chapter%2060 - Chapter 6 Process Costing 1 Accounting 2102...

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September 7, 2011 Accounting 2102 1 Chapter 6 Process Costing
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Why Choose Process Costing ? determined by the operating environment homogeneous products that pass through a series of processes where they receive similar amounts of costs what are processes ? an activity that brings the product closer to completion . . . takes place in a department where product costs are added (each department has a WIP account) sequential processes September 7, 2011 Accounting 2102 2
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There are issues we need to address before moving on . . . Define Work in Process . . . The presence of WIP presents two issues: 1. How much cost has already been incurred on the units in beginning WIP? 1. How much cost should be assigned to the units in ending WIP? September 7, 2011 Accounting 2102 3
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Addressing Beginning WIP Weighted Average Method (what we will use) Beginning WIP is pooled with current period activity Units are valued by averaging costs from the prior period and costs from the current period FIFO Method Beginning WIP is separated from current period activity Units in Beginning WIP are valued by combining the unit cost
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