Chapter 4 Process Costing

Chapter 4 Process Costing - Chapter 4 Process...

This preview shows pages 1–2. Sign up to view the full content.

Chapter 4 Process Costing - equivalent units of production are the number of units transferred to the next department or to finished goods + equivalent units in ending work in process o Number of partially completed units X percentage completion o Number of compete units that could have been obtained from materials and effort that went into partially complete units o Partially completed units are translated into an equivalent number of fully completed units when determining a department’s output. - WEIGHTED-AVERAGE METHOD— o Blends together units and costs from current period with units and costs from prior period o Costs to be account for = BEG WIP INV o Costs accounted for = ENDING WIP INV o Separate calculation is made for each cost category in each processing department o Equivalents units of production = units transferred to next department/finished goods + equivalent units in ending work in process inventory o Equivalent units completed = units transferred out for determining cost per unit o Cost per equivalent unit are used to value units in ending inventory and units that are transferred to next department o Does not take into account percentage competed of the beginning inventory o COST PER EQUIVALENT UNIT = (cost of beg WIP inv + cost added during period)/ equivalent units of production o EG: 3000 units transferred to next department, ending WIP 100 units, 40% complete for materials, 25% complete with conversion costs. Weighted-average method, what is equivalent units of production? = 3000 + (100x40%) = 3040 - FIFO method (best option) o Separate calculation is made for each cost category in each processing department o Using only costs incurred by processing department in current period o Cost of units transferred out = cost of beginning WIP inv + cost to complete units in beginning WIP inv + cost of units started and completed during period o DIFFERENT: 1) computation of equivalent units 2) way in which costs of beginning inventory are treated (more accurate and complex)

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern