chap17 - David Franz, 2012 1 CHAPTER 17 - PROCESS COSTING...

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1 © David Franz, 2012 CHAPTER 17 - PROCESS COSTING I. Process Costing A. Characteristics 1. Used for mass production of like units (e.g. clothes, paint, toys) [versus unique items in job costing]. Process Costing is used when the cost versus benefits do not support collecting costs for individual items (job costing). 2. Costs accumulated by process rather than by job in job costing. 3. Unit cost = total manufacturing costs for the month quantity manufactured 4. Process costing uses an average unit cost rather than the actual cost of one unit used in job costing. B. Inventory Accounting and Journal Entries 1. Journal entries are similar to job costing except there are several WIP accounts (e.g. for each department: WIP-Machining, WIP-Assembly, WIP-Painting) see Exhibit 17-3, p. 614. 2. Key accounting problem - how to allocate total costs of work completed (Finished Goods) versus WIP at the end of the period (month) since in mass production there are always some units partially assembled on the production line.
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C. Steps in calculating process costs
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This note was uploaded on 09/29/2011 for the course ACCT 305 taught by Professor Franz during the Spring '07 term at S.F. State.

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chap17 - David Franz, 2012 1 CHAPTER 17 - PROCESS COSTING...

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