What are the advantages and disadvantages of the variety method in the cost accounting method?

Advantages: The variety method is the most basic method of calculating product costing among the basic methods. In this method, it is not required to calculate the cost according to the product batch, nor does it require the cost to be calculated according to the production step of the product, but only requires the product cost to be calculated according to the variety of the product.

Disadvantages: It is suitable for large-scale single-step production with a single product variety and a short production cycle. If the production of products is complicated and is produced in small batches, it is not very suitable.

Variety method for product costing:

The main features of the breed method are:

First, the object of cost accounting is the product variety;

Second, the cost of the product is generally calculated on a regular basis (at the end of each month);

Third, if the enterprise has products in progress at the end of the month, the production cost should be allocated between the finished product and the product.

Primary Accounting Practice, General Procedures for Product Costing by Variety Method Cost Accounting:

1.Set up a detailed account of costs according to the product variety, prepare relevant accounting vouchers and register relevant sub-accounts according to the original vouchers and related materials of various expenses, and prepare various expense distribution tables to allocate various element expenses;

2.According to the above-mentioned various cost allocation tables and other relevant information, register auxiliary production accounts, basic production accounts, manufacturing cost accounts, etc.;

3.According to the auxiliary production ledger, the auxiliary production cost distribution table is prepared and the auxiliary production cost is allocated;

4.Prepare a manufacturing expense distribution table according to the manufacturing expense ledger, allocate the manufacturing expense among various products, and register the basic production cost ledger accordingly;

5.According to the basic production ledger of each product, prepare the finished product calculation sheet, and allocate the cost of finished products and the cost of products in progress;

6.Compile a summary table of the cost of finished products and carry forward the cost of finished products.

Pros and cons: 1.Costing object.

Excellent: The variety method takes the product variety as the cost calculation object, and sets up the product cost sub-account to collect production expenses and calculate product costs.

Missing: If the enterprise produces more than one product, it needs to use each product as the cost calculation object and set up the product cost ledger separately.

2.Costing period.

Excellent: The cost of the product is calculated on a regular and monthly basis.

Lacking: Because a large number of large-scale production is uninterrupted continuous production, it is impossible to collect production costs and calculate product costs according to the production cycle of products, so it can only calculate product costs on a monthly basis on a regular basis, so as to match the sales revenue of this month with the production cost of products and calculate the profit and loss of this month. Therefore, the cost of the product is calculated on a monthly basis on a regular basis, which is consistent with the reporting period and inconsistent with the product production cycle.

3.Whether production expenses need to be allocated between finished products and products.

Excellent: If it is a large number of simple production, the variety method is used to calculate the product cost, because simple production is a production step, the entire production process is completed. Therefore, there is generally no product at the end of the month (or at any point in time), so it is not necessary to allocate the production cost between the finished product and the product when calculating the cost of the product;

Missing: If the management does not require a large number of complex production to calculate the cost of the product step by step, the variety method is used to calculate the product cost, because the complex production is the production that needs to go through multiple production steps, so at the end of the month (or at any point in time) there will be products on the production line, therefore, when calculating the cost of the product, it is necessary to allocate the production cost between the finished product and the product. It is possible to analyze the specific situation, various methods of allocating production costs between finished products and products, and select the appropriate method for allocation.

The variety approach in costing and management is a method of allocating costs to different products or services. Its advantages and disadvantages are as follows:

Advantages: The cost of each product or service can be accurately calculated, which is convenient for formulating ** and sales strategies.

It can help companies discover which products or services are profitable and which are loss-making, so as to adjust production and sales strategies.

It can improve the cost control ability of the enterprise, reduce costs and improve profit margins.

Disadvantages: The variety method requires a detailed cost analysis of each product or service, which requires a lot of time or labor costs.

The variety approach may ignore some common costs, such as overheads and fixed costs, resulting in inaccurate cost calculations.

The variety method is only applicable to companies with a small variety of products or services, and for a wide variety of enterprises, the complexity of cost allocation will increase.

The variety method is the most basic cost calculation method, and the characteristics of the variety method are:

1. The cost calculation object is the product variety.

2. The costing period is generally to calculate its average cost at regular intervals (such as the end of each month).

3. The cost is allocated between the finished product and the product.

The product costing variety method is characterized by the fact that the object of cost accounting is the product variety.

Product cost calculation methods include variety method, batch method, and step-by-step method. Among them, the variety method is suitable for single-step, high-volume production enterprises, such as power generation, water supply, mining and other enterprises. In this type of enterprise, the technical process of product production cannot be technically divided into steps, and can only be completed by one enterprise alone, and cannot be coordinated and divided by several enterprises.

The variety method is a method that takes the product variety as the product calculation object, collects the production cost, and calculates the product cost.

In the production enterprise that adopts the variety method, if only one product is produced, the product is taken as the cost calculation object, and a product cost ledger (or product cost calculation sheet) is opened, at this time, all the production expenses incurred by the enterprise are direct expenses, which can be directly recorded in the relevant cost items of the product cost ledger according to the relevant vouchers and expense distribution tables.

If it is the production of a variety of products, each product should be used as the cost calculation object, and the product cost ledger should be set up separately, and the production expenses incurred should be collected by cost item.

All the expenses directly consumed by various products can be directly included in the relevant cost items in the detailed account of the cost of the product according to the relevant vouchers and expense allocation tables; All expenses that belong to the common consumption of several products must be counted at the relevant cost items that must be allocated and included in the detailed account of the cost of various products according to the relevant expense allocation table.