:

• a) lost production time or overtime caused by the unavailability of material, parts or other resources important for production;
• b) the cost of tracking deferred client inventory for finished products that were not in stock;
• c) costs associated with partial or urgent shipments to clients;
• d) lost sales or even lost customers.

Thus, the analysis of material inventories is important for the organization, since its results are taken into account in the work of marketing services, financial service and production departments.

Material costs occupy a large share in the cost of production. Total amount of material costs as a whole for the enterprise depends on the volume of production (VVP), its structure (Ud i) and changes in specific material costs for certain types of products (UMZ i). The level of the latter, in turn, may change due to the amount (mass) of material resources spent per unit of production (UR i) and the average cost of a unit of material resources (C i).

This relationship is shown schematically in Fig. 11.6.

It is advisable to start the analysis with studying factors for changing material costs per unit of production,

UMP i =?(UR i ·C i)

We will calculate the influence of these factors using the chain substitution method:

UMP 0 =?(UR i0 ·C i0); UMP conv =?(UR i1 ·C i0);

UMP 1 =?(UR i1 ·C i1);

DUMZ ur =UMZ conv - UMP 0;

DUMZ c =UMZ 1 - UMP conv.

Table data 11.11 allow us to establish why the material costs per unit of production have changed in general and for each type of material resource. In the example under consideration, they increased mainly due to rising prices for resources.

Table 11.11. Calculation of the influence of factors on the amount of direct material costs per unit of production

cost cost material resource

After this you can study factors changing the amount of direct material costs for the entire volume of production of each type of product, Why is the following factor model used:

МЗ i = VBP i ?(UR i ·Ц i)

From the table 11.12. it can be seen that the material costs for the production of product A increased by 11,130 thousand rubles, including due to changes in:

• a) volume of production 22,610 - 17,000 = +5,610 thousand rubles;
• b) material consumption for the product 21,998 - 22,610 = -612 thousand rubles;
• c) cost of material resources 28,130 - 21,998 = +6,132 thousand rubles.

Similar calculations are made for all types of products (Table 11.13.)

The total amount of direct material costs for the enterprise as a whole In addition to these factors, it also depends on the structure of the products produced:

The necessary data for the calculation are given in table. 11.14.

Based on this data we can establish that total amount direct material costs for production increased by 8,488 thousand rubles, including due to changes in: volume of production 23,750 - 25,000 = -1,250 thousand rubles; structure of product production 27,170 - 23,750 = +3420 thousand rubles; material consumption of products 26,444 - 27,170 = -726 thousand rubles; cost of material resources 33,488 - 26,444 = +7044 thousand rubles.

Total: 33,488 - 25,000 = + 8488 thousand rubles.

Consumption of raw materials and materials per unit of production depends on their quality, replacement of one type of material with another, changes in the recipe of raw materials, equipment, technology and organization of production, qualifications of workers and other innovative measures.

During the analysis process, you need to find out the change specific consumption material due to each factor, and then multiply the resulting result by a basic level of prices and actual production volume of the i-th type of product. As a result, we obtain an increase in the amount of material costs for the production of this type of product due to the corresponding factor in reporting period:

DMZ xi =DUR xi ·C i0 VPP i1 .

Average material price level depends on raw material markets, inflationary factors, the intra-group structure of material resources, the level of transport and procurement costs, the quality of raw materials, the replacement of one type with another, etc. To find out how the total amount of material costs has changed due to each of them, a change in the average price is necessary multiply the i-th type or group of materials due to the i-th factor by the actual amount of materials used of the corresponding type:

DMZ xi =DC xi ·UR i1 VPP i1 .

In many enterprises there may be excess returnable waste of raw materials, which can be implemented or used for other purposes. If we compare their cost by the price of possible use and the cost of raw materials, we will find out by what amount the material costs included in the cost of production have increased.

The presence of excess irrevocable waste leads to a direct increase in the cost of products and a decrease in their output. To establish how much the amount of material costs has increased, it is necessary to multiply the excess amount of irrecoverable waste by the planned price of the source material.

Finally the results of factor analysis of direct material costs are summarized and unused, current and future reserves for their reduction per unit of production are determined.

