Chapter 6 PPT - Cost Accounting Foundations and Evolutions...

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Chapter 6 Process Costing Cost Accounting Foundations and Evolutions Kinney, Prather, Raiborn
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Learning Objectives (1 of 2) Contrast process costing and job order costing Explain why equivalent units of production are used in process costing Calculate equivalent units of production, unit costs, and inventory values using weighted average method of process costing
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Learning Objectives (2 of 2) Compute equivalent units of production, unit costs, and inventory values using FIFO method of process costing Explain how standard costs are used in a process costing system Explain why a company would use a hybrid costing system
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Job Order vs. Process Costing Job Order Assign costs to job and then to units within the job Process Costing Using an averaging technique, assign costs directly to units produced during the period
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Process Costing Averaging technique to assign costs to units produced Unit Cost = Production Costs Production Quantity
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Process Costing The Numerator - Production Costs Accumulate costs by department Accumulate costs by product Direct material from material requisitions Direct labor from time sheets and wage rates Overhead Actual Predetermined application rates Unit Cost = Production Costs Production Quantity
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Process Costing Production Costs Direct material from material requisitions Direct labor from time sheets and wage rates Overhead Actual Predetermined application rates
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Process Costing The Denominator - Units Produced Complicated by work in process Units started last period and completed this period Units started this period and not completed Convert partially completed units to equivalent whole units Unit Cost = Production Costs Production Quantity
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Chapter 6 PPT - Cost Accounting Foundations and Evolutions...

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