In the bookkeeping of any company, specialists necessarily share a lot of costs into direct and indirect. This is necessary both for calculating the tax base and for calculating the cost of production. To know what costs are not direct, it is important for both accounting and tax accounting. The difficulty here is that in the production of various industries, the same costs can be considered somewhere direct and somewhere indirect. In order not to get confused in this classification, you need to know a clear definition of each concept.
Direct expenses
We will begin to analyze what direct and indirect costs are. The first group includes those that are easily attributed to a specific object of costs - products, projects, services. These are the raw materials that are needed to create the product, the cost of remuneration of workers employed in production.
It is important to take into account, as we mentioned, the specifics of the company. If the organization is engaged in the development of certain software, then paying for the activities of programmers here will also be a direct cost.
Another important feature - direct costs are mostly variables. But this does not mean that there will be no exceptions in the group. Variable costs, as a rule, will increase in direct proportion to the volume of manufactured products. Also this statement is true in relation to raw materials. More materials are needed to produce more products. But here we must not forget about the intricacies. The remuneration of the work of a supervisor who controls the volume of production is already an indirect cost.
Character traits
To know what costs are not direct, you must clearly understand the defining features of this group.
So, direct costs are characterized by the following:
- The formation of the cost of only a single type of product.
- Directly related to the production of goods, the sale of services, the execution of work.
- Costs that go directly to the manufacturing sector.
The list of direct costs is directly presented in Art. 318 of the Tax Code of Russia. It is open - organizations can complement it at their discretion. At the same time, a specific, strictly regulated list of direct costs is introduced for trade organizations, which are not subject to change. These include such quantities as transportation costs, the cost of purchased products.
Direct spending examples
Where should the costs of maintaining and operating the equipment be attributed? To answer this question, the accountant should provide the main examples of direct spending:
- Basic materials for production.
- Components for the manufacture of products.
- Semi-finished products for production.
- Salaries of employees with all deductions to pension, insurance funds, social benefits.
- Depreciation of equipment for the main production process.
- Other direct expenses. This is equipment rental, installation and preparation for operation of equipment directly involved in manufacturing, adjustment of production machines for a certain type of goods, cooling of equipment, utilization of materials.
Classification
For direct costs, a convenient classification is introduced:
- Direct material costs. This includes the costs of materials, raw materials, semi-finished products, components, payment of energy carriers, ensuring the operation of the main production equipment.
- Direct costs for s / n.Accordingly, the remuneration of staff who are engaged in the main production process.
- Other costs. This includes the depreciation of the main group of production equipment, the cost of advertising specific products, the cost of packaging products, transporting them to warehouses and stores, commission payments to sales agents.
Accounting and tax accounting
What costs are not direct? Costs not directly related to production.
When accounting for direct costs, it is sometimes impractical for an accountant to consider all the costs of producing a unit of output. For example, glue, buttons, paper clips and nails. The specialist classifies these expenses as general business, official. They will be taken into account for each reporting period, methodically redistributed between specific types of goods.
If the organization is directly involved in production, then it has the right to consider as direct expenses those expenses that relate only to sold goods. The rest is allowed to go to work in progress and unsold goods. Accountants take this group into account. 20. In order to make it more convenient to carry out the analysis, they conduct a score 43. In this case, the cost is calculated on the account. 20.
For tax accounting, you need to reflect the amount of direct costs. It is calculated by the formula:
Direct costs = (Direct costs) x (Amount from the sale of goods) / ((Amount of release) + (Amount of unfinished production))).
Features for trade and services
For the service sector, the Russian Tax Code simplifies the process of accounting for direct costs. Under paragraph 2 of Art. 318 of the Tax Code of the Russian Federation, the separation of direct waste into unfinished production and already sold services is optional. All expenses that may affect the cost of services are necessarily included in the tax period, which reduces the taxable profit of the organization. Therefore, in the reporting period, the company must have at least the only service sold so that the amount of direct costs can reduce the taxable base.
