ACCT2301-002-chap5-sp2009

ACCT2301-002-chap5-sp2009 - Chapter 5 Process Costing...

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1 Chapter 5 Process Costing adapted from  Fundamental Cornerstones of Managerial  Accounting Heitger, Mowen and Hansen (2008) Professor D. Collins
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2 Learning Objectives – Chapter 5 Describe the basic characteristics and cost flows  associated with process manufacturing. Define equivalent units and explain their role in process  costing.  Explain the differences between the weighted  average method and the First-in, First-out (FIFO)  method of accounting for process costs.  Prepare a departmental production report using the  weighted average method. Explain how non-uniform inputs and multiple  processing departments affect process costing.
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3 Job-Order versus Process Costing Systems The objective of both systems is to compute  unit  costs . The choice between the two types of systems is  dictated by the type of product/service being  provided or manufactured. Job costing – a number of different types of products  or services.  Costs accumulated by job. Process costing – masses of similar (homogeneous)  product or service units.  Costs accumulated by  process or department.
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4 Other Characteristics of Process Costing Systems Costs are accumulated by process or department, not  by individual unit.  Production processes can be  sequential  or  parallel . Costs are assigned equally to homogeneous units  within a particular time period.  The resulting unit costs  thus represent average costs of all units processed  through the department. Process costing works well whenever relatively  homogeneous products pass through a series of  processes (a continuous flow production process) and  they receive similar amounts of manufacturing costs.
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5 Cost Flows in Process Costing Systems
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This note was uploaded on 02/16/2009 for the course ACCT 2301 taught by Professor Staff during the Spring '08 term at Texas Tech.

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ACCT2301-002-chap5-sp2009 - Chapter 5 Process Costing...

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