Cost accounting and product’s price calculation for Ba Dinh Printing Company – Ministry of Public Security By TRAN TRIEU LONG E0500067 BARCHELOR OF BUSINESS (ACCOUNTING) HONS HELP UNIVERITY COLLEGE OCTOBER, 2011 i DECLARATION OF THE PROJECT’S ORGINAL I declare that this graduation project is based on my original work except for quotations and citations, which has been referred and duly acknowledged. This project is also declared that it has not been previously or concurrently submitted by any student at Help University or other institutions. The word count is 9015 words. TRAN TRIEU LONG OCTOBER, 2011 ii ACKNOWLEDGEMENT First of all, I would like to express my sincere appreciation to my supervisor, Ms. Nguyen Van Anh, who guided me throughout this thesis. Her constant guidance, insightful suggestions, and constructive ideas are the essential inputs and encouragement for me in order to complete this thesis. Secondly, I would like to acknowledge to manager and all of employees in Ba Dinh Printing Company, and Worker Magazine who allowed and assisted me to collect all of necessary information for me to get this thesis done. I could not be able to gather much information for my research without their support. Lastly, I would also like to extend my heartfelt gratitude to my family and friends for their continuous support, encouragement and contribution Without your supports, my thesis cannot be finished. iii TABLE OF CONTENT DECLARATION OF ORGINALITY AND WORD COUNT Er ror! Bookmark not defined. ACKNOWLEDGEMENT Er ror! Bookmark not defined. TABLE OF CONTENT Er ror! Bookmark not defined. LIST OF FIGURES v LIST OF TABLES v ABSTRACT vi CHAPTER 1: INTRODUCTION Er ror! Bookmark not defined. 1.1 Topic Introduction Er ror! Bookmark not defined. 1.2 Problem statement 3 1.3 Research structure Er ror! Bookmark not defined. CHAPTER 2: LITERATURE REVIEW Er ror! Bookmark not defined. 2.1 Objectives of cost accounting in a company 5 2.1.1product costing 5 2.1.2 Planning and control 5 2.1.3 Information for decision 6 2.1.4 The role of cost accountant 7 2.2 Relationship between manufacturing overhead and product cost 8 2.3 Price calculation methods 10 2.3.1 Absorption costing method 10 iv 2.3.2 Activity based costing method (ABC) 11 Figure 1: Activity based costing 12 2.3.3 Variable costing method 13 2.4 Cost accounting in decision making process 15 CHAPTER 3: RESEARCH AND METHODLOGY 18 3.1 Objective of the project 18 3.2 Method of the research 19 3.3 Data sources 19 3.4 Research scope 20 CHAPTER 4: COMPANY ANALYSIS 21 4.1 Company background 21 Table 1: Profit from 2008 to 2010 23 4.2 Characteristic of Company business activity 24 Figure 2: Printing processes in Ba Dinh Printing Company 25 4.3 Types of cost appear in product price calculation 26  Direct and Indirect Product Costs 27  Direct Materials 27  Direct Labor 28  Manufacturing overhead 29 4.4 Cost accounting and product price calculation in Ba Dinh Printing Company 30 4.4.1 Cost accounting for direct materials 30 4.4.2 Cost accounting for direct labor 31 Table 2: No.1 Printing Firm Pay-sheet 32 4.4.3 Cost accounting for manufacturing overhead 32 Table 3: Manufacturing overhead account 34 4.4.4 Product price calculation in the company 35 Table 4: Product's price bill 36 CHAPTER 5: CONCLUSION AND RECOMMENDATION 37 v 5.1 Conclusion Er ror! Bookmark not defined. 5.2 Recommendation 38 REFERENCE 39 vi List of Table Table 1: Profit from 2008 to 2010 Table 2: No.1 Printing Firm Pay-sheet Table 3: Manufacturing overhead account Table 4: Product's price bill List of Figure: Figure 1: Activity based costing Figure 2: Printing processes in Ba Dinh Printing Company vii ABSTRACT This paper is covered with the analysis of cost accounting methods and the impact of the selected costing methods to the company business reality activities. The purpose of this thesis is to analyze the use of cost accounting methods to the company as well as the effectiveness of cost accounting system that the selected company adopted. The three costing methods are mentioned in this thesis namely Absorption costing method, Activity-Based costing method, and Variable costing method. Each method will leads to different financial statement to company managers, and hence affect to the manager‟s decision making. The research focuses to analyze the company‟s selected costing method by providing the relevant costing statements, and from that I will provide self opinions and also recommendations to hopefully enhance the effectiveness of the company‟s cost accounting performance. 1 CHAPTER 1. INTRODUCTION This chapter provides an over view of cost accounting. Throughout this chapter is the most basic knowledge of cost accounting and its role in the corporation control. The link between cost accounting and manager‟s decision making as well as the product‟s cost and price definition will be considered in order to help users to have an over view of company‟s costing system and the importance of cost accounting which directly affect to the company‟s financial. 