At an enterprise, the analysis of material costs begins with an analysis of the ratio of the amount of actual material costs to the planned value, and the relative fulfillment of planned indicators is determined:

ΔМЗ = МЗ(ф) - МЗ(п)

МЗ(п) = МЗф / МЗп * 100%

ΔMZ(f) = MZf / MZpp * 100%

Where,
ΔМЗ - deviation of the amount of actual material costs from the planned value, rub.;
МЗф - actual material costs of the reporting period;
MW - planned material costs;
MH(p) - relative implementation of the material cost plan, %;
ΔМЗ(ф) - dynamics of actual costs compared to the previous period;
Minimum wages - actual material costs for the previous period.

When analyzing the cost structure, the share of individual species material resources in their total value for the previous and reporting year, determine the deviation and identify the reasons for the change.

Approximate structure of a material cost analysis table

The main objectives of the analysis of direct material costs as the main component of cost are:

identification and measurement of the influence of individual groups of factors on the deviation of costs from the plan and their changes compared to previous periods;

identifying reserves for cost savings and ways to mobilize them.

Material Cost Analysis

As a rule, the largest share in the cost of production is occupied by the costs of raw materials and supplies.

Figure 1. System of factors influencing material costs

Material Cost Analysis is carried out by studying factors that influence the total amount of material costs ( factor analysis material costs). These factors are:

• volume of production (VVP);
• average cost of a unit of material resources (CM);
• consumption of raw materials and materials per unit of production (UR).

To study the influence of these factors, the following factor model is used:

MZ = VVP*∑(UR*CM)

The influence of factors is calculated using the chain substitution method:

MZp = VVPp*∑(URp*CMp)

MZusl1 = VVPf*∑(URp*TsMP)

MZusl2 = VVPf*∑(URf*CMp)

MZf = VVPf*∑(URf*CMf)

Where, MZ - material costs for production; MW - planned material costs; MZf - actual material costs (hereinafter similarly).

Change in material costs for a product due to:

a) changes in the consumption rate are calculated using the formula:

ΔMZ(ur) = MZusl2 - MZp

During the production process, a situation is possible in which one type of material (raw material) is replaced by another; as a result of such replacement of one material by another, not only the amount of materials consumed per unit of production changes, but also their cost:

ΔMZ(ur1) = ΔUR(1)*CM0 + ΔCM*UR1

ΔUR(1) = UR1 - UR0

ΔCM = CM1 - CM0

Where,
UR0, CM0 - consumption and price of raw materials per unit of production before replacement;
UR1, CM1 - consumption and price of material after replacement.

b) changes in the unit cost of the material are defined as:

ΔMZ(cm) = MZf - Mzusl

The influence of factors on the amount of direct material costs is determined by the following formulas:

a) change in the volume of production:

ΔМЗ(vп) = МЗусл1 - МЗп

b) change in material consumption for the product:

ΔMZ(ur) = MZusl2 - MZusl1

c) change in the cost of material resources:

ΔMZ(cm) = MZf - MZusl2

Calculations are carried out for each type of product on the basis of planned and reporting calculations with subsequent generalization of the results obtained for the entire enterprise. The total amount of deviations in the value of material costs under the influence of the above factors should be equal to the difference between the actual and planned values ​​of direct material costs.

Let us illustrate the factor model for analyzing direct material costs with an example.

Let’s say Vector LLC is engaged in the production of a product; three types of material are used in the production of the product. Let us determine the influence of factors on the total amount of direct material costs for the reporting period.

Table 1. Calculation of the influence of factors on the amount of direct material costs per unit of production

Using the method of chain substitutions, we determine material costs (Table No. 2).

Table 2. Material costs for production

From Table 2 it follows that the specific material costs for the production of 1 unit. product increased by 457 rubles due to an increase in the unit price of material resources by 461 rubles, while due to a decrease in the consumption rate by one unit, material costs for the product decreased by 46 rubles.

Total material costs increased by 9,220 rubles in the reporting period compared to planned indicators due to changes in:

1. volume of production: 3740 rub.
2. material consumption for the product: -606 rub.
3. cost of material resources: 6086 rub.

