Indirect costs are the costs incurred by an enterprise in the manufacture of several types of goods; they can be called general business expenses. They are one of the most important elements in calculating the cost of production.
Until now, the question of how to properly allocate indirect costs and which method to choose remains relevant for accountants. Whatever specific method is chosen, there is always a fraction of distortion and inaccuracy. In this regard, the task of a qualified specialist is considered to be the adoption of an optimal solution that would help minimize such deviations. In addition, a competent employee with a rational approach can significantly improve the quality characteristics that reflect the effectiveness of the core business of the enterprise.
So, indirect costs include the costs of organizations for the remuneration of administrative staff, all costs of utilities, rental payments, maintenance of equipment and buildings. These types of expenditures cannot be immediately attributed to the cost of production, therefore, the accounting department employees first accumulate money in a separate account, and then from the total amount posting is made for specific articles and types of products. The secret to success lies in choosing the right proportions of distribution.
Of course, first of all, the accountant develops and approves the planned amount of expense, which workers must subsequently adhere to. For example, the distribution of indirect costs in terms of the use of equipment involves a preliminary calculation of the costs per hour attributable to certain types of machines. Thus, the expenditure of funds to support machine tools and other devices in working condition is determined by a proportionately established base. As such, often used the wages of workers engaged in primary production, estimated elemental rates.
Let us consider in more detail the distribution system depending on wages. In order to calculate indirect costs, it is necessary first of all to collect data on the amount of remuneration of the main workers, noted in the primary documents of the company. Then, analytical work is carried out aimed at establishing the percentage of actual costs and salary. We get a certain coefficient value, with which you can post on individual types of products and types of work. That is, we find the share of costs for manufactured goods.
The above method is quite simple to use, so it is used at most enterprises in our country. However, in modern conditions, it has significant drawbacks, since indirect costs largely depend on the degree of automation of the production process. Accordingly, the more new information technologies are used at the enterprise, the less these costs are for products.
Among other ways of cost allocation, others can be noted, mainly depending on the chosen base. For example, the following are distinguished as a proportion:
- volume of output (used in metallurgy and food industry);
- marginal cost (corresponding to chemical organizations);
- the volume of bets for each workshop individually;
- by machine hours.
In conclusion, I would like to note that indirect costs should be considered as an effective tool for improving the production process. And with a competent approach, using it you can significantly improve the financial situation of the enterprise.