1.1 TOPIC INTRODUCTION The Institute of Cost and Management Accounting, London defines “Cost accounting is the process of accounting from the point at which expenditure is incurred or committed to the establishment of its ultimate relationship with cost centers and cost units. In the widest usage, it embraces the preparation of statistical data, application of cost control methods and the ascertainment of profitability of activities carried out or planned”. Costing includes the techniques and processes of ascertaining costs. The word technique refers to principles which are applied for ascertaining costs of products, jobs, processes and services. The `process‟ refers to day-to-day routine of determining costs within the method of costing adopted by a business enterprise. Costing involves “the classifying, recording and appropriate allocation of expenditure for the determination of costs of products or services; the relation of these costs to sales value, and the ascertainment of profitability”. (1) [...]... stage of the accounting process To make clear about the important role of cost accounting, base on the knowledge I have learnt and the advices from lecturers, I plan to do a deep research about cost accounting for a selected company In this thesis, I discuss about: - Relationship between cost and price - Objectives and method of cost accounting in generally - The company method to determine production cost. .. - Providing managers with data and reports about their individual performance of subordinates (3) 2.1.3 Information for Decisions Cost accounting also plays a key role to provide data and special analyses for short-term and long –term decisions of a non-recurring nature Appropriate cost information must be accumulated to make a wide variety of short-term and long-term decisions According to Henke and. .. 4 COMPANY ANALYSIS 4.1 - Company background: Ba Dinh printing company was established due to the merger of the two enterprises which are also belong to Ministry of Public Security In 1999, the resolution number 819/1999/QĐ – BCA (X13) was announced, which allowed the merger of two companies: XZ72 printing company and Ministry of Public Security printing firm The event was marked the creation of Ba. .. this company is to: 2 - Analyze the realistic performance of the company s cost accounting and the accounting department, how they define the cost of production processes as well as product‟s price - Base on the analyzing of collected data; propose some ideas to upgrade the process of cost accounting system in the company 1.2 PROBLEM STATEMENT: Through all of the objectives mentioned above, cost accounting. .. of the idea I provided in each chapter will be linked to the others in order to create the effective way for reading and understanding for users about my working 4 CHAPTER 2 LITERATURE REVIEW 2.1 - Objectives of cost accounting in a company There is a direct relationship among information need of management, cost accounting objectives, and techniques and tools used for analyses in cost accounting Cost. .. and interpretation of cost In other words, it is a system of accounting, which provides the information about the ascertainment, and control of costs of products, or services It measures the operating efficiency of the enterprise It is an internal aspect of the organization Cost Accounting is accounting for cost aimed at providing cost data, statement and reports for the purpose of managerial decision... profit margin Cost, in this context, usually means full cost Similarly, in deciding what price to charge for its goods or /and services, a company often uses estimates of full costs plus a profit margin as a guide.(11) 17 Chapter 3 RESEARCH AND METHODOLOGY 3.1 - Objective of the project The purpose of literature study is to understand past performance and data of the company From the information collected,... inventory valuation, deciding price of the product, and managerial decisionmaking Product costing covers the entire cycle of accumulating manufacturing and other costs and subsequently assigning them to work in progress and finished goods 2.1.2 Planning and Control Another important objective of cost accounting is the creation of useful cost data and information for the purposes of planning and control by management... Printing Company English Name: Ba Dinh Printing Company C.E.O: Trần Thanh Duy Address: 160 Thai Thinh Street, Đong Đa District City/Province: Ha Noi Company type: S.O.C Telephone: 4-3 8533802, 38562331 Fax: 4-3 5143209 Main activity: Printing Producing & trading in paper & materials, printing materials & equipment Ba Dinh Printing Company is a public company, under the control of Ministry of Public Security. .. offset printing, and guillotine technology The organization structure for each of subsidiary firm is as follow: - No.1 printing firm: Including printing facility, books and documents storage, and guillotine facility - No2 Printing firm: Including printing facility and facilities of finished products - XZ72 firm: Including paper storage, guillotine facility, and facilities of finished product Company . 4.4 Cost accounting and product price calculation in Ba Dinh Printing Company 30 4.4.1 Cost accounting for direct materials 30 4.4.2 Cost accounting for. Cost accounting and product’s price calculation for Ba Dinh Printing Company – Ministry of Public Security By TRAN