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ACIS_2116_Chap4_Slides_no_blanks

ACIS_2116_Chap4_Slides_no_blanks - Systems Design Process...

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Chapter Four Systems Design: Process Costing
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Similarities Between Job-Order and Process Costing Assign material, labor and overhead costs to products. Use the same manufacturing accounts. The flow of costs through the manufacturing accounts is basically the same.
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Differences Between Job-Order and Process Costing Job-Order Costing Process Costing Many different jobs are worked on. Single product produced for long time. Accumulate costs by individual job. Accumulate costs by department. Job Cost Sheet is key document. Department Production Report is key document. Unit costs are computed by job. Unit costs are computed by department.
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Process costing is used for products that are: a. Purchased from vendors. b. Different and produced continuously. c. Similar and produced continuously. d. Individual units produced to customer specifications. Quick Check
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Process costing is used for products that are: a. Purchased from vendors. b. Different and produced continuously. c. Similar and produced continuously. d. Individual units produced to customer specifications. Quick Check
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What is a Processing Department? Any location in an organization where materials, labor or overhead are added to the product.
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Comparing Job-Order and Process Costing Finished Goods Cost of Goods Sold Work in Process Direct Materials Direct Labor Manufacturing Overhead
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Comparing Job-Order and Process Costing Finished Goods Cost of Goods Sold Direct Labor Manufacturing Overhead Jobs Costs are traced and applied to individual jobs in a job-order cost system. Direct Materials
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Comparing Job-Order and Process Costing Finished Goods Cost of Goods Sold Direct Labor Manufacturing Overhead Processing Department Costs are traced and applied to departments in a process cost system. Direct Materials
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T-Account and Journal Entry Views of Cost Flows For purposes of this example, assume there are two processing departments – Departments A and B. We will use T-accounts and journal entries.
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Process Cost Flows (in T-account form) Work in Process Department B Work in Process Department A Raw Materials Direct Materials Direct Materials Wages Payable Direct Labor Direct Labor Mftg. Overhead Applied Overhead Actual Overhead Applied Overhead Transferred to Department B Transferred From Department A
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Finished Goods Cost of Goods Sold Process Cost Flows (in T-account form) Work in Process Department B Transferred from Dept. A Cost of Goods Sold Cost of Goods Sold Direct Materials Direct Labor Applied Overhead Cost of Goods Manufactured Cost of Goods Manufactured
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Process Cost Flows (in T-account form) Work in Process Department A Raw Materials Direct Materials Direct Materials
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Process Cost Flows (in journal entry form) GENERAL JOURNAL Page 4 Date Description Post.
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