In trade, when filling out a tax return, the total amount of all purchased products must be indicated. If the range of transportation costs is not taken into account in the cost of goods, then they are also referred to as direct costs. As for accounting, they are carried out by recording Debit 90.2 - Credit 41.
Indirect costs
Now it is much easier to determine what is considered indirect costs in the cost of production. These are those that cannot be attributed to a specific object. But along with this, such expenses are vital for maintaining the company’s activities. An example of indirect costs can be called overhead, which remained unaccounted for after the deduction of direct.
This also includes the full range of administrative waste - from renting office equipment, utilities, communication services to buying computers for offices, cleaning detergents. All these acquisitions are necessary to ensure the activities of the company as a whole, but at the same time they cannot be attributed to the costs of creating a specific product group. This also includes such "innovations" as the cost of advertising, promotion, call center maintenance, legal, consulting services and so on.
As for the indirect costs of labor, they again make it possible to manufacture the cost object, but cannot be attributed to a specific product. An example of such expenses is the maintenance of the financial department or the same bookkeeping. Without these units, the organization’s activities are impossible. But they do not participate in the production of a particular type of product or the provision of services.
What costs are not direct, we have already considered. By their nature, indirect costs can be both variable and constant. Constantly include, for example, office rental fees.Variables will be considered the cost of electricity to ensure the operation of auxiliary equipment.
Character traits
Many accountants make the mistake of classifying non-operating expenses as indirect. Therefore, it is worth highlighting the main characteristic features of the category:
- At the same time form the cost of several types of products.
- There is no way to specifically determine which category of products these costs can be attributed to.
- In general, they provide both the work of the organization and the ongoing production processes.
Not all costs that were not classified as direct in accounting policies are indirect. Non-operating expenses are not included. The reason is that they do not have a direct connection with the production of products, as well as the subsequent sale of goods, works and services.
The distribution of indirect costs is proportional to all types of products. The specialist needs to choose a base for this. It is, for example, variable costs - the cost of raw materials, wages.
Examples of indirect costs
Here are the items that are set when accounting for indirect costs:
- Salaries of top management, administrative and support staff.
- Payment of utility services.
- Marketing campaigns, company advertising.
- Depreciation of auxiliary production equipment.
- Tax deductions.
- Certification and licensing costs.
- Advisory services.
- Repair of office, industrial premises, transport.
- Training and classification of workers.
- Transport costs for the delivery of products to the final buyer.
- General shop, general production costs.
Classification
Now consider the types of indirect costs and their distribution in the classification:
- Indirect material costs. This is a payment for energy sources that support the organization’s auxiliary equipment.
- Remuneration of workers. Two groups of personnel stand out here: managerial, administrative, and auxiliary production.
- Other costs. This depreciation of production auxiliary equipment, advertising costs, promotion of the company (and not a specific product), general, administrative, expenses for the provision of professional services to the company.
Accounting
All varieties of indirect, non-production costs can be found in Art. 265 of the Tax Code. Most of them can be called permanent. In accounting, they pass through the account "General expenses" (26). However, postings to accounts 20, 23, 25 are possible.
In order to solve the problem of determining the cost, an individual absorption coefficient is introduced. It will reflect the amount of overhead per unit of output. A popular method is the proportional division of indirect costs into direct costs. A method of dividing indirect costs by production labor costs is also possible.
Accounting for indirect costs helps to really assess the cost. But keep in mind that the result will vary with the change in the redistribution base.
The income tax return must reflect the accumulated indirect costs. Here are those that require individual decryption:
- Amounts of fees and taxes.
- Depreciation of equipment.
- The amount of deductions for social benefits for the disabled.
- Amounts for the acquisition of land, as well as rental rights to land plots.
- Research costs.
Dividing the organization’s expenses into direct and indirect is a rather complicated process, having a lot of subtleties. Here, the specifics of production, the goods sold, and the areas of the company’s activity — production, rendering of services or performance of work — also have an effect. The Tax Code itself does not dictate clearly which expenses are considered indirect and which are direct.