ch06tc - COST MANAGEMENT Accounting & Control...

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COST MANAGEMENT 1 Hansen▪Mowen▪Guan Chapter 6 Product and Service Costing: A Process Systems Approach
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2 Study Objectives 1. Describe the basic characteristics of process costing, including cost flows, journal entries, and the cost of production report. 2. Describe process costing for settings without beginning or ending work-in- process inventories. 3. Define equivalent units, and explain their role in process costing. 4. Prepare a departmental production report using the FIFO method. 5. Prepare a departmental production report using the weighted average method. 6. Prepare a departmental production report with transferred-in goods and changes in output measures. 7. Describe the basic features of operation costing. 8. Explain how spoilage is treated in a process-costing system.
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3 Process-Costing Systems: Basic Operational and Cost Concepts
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4 Process-Costing Systems: Basic Operational and Cost Concepts
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5 Process-Costing Systems: Basic Operational and Cost Concepts
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6 Process-Costing Systems: Basic Operational and Cost Concepts
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7 Process-Costing Systems: Basic Operational and Cost Concepts 1. Homogeneous units pass through a series of similar processes. 2. Each unit in each process receives a similar dose of manufacturing costs. 3. Manufacturing costs are accumulated by a process for a given period of time. 4. There is a work-in-process account for each process. Basic features of a process-costing system continued
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8 Process-Costing Systems: Basic Operational and Cost Concepts 1. Manufacturing cost flows and the associated journal entries are generally similar to job- order costing. 2. The departmental production report is the key document for tracking manufacturing activity and costs. 3. Unit costs are computed by dividing the departmental costs of the period by the output of the period. Basic features of a process-costing system (con’t)
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9 Process Costing With No Beginning or Ending Work-in-Process Inventories Services that are homogeneous and repetitively produced can use the process- costing approach. Examples: check processing in a bank, changing oil, dental cleaning, surgical procedures JIT manufacturing firms minimize inventories and strive to reduce work-in- process inventories to insignificant levels.
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10 Process Costing With Ending Work-in-Process Inventories
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11 Process Costing With Ending Work-in-Process Inventories
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12 Process Costing With Ending Work-in-Process Inventories Analysis of the flow of physical units Calculation of equivalent units Computation of unit cost Valuation of inventories (goods transferred out and ending work in process) Cost reconciliation Cost of Production Report
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13 Process Costing With Ending Work-in-Process Inventories Units Direct
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This note was uploaded on 02/08/2010 for the course ACTG 3000 taught by Professor C during the Spring '10 term at Oregon State.

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ch06tc - COST MANAGEMENT Accounting & Control...

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