The data presented indicate that the main factor in cost growth is the increase in the unit cost of material resources.

Analysis of enterprise material costs(download table)

Analysis of direct material costs taking into account the structure of commercial products

In the case of multi-product production, I use a modified factor model for analysis, taking into account the structure of commercial products (CP).

MH = ∑(VVP*UD*UR*CM)

To do this, it is necessary to recalculate the costs of production:

a) according to plan:

MZp = ∑(VVPp*URp*CMp)

b) according to the plan, recalculated to the actual volume of production:

MZusl1 = ∑(VVPp*URp*CMp)*Ivp

Ivp = VVPf/VVPp

c) according to planned standards and planned prices for actual production:

MZusl2 = ∑(VVPf*URp*CMp)

d) actually at planned prices:

MZusl3 = ∑(VVPf*URf*CMp)

d) in fact:

MZf = ∑(VVPf*URf*CMf)

The influence of factors on the change in the total amount of material costs will be determined using the formulas:

1) Change in production volume:

ΔМЗ(vп) = МЗусл1 - МЗп

2) Change in production structure:

ΔMZ(sp) = MZusl2 - MZusl1

3) Change in specific consumption of materials:

ΔMZ(ur) = MZusl3 - MZusl2

4) Changes in prices for raw materials and materials:

ΔMZ(cm) = MZf - MZusl3

Consider the following example of analysis of direct material costs, in multi-product production.

Table 4. Analysis of material costs by type of product

Let us determine the influence of the structure of manufactured products on the amount of direct material costs.

The total production costs of Vector LLC products in the reporting period increased by 9,372 rubles compared to planned indicators, including product No. 1 - 9,220 rubles, product No. 2 - 152 rubles.

Table 5. Total cost of materials for production

Based on the data in table. 5 it can be established that the total amount of direct material costs for production increased due to changes in:

• volume of production: 1537 rub.
• production structure: 1001 rub.
• specific consumption of materials: -849 rub.
• prices for raw materials: 7684 rub.

Factor analysis of direct material costs(download table)

Bibliography:

1. Abryutina N.S. Grachev A.V. Analysis of the financial and economic activity of an enterprise: Educational and practical manual - M.: “Business and Service”, 2007.
2. Savitskaya G.V. Analysis economic activity enterprises 5th ed., revised. and additional - M.: Infra-M, 2009.
3. Savitskaya G.V. Methodology for comprehensive analysis of economic activity: Short course for higher education textbook institutions / G.V. Savitskaya. - 3rd ed., rev. - M.: Infra-M, 2007.

IN direct material costs costs of raw materials and basic materials are included. Direct material costs - these are materials that become part finished products, their cost is directly and economically attributed to a specific product without any special expenses. The amount of direct material costs cannot be calculated by multiplying the amount of materials that must be used to produce a particular type of product by the price of a unit of materials. In some cases, the cost of calculating the cost of materials associated with a particular product is too high. These materials are accounted for as auxiliary materials and their costs are included in indirect material costs. Costs for auxiliary materials are included in general production costs.

Let's continue with the example of a garment factory. The costs of the material (fabric) from which jeans are made are direct material costs. The costs of threads, zippers, buttons, buttons can be calculated relative to a specific type of product (model and size), but the costs of creating such an accounting system will be many times higher than the cost of auxiliary materials, so they are preferred to be considered as indirect material costs.

Each organization, based on the specifics of the production process, independently decides which materials are classified as basic and considered as direct costs, and which are auxiliary and included in overhead costs. So, if as finishing material use gold, its cost is too high to be attributed to general production costs, so it is taken into account directly as part of direct material costs for each type of product.

See also:

Materials, raw materials, components are considered direct costs, i.e. to costs that can be directly attributed to the cost of a certain type of product.

Some costs directly depend on the volume of sales, others do not directly depend and are more or less constant; accordingly, the description can be constructed either in the form of data on the consumption of materials per unit and the cost of materials (for variable costs), or in the form of consumption per unit of time.

