chapter%203%20-%20ACCT%202332%20-%20Spring%202010

chapter%203%20-%20ACCT%202332%20-%20Spring%202010 - CHAPTER...

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CHAPTER 3 CHAPTER 3 Process Costing Process Costing
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Difference Between Job-Order and Difference Between Job-Order and Process Costing Systems Process Costing Systems Job-Order Costing Each unique product or batch is considered a job Manufacturing costs are traced to specific jobs Process Costing Used when homogenous items are produced Total costs are divided by total units produced
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Job-Order and Process Costing Job-Order and Process Costing Examples Examples Companies who use job order: Cray Computer Corporation, Boeing Company, Chris Craft Boat Company, construction, Legal Services, or Repair Services tailored to client. Companies who use process costing: Pepsico Incorporated, Starbucks Corporation, Revlon Consumer Products Corporation, Goodyear Tire and Rubber Company
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Product and Cost Flows Product and Cost Flows Product Flows Through Departments A product typically passes through multiple departments Conversion Costs: Labor and Overhead.
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Physical flow of units Physical flow of units The units are homogenous and so the inventory can be presented in units and not only in cost. The flow of units is calculated exactly in the same way of calculating the cost flow (see reconciliation-of-units figure in the next slide).
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Reconciliation of Units Reconciliation of Units
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Reconciliation of units: Example 1 Reconciliation of units: Example 1 Example 1: WIP inventory on 10/1 8,000 tons Units started in October ? Units completed in October 18,000 tons WIP inventory 10/31 1,000 tons
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Example 2: Example 2: WIP inventory on 11/1 WIP inventory on 11/1 200,000 lbs 200,000 lbs Units started in November Units started in November 950,000 lbs 950,000 lbs Units completed in November Units completed in November ? WIP inventory 11/30 WIP inventory 11/30 300,000 lbs 300,000 lbs 1 2 3 4 25% 25% 25% 25% 1. 300,000 lbs 2. 1,050,000 lbs 3. 850,000 lbs 4. 200,000 lbs
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Reconciliation of Costs Reconciliation of Costs
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Reconciliation of costs: Example Reconciliation of costs: Example Example: WIP inventory cost on 11/1 $7,200 Material and labor used during November $243,480 Overhead during November $91,120 Cost of units completed in November $336,000 WIP inventory cost 11/30 ?
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This note was uploaded on 05/06/2010 for the course ACCT 2332 taught by Professor Howard during the Spring '10 term at University of Texas-Tyler.

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chapter%203%20-%20ACCT%202332%20-%20Spring%202010 - CHAPTER...

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