AFM102January312011

AFM102January312011 - Click to edit Master subtitle style...

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Unformatted text preview: Click to edit Master subtitle style 5/11/11 Anthony Atkinson Introduction to Management Accounting January 31, 2011 Process Costing 11 5/11/11 Anthony Atkinson Important Messages Quiz 1 Friday February 4, 4:30PM 6:00PM Quiz location will be posted on ACE on Tuesday February 1, or Wednesday February 2 Quiz will cover chapters 9, 2, and 3 You are responsible for the material in the text and what was discussed in class Online Tests 22 5/11/11 Anthony Atkinson Key Topics in Todays Class Process costing Steps Equivalent units 33 5/11/11 Anthony Atkinson Process Costing Story A costing system used when all units are identical The focus is on computing the costs of the individual components of total costs The usual components Materials Cost Conversion Costs 44 5/11/11 Anthony Atkinson The Flow 55 Processing Units Started Units Completed Conversion Costs Materials Costs 5/11/11 Anthony Atkinson Process Costing in Practice The issue How to assign costs to partially completed units The solution The concept of equivalent units of production Equivalent units = physical units * percentage completion 66 5/11/11 Anthony Atkinson Example A company enters 1000 units into production During the year 800 were completed and transferred out The remaining work in process was 60% complete with respect to materials cost and 25% complete with respect to conversion costs 77 5/11/11 Anthony Atkinson Cost per Equivalent Unit 88 Materials Cost Conversion Costs Completed and Transferred Out- Physical Units 800 800- Percentage Completion 100% 100%- Equivalent Units 800 800 Ending Inventory- Physical Units 200 200- Percentage Completion 60% 25%- Equivalent Units 120 50 Total Equivalent Units 920 850 Total Cost $4,500 $12,600 Cost per Equivalent Unit $4.89 $14.82 5/11/11...
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AFM102January312011 - Click to edit Master subtitle style...

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