ACC221ch04sp08

ACC221ch04sp08 - ACC221 Chapter 4 System Design: Process...

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1 ACC221 Chapter 4 System Design: Process Costing 2 Objectives Covered 1. Enumerate the major similarities and differences between job-order and process costing. 2. Understand processing departments. 3. Record the flow of materials, labor, and overhead through a process costing system. 4. Compute the equivalent units of production using the weighted average method.
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3 Objectives Covered 5. Prepare a quantity schedule using the weighted-average method. 6. Compute the costs per equivalent units using the weighted average method. 7. Prepare a cost reconciliation using the weighted-average method. 8. Combine the quantity schedule, total and unit costs and cost reconciliation into a production report. 4 Objective 1 Enumerate the major similarities and differences between job-order and process costing.
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5 Process Costing Used in industries that produce homogeneous products on a continuous basis. Used in industries that convert basic raw materials into homogeneous products. 6 Similarities between Job-Order and Process Costing The same basic purposes exist in both systems, which are to assign material, labor and overhead costs to products and to provide a mechanism for computing unit costs. Both systems maintain and use the same basic manufacturing accounts, including Manufacturing Overhead, Raw Materials, Work in Process and Finished Goods The flow of costs through the manufacturing accounts is basically the same in both systems.
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7 Differences between Job-Order and Process Costing Job-Order Costing Process Costing 1. Many different jobs are worked on during each period, with each job having different production requirements. 1. A single product is produced either on a continuous basis or for long periods of time. All units of product are identical. 2. Costs are accumulated by job. 2. Costs are accumulated by department. 8 Differences between Job-Order and Process Costing Job-Order Costing Process Costing 3. The job cost sheet is the key document controlling the accumulation of costs by a job. 3. The department production report is the key document showing the accumulation and disposition of costs by a department. 4. Unit costs are computed by job on the job cost sheet 2. Unit costs are computed by department on the department production report.
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9 Objective 2 Understand processing departments. 10 Processing Department Any location in the factory where work is performed on a product and where materials labor or overhead costs are added to the product.
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11 Features of Processing Departments 1. The activity performed in the processing department must be performed uniformly on all of the units passing through it. 2. The output of the processing department must be homogeneous. 12
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ACC221ch04sp08 - ACC221 Chapter 4 System Design: Process...

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