Fixed assets or materials play an important role in the activities of any company. It is from the correct determination of the needs for basic materials that the financial stability of the enterprise depends. Lack of basic components can lead to disruptions in production and delays in supply, which in turn affects financial well-being. Therefore, it is important that the material basis or base is properly taken into account, analyzed and used sparingly, reducing the cost of production.
What are materials in production?
The division of all materials into the class of main and auxiliary depends on the scope of the company. For example, in industrial enterprises, steel belongs to the basic materials, like paper in a printing company. But in other companies, these same materials are classified as auxiliary. For example, if paper is used as the production of labels or tags at enterprises in the light or food industries.
Basic materials are the main components of the production of any company, regardless of its field of activity. They participate in the production process for a certain time, their cost is fully taken into account in the cost of the finished product. In industry and agriculture, these include raw materials, as well as other materials after primary processing.
For companies, regardless of the field of activity, such an indicator as material consumption is important, the lower it is, the lower the cost of the finished product.
Basic and auxiliary materials
The cost estimate of the enterprise must necessarily indicate the consumption of basic materials, as well as auxiliary elements. In this case, the cost of repayments, if any, of purchased materials and semi-finished products is deducted.
In logistics, the object of control is materials. This may include fuel, raw materials, overalls, spare parts for repairs, tools, equipment. They are all displayed in the accounting of the enterprise for a certain period of time. There is such a thing as the rate of consumption of materials depending on the scope of the company.
Each company plans the consumption of both materials and economic indicators in advance (month, quarter, year). Further, the planned indicators are compared with the actual figures, from where the profitability of the enterprise is calculated. The main and auxiliary materials are taken into account. It is important for each company to minimize these indicators, but at the same time, so that this does not affect the number of manufactured products.
Where do the basic materials come from?
Basic materials are the main values of the enterprise that come into production from suppliers, intermediaries or partners. The fact of receipt of materials must be documented and displayed in the company's accounting records.
The supplier, when delivering the material, both primary and secondary, must provide accompanying documents (usually a bill of lading), then the representative of the procurement department checks the accuracy of the information and the goods delivered. If there are no discrepancies, the bill of lading and the invoice remain one copy with signatures on both sides. If the goods are received outside the organization, and not at the warehouse, then a power of attorney is issued.
Further, the movement of fixed assets takes place already in the organization itself, starting from the receipt of the goods at the warehouse, displaying in the movement card in the materials accounting card and using directly in the enterprise’s work.
Why do we need accounting for basic materials and their classification
Each company is interested in reducing the cost of its products. That is why expensive materials are replaced with cheaper ones, it depends primarily on the characteristics of the base material. It is also important to reduce production waste and streamline costs. For this, companies use advanced technologies, improving the quality of raw materials and materials, as well as secondary resources.
In the manufacturing process, basic materials can be used in different ways. Some are completely consumed in the production process (raw materials), others change their shape (paint, grease), others enter the finished product completely without being processed (spare parts), and others contribute to the formation of products, but are not included in them (MBP).
Also, the materials can be divided according to technical properties, on which the reporting form, which the companies fill out, depends on.
Accounting for basic materials
Basic materials - this is the basis of accounting for any enterprise, which is based on three stages: receipt, issue directly for the production process and return, that is, waste accounting. Sometimes enterprise waste is reused in production, which minimizes costs. Funds in accounting are accepted at actual cost excluding VAT.
Actual costs of basic materials include:
- the amount paid to the seller or supplier;
- the amount for information and consulting services related to the acquisition of materials;
- customs duties (if the funds were purchased from foreign companies outside the country);
- taxes related to the purchase of materials and which are not refundable;
- remuneration to the intermediary, if through him the purchase of fixed assets;
- transportation costs for the delivery of materials (including insurance).
The actual cost of materials is determined on the basis of direct costs of materials, starting from the search and ending with transportation.
The main materials used in the analysis
The main material is the main item of the account 10 “Materials”. Perhaps the use of some support accounts to account for the cost of additional costs associated with the acquisition of fixed assets.
Particular attention of each enterprise is given to the analysis of materials, which are the basis of production. It is important to correctly consider the consumption of materials, calculate their level of use by the company. All these indicators are calculated as planned, and also compared with previous similar periods (for a month, quarter, year). Patterns allow you to identify where there was an overspending of basic materials and for what reason. Also, through analysis, it is possible to identify methods and ways to reduce the cost of basic materials, which entails a reduction in the cost of production.
There is such a thing as the utilization of materials. It is defined as the ratio of the volume of certain materials in the finished product for a certain period of time to the spent funds and their quantity for another period similar in time. If this indicator is close to unity, then there is practically no waste in production and fixed assets are used rationally.
Material Accounting Tasks
Basic materials - this is the base with which the company works. Their accounting and analysis is the most important task of a company that wants to increase its profitability.
The main tasks of accounting materials are:
- formation of actual cost;
- timely and correct documentation of the acquisition, acceptance and use of materials;
- control over the preservation of materials, all their properties at each stage of movement;
- control and analysis of the required amount of materials so that the company operates without interruptions;
- identification of waste from which it is possible to benefit (reuse, sell or sell in other products);
- analysis of the effectiveness of the use of materials.
