Determine the cost of the product from the wages

The wage of workers is one of the most important factors involved in the cost of the product and has a great influence in determining the prices of the products that we manufacture and sell, so that we can achieve the targeted profit margin or at least determine a selling price that covers our own cost.

And as a cost accountant, I must work well and determine the exact cost of my product from the wages. At the same time, my accounting guidance is elaborate and the accounting treatment is correct as a financial accounting system that is accurate We should take in consideration for few things

Determine the wages payable

The time factor is a very important factor in most cases in determining the wages owed to each worker inside the factory, and I can also calculate every worker's request that takes time from this worker. According to the total hours of his work in the factory, it was the way to see what he owes, and to design an operating card or work sheet that is to be with the production supervisors and by which they determine each worker who worked for as long as the hours on the production order of these products. The best prices of the ERP accounting program in The Arab world In order to be accurate in the accounting treatment and also correctly determine the cost of the product from the wages, we must separate and differentiate between the things that we will talk about now

1- wasted time cost  

Here, we must differentiate between the ordinal wasted time, that I am obligated to bear it and consider it as a direct labor cost and load it to the orders very normal., and the wasted time due to workers' spoilage or emergency reasons due to the malfunctions, this is considered to be among the unusual losses And We close it in profits and losses . so in the opinion we consider it among the indirect costs and redistribute it to products or orders entirely

2-Additional pay

The wage that I give to the worker because of his work in informal working hours, and in most cases the hourly wage rate in it is higher than the average hourly wage, meaning for example, we calculate the hour by an hour and a half if he is taken in the hour 10 pounds, then the overtime hour will be 15 pounds

Here, we divide the 15 pounds, into 10 pounds,, the average hourly wage, and this we will consider it a direct cost, and the 5 pounds is the amount of the addition or increment, and we consider it among the indirect costs. Check out the best public accounts program

3- Benefits in kind

These services that we provide to employees such as accommodation, food, trips, etc., and in most cases these elements are linked to service centers and are distributed among the indirect costs to all orders.

4- The company's quota  in insurances and bonuses

The company's quota in insurances and grants is considered friendly and differs in its direction according to the person to whom it is presented, meaning if we go to the marketing staff, it will remain included in the marketing costs, even if they go to production workers, as they are considered direct or indirect wage costs depending on the worker's position in the production process and so if it is going to an administrative employee.

The importance of accounting entries for a cost accountant

And this is the last step and one of the most important steps that distinguishes you as an accountant is the costs of the most important directive that he has and its effect on the financial statements will be how it will be, and it is necessary to know that the production wages here we consider them as part of the production cost and not an expense, and after what we divide and classify the wages and know the direct and indirect by making this entry:

The first is to prove the entitlement of the wages to the workers:

10,000 direct wages account

13,000 of indirect wages account

23,000 to the account owed wages

After that, carry out production orders at the cost of direct wages and their share of the indirect wages

From h the output is under operation

5000 Order number ...

2000 Order No.

3000 order number.

10,000 to the direct wage account.

The production orders were also carried at the cost of direct wages, each order according to his benefit from the workers.

How to distribute indirect wage costs

After that we distribute the costs of indirect wages, such as benefits in kind, insurances, and unauthorized lost time, and distribute these costs to orders after we choose an appropriate distribution basis, whether the number of direct hours or hours of the machine’s work. Each item we calculate on the basis appropriate for it and make this restriction:

Account of production under the operating

6000 Order number ...

4000 is the order number.

3000 order number.

13,000 to indirect wages account.

Thus, we will know the cost of each order of direct wages and its share of indirect wages, and at the same time the accounting entries were directed.

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