CHINESE RULES AND PROCEDURES FOR CALCULATING PRODUCTION COSTS OF COTTON TEXTILES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00809A000700200101-5
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 4
• Document Creation Date: December 22, 2016
• Document Release Date: August 31, 2011
• Sequence Number: 101
• Publication Date: September 22, 1954
• Content Type: REPORT

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STAT
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D pROCIDURE3
FOR CAICULATING PRODUCTION COSTS OF COTTOpI TEXTILES
(Comment: This report is a summarization of Part 2.. ,"
Miefon Fan -chih Ch'eng-pen Chi
of swan Ruei t'en "Cost Items
cedturehes r Calculating Production Costs of Cotton Texti es) and Pro-
in Peiping in 1952. These rules and re , published
ations
ciples of "process ccst and class cost aaceou
, i on the prin-
ntin.ne based
m "to the coat accounting principles in the textile inrblst , to otes-
tablish and develop a strong cost control system, to promote the use of cost control in the financial calculations of factories,
and to have a complete and proper uniform cost accounting system in
all textile mills."]
The items listed below are all functional cost items and belong in the cat-
egory of production support departments (generation and distribution of elec-
tricity, maintenance, supply of water and steam, etc.), and direct production
departments. These costs should all be entered into departmental cost calcula-
tions, and comverted into functional items of cost in accordance with the serv-tments. costsices
bee directly recorded asi~costtitemsoifrthe oareiof, various
ture but of a dissimilar function. Y are of a similar na-
na-
Cost items are divided into raw materials, important materials, supplemen-
tary materials, fuel and power used in technical processes, wages and supplemen-
tary wages
expenses, losses from work stoppages, workshop expenses,
consignment processing and administrative expenses.
1. Raw materials refer to materials which are used directly in the n.anu-
facture of a proc'',c~- -r: ?. ich are a constituent part of it (raw cotton,
cotton, processed and unprocessed yarn purchased from other sources, etc reclaimed
cost of waste cotton from the manufacturing process is deducted The
.
2. Important materials refer to special materials such as starch, yarn,
etc., which are eunsumed in the manufacturing process. PTnenta
refer to all ments3whichpare directlyaorrinairectly consumedainrth s in production recess
in strengthening production capacity, erals which reonts or
constituent part of the ' all those materials whiich are not a
cos such as strip product (expendables used during manufacturing and pack-
g, wate:rproo-ed paper, etc., and miscellaneous mechanical
parts which are not fixed assets).
CHINESE RULIS AN
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4. Fuel used in technical process refers to liquid and solid fuels con-
sumed (does not include coal usea for steam).
5. Power used in technical process refers to power consumed in the manu-
facture of a product (electricity, steam, etc.) including distribution expenses,
but not plant illumination expenses).
6. Direct production workers,' wanes refer to wages for those workers di-
rectly concerned with the manufacture of a product (does not include experimental
workerst statisticians, cost clerks, etc.).
7. G"pplementary wages refer to only to supplementary wages for those di-
rectly concerned with the manufacture of a product.
8. Work stoppage losses refer to losses from work stoppages of short dura-
tion (one hour and above) and includes all expenses incurred during work stoppage.
9. Workshop expenses refer to all production expenses concerned with the
manufacture of a product. Further detailed breakdown is as follows:
Wages and supplementary wages for workshop personnel of production de-
partments, including foremen, technicians, accountants, clerks, workshop cost
finders, etc.
Steam, includes sprayer, starching yarn, steam heat
Water, sprayers, drinking water, includes cost of water supply
Illumination, lighting and distribution expenses of production depart-
ments
Maintenance, repair and upkeep of buildings, machinery, etc.
Depreciation of fixed assets
Depreciation of low-value, easily expended items, i.e., tools, work
clothes, instruments, etc.
Expenses for all types of expendables (toilet paper, etc.)
Insurance, fire, calamity, etc.
Research and experimentation, all expenses incurred from experimenta-
tion during production, includes wages and supplementary wages for experimental
workers
Office expenses, paper, printing, telephone, etc.
A11 expenses not already included, such as books, newspapers, period-
icals, health fees, etc.
10. Cc'cignmcpt processing refers to expenses incurred from the processing
of consigned materials from other production organs.
11. Management expenses refer to all expenses incurred in the operation of
the basis unit; detailed breakdown is as follows:
Wages and supplementary wages for management personnel
Supply personnel expenses, all expenses except traveling
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Taxes, in addition to goods, unified distribution, commercial and stamp
taxes, also regular and temporary taxes
Water, electricity, and coal expenses
Postal and communication expenses, telephones, mc.iling, cablegrams, etc.
Printing, stationery, record sheets, etc.
Traveling expenses, gasoline, oil, buses, etc.
Shipping, includes loading and unloading
Insurance, expenses necessary for the protection of fixed and current
assets
Depreciation of fixed assets
Depreciation of low-value expendables, all those items which are not
fixed assets, such as tools, instruments, work clothes, etc.
Expendables
Maintenance
Rent, includes rent for all units of the enterprise
Receptions, expenses for parties held in line of business
Clothing, work clothes and uniforms
Research and improvement, all those expenses incurred in experimentation
dealing with improvement of the product
Contributions, in accord with government law, for unemployed and re-
lief funds
Samples, all expenses incurred in recommending, exchanging, and exhib-
iting the product
Publishing, all expenses from publications dealing with product
Books and newspapers, expenses for purchase of these items
Interest, on loans, cannot be compensated by profits
All other expenses not included in above
12. Enterprise management organs' expenses refer to these higher office man-
agement expenses distributes proportiona.ily. is a cost item, such expense is
charged to the original department where the finished goods are produced. This
cost is not deducted from goods in process or semifinished products.
13. Other expenses refer to all other outlays or losses not calculated as
costs, but disposed of under profit and loss.
STAT
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