How do you look at material cost differences, debit overruns, credit savings? Why? What does it mean

The material cost variance is the account used by the enterprise when the planned cost ** is used to calculate the raw materials of the enterprise, and the account used to adjust the actual **.

When the actual purchase price is greater than the planned cost, the material cost variance debit is generated:

Borrow: raw materials (planned price).

Material cost variance (actual price - planned price).

Tax payable – VAT (input tax).

Credit: Accounts payable (if last payment).

When the actual purchase price is less than the planned cost, the material cost variance credit number is generated

Borrow: raw materials (planned price).

Tax payable – VAT (input tax).

Credit: Accounts payable (if last payment).

Material cost variance (planned price - actual price).

The "Material Cost Variance" account is the adjustment account of the "Raw Materials" account, which is also an account with a dual nature, when it reflects the overrun variance and the direction of the raw material account, then it is the additional adjustment account of the raw materials; If it reflects the difference in savings, then it goes in the opposite direction to the raw material, and it becomes the allowance adjustment account for the raw material.

The raw material procurement of industrial enterprises adopts the planned accounting, and the difference between the actual and the planned is carried forward to the material cost difference account.

Material cost variancesThe debit is an overspending.

Material cost variance savings should be credited. Material cost variance overruns should be debited. Material cost differences are transferred out of the variance, whether it is an overrun or a savings variance, it is transferred from the credit side, the overrun difference is in blue, and the savings difference is in red.

Of course, it is also possible to save the difference from the debit side, and the accountant should be cautious about using red letters, but the method of carrying forward red letters still exists.

Meaning:

The "Material Cost Variance" account is the adjustment account of the "Raw Materials" account, which is also an account with a dual nature, when it reflects the overrun variance and the direction of the raw material account, then it is the additional adjustment account of the raw materials; If it reflects the difference in savings, then it goes in the opposite direction to the raw material, and it becomes the allowance adjustment account for the raw material.

1. When purchasing raw materials, if the actual cost is greater than the planned cost, there will be an "overrun variance", and the "excess variance" will be debited in the "material cost variance" account. The accounting entries are:

Borrow: raw materials (planned costs).

Material cost variance (overrun variance).

Credit: Material Purchases (Actual Cost).

2. When the material is issued, if the actual cost is less than the planned cost, there will be a "saving difference", and the "saving difference" will be debited to the "material procurement difference". The accounting entries are:

Borrow: Material Cost Variance (Savings Variance Planned Cost of Issued Materials Material Cost Variance Rate).

Credit: Production Costs, Manufacturing Expenses, Administrative Expenses.

The difference in material cost is the difference between the planned cost of materials and the actual cost of knowing the loss. The actual cost of materials refers to all the expenses incurred by the enterprise before the purchase of the materials from procurement to warehousing, including the purchase price, relevant taxes, transportation costs, loading and unloading costs, insurance premiums and other expenses attributable to the cost of material procurement. The planned cost of materials refers to the method of pricing according to the planned cost of the daily sending and receiving and balance of the enterprise's materials, whether it is general classification accounting or detailed classification accounting.

Its characteristics are: the receipt and dispatch voucher is valued according to the planned cost of the material in the material circle, the general ledger and the sub-ledger are registered according to the planned cost, and the difference between the actual cost of the material and the planned cost is accounted for by the "material cost difference" account. At the end of the month, the planned cost of the issued material is adjusted to the actual cost by allocating the material cost variance.

Under the planned costing method, the material cost variance Actual cost - planned cost, if the actual cost is greater than the planned cost, it is an overrun variance, and vice versa, it is a savings variance.

Material cost variance savings should be credited.

The material cost variance account is used to calculate the difference between the actual cost of various materials and the planned cost of the enterprise, and the debit side registers the difference between the actual cost and the planned cost (overrun) and the difference in savings that should be borne by the issued materials, as well as the adjustment of the planned cost of the inventory materials, and adjusts the reduced planned cost. The credit registers the variance (savings) where the actual cost is less than the planned cost and the overrun variance that should be borne by the issued material, and adjusts the increased planned cost when the planned cost of the inventory material is adjusted.

The material cost variance credit is the savings.

The cost variance account of the material Buxiang abrasives account registers the overrun variance and the savings variance to be borne by the issued materials, and the credit side registers the savings variance and the overrun variance to be borne by the issued materials. Material cost variance is the difference between the actual cost of the material and the planned cost. The actual cost is greater than the planned ** cost is an overrun; The actual cost is less than the planned ** cost for the savings.

