tf2 - Top ic Foc us Focus on Process Costing r ka ici i k...

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Topic Focu s 2 ©petekarici/iStockphoto Topic Focus 2 – Focus on Process Costing Focus on Process Costing Learning Objectives 1. Identify the kinds of companies that use process costing systems. 2. Explain how costs flow through the inventory accounts in a process costing system. 3. Calculate and explain equivalent units of production. 4. Assign costs to completed units and ending work-in-process inventory. Summary of End of Chapter Material Difficulty: E = Easy, M = Moderate, D = Difficult Bloom: K = Knowledge, C = Comprehension, AP = Application, AN = Analysis, S = Synthesis, E = Evaluation AACSB : A = Analytic, C = Communication, E = Ethics AICPA FN: DM = Decision modeling, RA = Risk Analysis, M = Measurement, R = Reporting, RS = Research, T = Technology AICPA PC: C = Communication, I = Interaction, L = Leadership, P = Professional demeanor, PM = Project Management, PS = Problem Solving and Decision Making, T = Technology IMA: BA = Business applications, BP = Budget Preparation, CM = Cost Management, DA = Decision Analysis, PM = Performance Measurement, R = Reporting, SP = Strategic Planning Item L. O. Difficulty Level Minutes to Complete Bloom’s Taxonomy AACSB AICPA FN AICPA PC IMA Ethics Coverage GUIDED UNIT PREPARATION 1 1 E 5-7 K A M PS CM 2 2 E 2 K A M PS CM 3 3 E 5 K A M PS CM 4 3 M 5 C A M PS CM 5 4 M 3 K A M PS CM 6 4 M 3 K A M PS CM EXERCISES T2-1 1 M 9 C A M PS CM T2-2 2 M 14 AN A M PS CM T2-3 2 M 14 AN A M PS CM T2-4 3 E 4 AP A M PS CM T2-5 3 M 12 AP A M PS CM T2-6 4 M 15 AP A M PS CM T2-7 4 D 15-18 AP A M PS CM PROBLEMS T2-8 2 D 18-20 AP AN M PS BP T2-9 3, 4 D 20-25 AP AN M PS BP T2-10 3, 4 M 12-15 AP AN M PS BP CASES T2-11 2, 3, 4 D 35-40 E, AP, AN A M PS CM T2-1
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Solutions for Davis & Davis, Managerial Accounting , 2 nd ed. SOLUTIONS TO GUIDED UNIT PREPARATION 1. Similarities: Both are costing systems with the objective of accumulating and assigning product costs (materials, labor, and overhead) to cost objects; costs flow through inventory accounts in a similar manner. Differences: Process costing is used for products that are mass- produced, whereas job-order costing is used for products or batches of products that are unique; process costing accumulates costs by processing department via a departmental production report; job- order costing accumulates costs by job via a job-cost sheet. 2. Conversion costs are the costs of direct labor and overhead needed to convert raw materials into products. 3. Equivalent units (EU) are “as if” the work-in-process was converted to complete units. For example, if 100 tennis balls were 40% complete, then it is as if 40 tennis balls were completed. Calculating EU is necessary to equate units that are finished in a process to units that are still in process at the end of a period. Otherwise, there is no way that costs could be assigned to both.
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