ch17 process costing

ch17 process costing - PROCESS COSTING CHAPTER 17 Stephen...

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Unformatted text preview: PROCESS COSTING CHAPTER 17 Stephen Asare ACG 3482C Learning Objectives 1. Review of Job order costing system 2. Identify the types of firms or operations for which a process costing system is most suitable 3. Explain and calculate equivalent units 4. Describe the five steps in process costing 5. Demonstrate the weighted-average method of process costing 6. Demonstrate the FIFO method of process costing 7. Extend process costing in a Standard Costing system 8. Analyze process costing with multiple departments 9. Account for spoilage in process costing 2 Learning Objective One Review of Job Order Costing System 3 Job-Order Costing System 4 Same objective: determine the cost of products Same Inventory accounts: raw materials, work in process, and finished goods Same overhead assignment method: predetermined rate times actual activity Same objective: determine the cost of products Same Inventory accounts: raw materials, work in process, and finished goods Same overhead assignment method: predetermined rate times actual activity Comparing Job Costing and Process Costing 5 Comparing Job Costing and Process Costing Job costing Costs accumulated by the job . Work in process has a job cost record for each job . Many unique jobs. Jobs built to customer order. Process costing Costs accumulated by department or process . Work in process has a production report for each batch of products . Homogenous products. Units continuously produced for inventory in automated process. 6 Learning Objective Two Identify the types of firms or operations for which a process costing system is most suitable 7 11-8 Process costing accumulates costs by process or department and then assigns them to a large number of nearly identical products. Characteristics of Process Costing Continuous mass production Similar processes Homogeneous products Unit cost = Process costs Equivalent units produced Process Costing System 9 Flow of Cost Between Processing Departments 10 So, direct labor and factory overhead are often combined into one product cost called conversion. Direct Materials Type of Product Cost Dollar Amount Direct labor costs are usually small in comparison to other product costs in process cost systems. Conversion Characteristics of Process Costing 11 Assigning Costs to Products All Units Fully Completed Ace CD Inc. incurred the following manufacturing costs in May: Ace started and completed 40,000 CDs in May. Ace had no beginning work in process inventory. Compute the manufacturing unit costs for May. Direct materials $20,000 Conversion costs 10,000 Total costs to be assigned $30,000 12 Assigning Costs to Products All Units Fully Completed Ace CD Inc. Solution Process costing systems do not track costs to each individual unit. Instead, they average the periods cost over the periods production....
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This note was uploaded on 04/08/2009 for the course ACG 3482C taught by Professor Tinaker during the Spring '09 term at University of Florida.

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ch17 process costing - PROCESS COSTING CHAPTER 17 Stephen...

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