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Chapter 16 notes Kimmel

Accounting: Tools for Business Decision Making

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Chapter 16 LECTURE OUTLINE Skip pages 805 – 811. We are covering FIFO only – in appendix to chapter. A. Uses of Process Cost Systems. 1. Process cost systems are used to apply costs to similar products that are mass-produced in a continuous fashion. 2. Once the production begins, it continues until the finished product emerges, and each unit of finished product is like every other unit. B. Similarities and Differences Between Job Order Cost and Process Cost Systems. 1. In a process cost system, costs are tracked through a series of connected manufacturing processes or departments, rather than by individual jobs as in a job order cost system. 2. Process cost systems are used when a large volume of relatively homogeneous products are produced. 3. Job order cost and process cost systems are similar in three ways: a. Both costing systems track the same manufacturing cost elements— direct materials, direct labor, and manufacturing overhead.
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Teaching TIp b. Costs are accumulated in the same manufacturing
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