Ch 04 - Process Costing - 4 Process Costing Chapter Four Key Topics Job-order vs process costing Accounting for process cost flows Apply costs to

Ch 04 - Process Costing - 4 Process Costing Chapter Four...

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Chapter Four Process Costing 4
Key Topics Job-order vs. process costing Accounting for process cost flows Apply costs to products Service department allocations – separate handout 4
Job-Order vs. Process Costing 4
What is Process Costing?4
Similarities Between Job-Order and Process Costing Both systems assign material, labor and overhead costs to products and they provide a mechanism for computing unit product cost. Both systems use the same manufacturing accounts, including Manufacturing Overhead, Raw Materials, Work in Process, and Finished Goods. The flow of costs through the manufacturing accounts is similar in both systems. 4
Differences Between Job-Order and Process Costing 4 Process Costing Job-Order Costing Used when a single product is produced on a continuing basis or for a long period of time. Used when many different jobs are worked on each period Accumulate costs by department. Accumulate costs by individual jobs. Compute unit costs by department. Compute unit costs by job on the job cost sheet.
Process costing is used for products that are: Quick Check 4-7
Processing Departments A processing department would be a unit that adds material, labor or overhead to the product. The same process is applied to all products and the output is homogenous. Products flow in sequence from one department to the next. For example, a soft drink manufacturer could have: 4-8
Accounting for Process Cost Flows 4-9
Comparing Job-Order and Process Costing Finished Goods Finished Goods Cost of Goods Sold Cost of Goods Sold Work in Process Direct Materials Direct Materials Direct Labor Direct Labor Manufacturing Overhead Manufacturing Overhead 4-10
Comparing Job-Order and Process Costing Finished Goods Finished Goods Cost of Goods Sold Cost of Goods Sold Direct Labor Direct Labor Manufacturing Overhead Manufacturing Overhead Jobs Jobs Costs are traced and applied to individual jobs in a job-order cost system. Costs are traced and applied to individual jobs in a job-order cost system.

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