Costing articles determine the costs in cost terms for the production of a unit or group of units of finished goods. We can talk about certain types of industries. Costing allows you to create and compare the planned and actual cost of the object or product, which gives it the right to be the basis for their assessment. For example, in a construction company this method of cost estimation is used in relation to accounting objects in cash.
Costing articles are the basis for determining average production costs and establishing production costs. Today, in scientific circles, the classification of cost accounting in production and the calculation of the cost of finished products are quite controversial. So, industry provisions and instructions regarding planning, accounting and costing, distinguish two main methods of such accounting: front-end and custom. However, when familiarizing yourself with economic literature, you can also find other methods or a combination of the already mentioned.
For example, a methodology that includes the necessary costing items is responsible for accounting for costs using the normative method or the method of incomplete cost, which cannot be used as alternatives for variable and custom. Each of the above methods is an independent separate characteristic of the formation of cost accounting. This fact allows you to put into practice many combinations of methods that contain costs for costing items.
It should be noted the classification of all methods of forming the costs of a business entity depending on the choice of an object. It is determined by the feature of the technological production process.
All costing articles relate to an object defined by a certain product. For him, you need to calculate the actual cost. For example, in mechanical engineering - it can be a separate part or whole equipment, in passenger transport - a separate route, in public catering - a specific dish. The choice of the object of the costing article is one of the most important issues of the entire accounting policy of a business entity, since it is the decision that may determine the division of costs into indirect and direct. Also, based on the decision made, the structure of the general analytical accounting system is being formed.
Costing articles in the context of the relevant units are taken into account in the following units:
- natural (meters, pieces, etc.);
- conditionally natural;
- cost (consulting services, acquired securities, etc.);
- work (measurement of transported cargo - ton-kilometer);
- time (man-hour, machine-hour).
The main difference between the various methods of cost accounting is the definition of their object. So, with the boiler method, production is taken as an object, with a custom order a specific product, with an alternate method the process itself.
