Account 621- Direct materials costs
1. Accounting Principles
This account is used to record costs of raw materials, materials used directly for producing goods, rendering services in branches, such as industry, construction, agriculture, forestry and fishery, traffic and transportation, post and telecommunications, travel, and other services.
b) Only accounting in Account 621 costs of raw materials, materials (include both raw materials, main materials and subsidiary materials) used directly to manufacture products, render services during the production and trade cycle. Costs of raw materials, materials must be computed in actual delivered price for usage.
c) During account period, accountants carry out recording, collecting costs of raw materials, direct materials in Dr 621 ―Direct material costs‖ classified as various users, result from direct usage of these raw materials, materials (If raw materials, materials used for process producing products, rendering services can be determined specifically for each user), or as summarized costs for process manufacturing products and rendering services. (If raw materials, materials, used for process producing goods and rendering services, can‘t be specified for each user).
d) At end of account period, transferring (if raw materials, materials can be grouped specifically for each separate objects), or carrying out allocating and transferring costs of raw materials, materials (If can‘t be grouped specifically for each separate objects) into Account 154, served for calculation of actual costs of products, services during account period. When allocating value of
raw materials, materials to costs of products, business must use reasonable grouping characteristics such as usage rate,...
dd) When purchasing raw materials, if the input VAT is deducted, the value of raw materials shall not include VAT. If the input VAT is not deducted, the value of raw materials shall include VAT.
e) The cost of raw materials, direct materials beyond normal levels is not included in the cost of products and services but must be transferred immediately to account 632 "Cost of goods sold".

2. Structure and contents of account 621 - Direct materials cost
Debit side : Actual value of raw materials, materials delivered for directly usage in manufacturing activity of products, or rendering services during account period.
Credit side :
- Transferring value of raw materials, materials actually used for production and trade during the period to Account 154 ―work in process‖ or to Account 631 ―costs of production‖, and transferring in details to separate objects to compute cost of products, services.
- Transferring cost of direct materials in excess over normal level to Account 632 - "Cost of goods sold".
- Value of direct materials which is redundant will be restored to warehouse.
Account 621 does not have ending balances.

3. Method of accounting for several major transactions
When delivering raw materials, materials used for manufacturing products or rendering services during the period, record :
Dr 621 - Direct materials costs
Cr 152 - Raw materials, materials
b) In case raw materials, materials are used directly (not stored) for manufacturing products or rendering services and VAT is deductible, record:
Dr 621 - Direct materials costs
Dr 133 - Deductible VAT
Cr 331, 141, 111, 112,...
c) In case value of raw materials, materials delivered for use is redundant from manufacturing products or rendering final services, and these redundant materials are restored, record:
Dr 152 - Raw materials, materials
Cr 621 - Direct materials costs
d) In case the cost of direct materials is beyond normal levels or losses are included immediately in cost price of goods sold, record :
Dr 632 - Cost of goods sold
Cr 621 - Direct materials costs
e) For the cost of materials used generally for business cooperation contract
- - When incurring costs of materials generally used for business cooperation contracts, based on invoices and related documents, record:
Dr 621 - Direct materials costs ( details of each contract)
Dr 133 - Deductible VAT
Cr 111, 112, 331...
- Periodically, accountants establish general cost allocation Statement (with the confirmation of the parties) and deliver VAT invoices to allocate the cost of materials used generally for business cooperation contract for the parties, record :
Dr 138 - Other receivables (details for each partner)
Cr 621 - Direct materials costs
Cr 3331 - payable VAT
In case of distribution of costs without VAT invoices, accountant record a decrease of input VAT by recording Cr 133 - deductible VAT.
g) At end of account period, accountants base on table of material allocation computed for every object using raw materials, materials (Factories, types of products, projects, construction sections of construction activity, types of services,...) under direct method or allocating methods, record :
Dr 154 – unfinished production, business cost
Dr 631 - Costs of production (periodical inventory method)
Dr 631 - Cost of goods sold (part in excess over normal level)
Cr 621 - Direct materials costs

Source: Circular 200, Article 84