Wage

When determining personnel costs, one should proceed from the planned staffing table. However, in addition to the list of employees, the following factors must be taken into account:

· salary structure, the presence of piecework payment or bonus payments depending on sales volume;

· changes in the number of personnel at different stages of the project;

· social benefits and other personnel costs equated to wages (for example, compensation for food or travel);

availability of unified social tax or voluntary insurance(pension, medical).

General production expenses

General production costs include costs associated with maintaining production and maintaining equipment. Such expenses may include the following cost items:

· wages of workers and employees of auxiliary departments (usually, wages are fully taken into account in the project personnel, but it is useful to give details by groups of personnel, dividing them into main production, auxiliary production, administrative and commercial);

· auxiliary material costs ( public utilities, waste removal);

· costs of equipment maintenance and servicing;

· rent production premises;

· fare;

· taxes attributed to the cost price;

Depreciation

Depreciation in the project is determined based on data on acquired assets and their terms beneficial use. Since depreciation amounts are calculated in financial model project, you may not include justification for these amounts in the description of current costs. However, depreciation itself should always be allocated as a separate line as part of current costs and prime costs, since in the process financial analysis A project often requires separating depreciation amounts from other operating costs.

Administrative expenses

Administrative expenses are the costs of organizing and managing an enterprise. Mainly fall into the category fixed costs and include the following articles:

· salaries of administrative staff;

· communication and travel expenses;

· office equipment and office supplies;

· rent of administrative premises;

· current payments for land;

· property insurance;

· defense costs environment;

· consulting services and research;

· license fees.

Business expenses

Selling expenses are the costs of organizing sales. These include:

· salaries of commercial personnel;

· agency fees;

· transportation costs associated with the delivery of finished products;

· Loss during delivery.

You should check the size match business expenses, taken into account in the project budget, with the marketing plan described earlier in the business plan.

Debt servicing costs

Interest on loans, as well as leasing payments, are included in current expenses. Like depreciation, these costs are calculated within the project's financial model.

However, in financially The financing characteristics underlying the calculations must be clearly indicated, and the amounts of these costs should be included in the structure of current costs as a separate line.

Sources of financing

The section should contain the following information:

· general need for financing;

· expected structure of funding sources;

· size own funds(which will be invested in the project by the project initiator and its shareholders/participants);

· the possibility of introducing additional (reserve) financing by the project initiator or other project participants;

· proposed options for leasing financing;

· expected size and form of lending;

· expected schedule for provision, servicing and repayment of debt by the bank and possible options exit of the bank from authorized capital(if appropriate funding is expected);

· proposals for the bank’s control over the progress of the project and the intended use of funds (for example, the possibility of pledging shares of the project initiator or its main shareholders; allocation of financing in the form of tranches; representation of the bank on the Board of Directors; separate accounting of project operations from current activities; transfer project settlement accounts to the bank; use of reserve expense accounts and authorization of payments; monitoring of project implementation schedule, etc.);

· size, form and conditions (including preliminary ones) for the provision of financing by other project participants (if such a possibility is being considered).

Planned budget

The planned project budget should be based on a financial model, the requirements for which are given in Appendix 1 to these recommendations. This financial model should take into account all the income and cost items mentioned in the business plan.

As a rule, in the main text of a business plan it is enough to include three key financial statements:

· traffic report Money;

· Profits and Losses Report;

· balance;

as well as individual financial indicators, characterizing the company’s activities during the implementation of the project.

The budget must be accompanied by an indication of the conditions and assumptions under which the financial modeling was carried out. It is advisable to justify the conditions chosen by the expert. The general list of questions disclosed regarding the principles of constructing a financial model looks like this:

· taken into account taxes, indicating the rate;

· simplifications used in modeling in the field of accounting, taxation, forecasting (if special simplifications were made in this project);

· inflation level (must always be predicted, even if the calculation is carried out in constant prices);

· the principle of constructing the model – in constant prices or taking into account inflation.

The recommended form of forecasting in a financial model is to build forecasts using inflation. However, for projects with a small share of borrowed capital, it can be considered quite correct to perform calculations in constant prices, taking this into account when calculating performance indicators.