Material cost variance is the difference between the actual cost of the material and the planned cost. The actual cost is greater than the planned ** cost is an overrun; The actual cost is small and the planned cost is the savings. The difference in the material cost of purchased materials reflects the quality of the work of the material procurement business to a certain extent.

Cost accounting method

1. The material cost accounting accountant shall record the documents for the material collection of each department this month, prepare documents, and calculate the material consumption cost of the month.

2. The workshop statistician shall report the statistical tables such as completed working hours**, completed working hours and output, and consumption standards.

3. The general ledger accountant reimburses the expenses of each department on a daily basis and provides various expenses incurred by each production department.

4. The fixed administrator provides the changes of the month, and the general ledger accountant provides depreciation and manufacturing expenses-depreciation expenses.

5. The payroll accounting shall make the payroll accrual for this month, and provide the direct labor and indirect labor costs of each production department.

6. Cost accounting accounting takes the raw material consumption data of each department in the current month from the cost management module, and calculates the cost with other cost information to obtain the cost of semi-finished products.

7. Material cost accounting accounts for the cost allocation of finished products in the inventory accounting module, and reads the processing cost of semi-finished products in the semi-finished product warehouse.

8. Material cost accounting accounting is carried out in the inventory accounting module for document accounting (mainly the warehousing and outbound costs of semi-finished products in the semi-finished product warehouse).

9. Carry out the end-of-term processing and document preparation of the semi-finished product warehouse.

10. Cost accounting accounting calculates the cost of finished products from the cost management module by recounting the raw material consumption data of each department in the current month and other cost information.

11. Material cost accounting allocates the cost of finished products in the inventory accounting module, reads the cost of finished product processing in the finished product warehouse, and carries forward the cost of sales.

Overrun variances are debited to material cost variances.

The overrun variance is on the debit side. The balance of the material cost variance account is on the debit side, indicating that it is an overrun; The material cost variance account balance is on the credit side, which is indicated as savings.

Material cost difference = actual cost - planned cost difference is a positive number, indicating that the actual is large, called overrun difference; The difference is negative, which means that the actual is small, which is called the saving difference. The material cost difference "the debit side is the overrun difference, and the credit side is the savings difference" refers to the purchase and warehousing, which should be understood from the nature and purpose of the account.

When the daily sending and receiving of materials is priced according to the plan, you need to set up a material cost variance account as an adjustment account for the material account. The actual cost of the debit registered material for the account is greater than the overrun of the planned cost, and the actual cost of the credit registered material is less than the savings of the planned cost.

The difference in the cost of issuing the consumables shall be transferred from the credit side of the section to the respective production expense accounts; The overrun amount is carried forward in blue, and the amount of the festival is carried forward in red.

1. Clarify the content of material cost difference accounting.

According to the current accounting system, the material cost difference is the difference between the actual cost of the material and the planned cost under the method of pricing the material according to the planned cost. But the materials referred to here are not only the contents of the raw material accounting.

It also includes packaging and low-value consumables. However, the material cost difference does not account for all the contents of the inventory, and the setting of the sub-ledger is consistent with the material purchase account, that is, the raw materials, packaging materials, and low-value consumables are accounted for.

2. Clarify the internal relationship between material cost differences and related accounts.

Raw materials, packaging materials, and low-value consumables are valued at the planned cost, which means that their revenue, issuance, and balance are all priced at the planned cost. However, according to the requirements of the Accounting Standards for Business Enterprises, accounting should follow the general principles of historical cost or actual cost accounting, so that the income of raw materials, packaging, low-value consumables and the planned cost issued must be adjusted to the actual cost at the end of the month.

The material cost difference is an adjustment account, which reflects the actual cost of raw materials, packaging materials, and low-value consumables through the increase and decrease of raw materials, packaging, and low-value consumables, so as to conform to the general principles of accounting.

Under the planning method, Material Cost Variance represents the difference between Actual Cost and Planned Cost.

1. When the enterprise purchases materials, there will be a difference between the "planned cost" and the "actual cost", when the actual cost of purchased materials is less than the difference between the planned cost, the difference in material cost is the difference in savings and credited.

2. Because there is a "difference in the cost of materials in the book" in the inventory materials, the enterprise needs to settle the "material cost difference" that the materials need to bear when issuing the materials. Differences in overruns and discrepancies in the issuance of materials shall be credited.