Chapter 4 - Process Costing - 3-1 MGT223 Systems Design:...

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Chapter Four MGT223 Systems Design: Process Costing Similarities Between Job-Order and Process Costing Both systems assign material, labour and overhead costs to products and they provide a mechanism for computing unit product cost. Both systems use the same manufacturing accounts, including Manufacturing Overhead, Raw Materials, Work in Process, and Finished Goods. The flow of costs through the manufacturing accounts Both systems assign material, labour and overhead costs to products and they provide a mechanism for computing unit product cost. Both systems use the same manufacturing accounts, including Manufacturing Overhead, Raw Materials, Work in Process, and Finished Goods. The flow of costs through the manufacturing accounts Differences Between Job-Order and Process Costing Process costing is used when Job-order costing is used when Process costing systems accumulate costs by department. Job-order costing systems accumulated costs by individual jobs. Process costing systems use department production reports to accumulate costs. Job-order costing systems use job cost sheets to accumulate costs. Process costing systems compute unit costs by department. Job-order costing systems compute unit costs by job on the job cost sheet. Process costing is used when Job -order costing is used when order costing is used when Process costing systems accumulate costs by department. Job -order costing systems accumulated costs by individual order costing systems accumulated costs by individual jobs. Process costing systems use department production reports to Process costing systems use department production reports to accumulate costs. Job -order costing systems use job cost order costing systems use job cost sheets to accumulate costs. sheets to accumulate costs. Process costing systems compute unit costs by department. Job -order costing systems compute unit costs by job on the order costing systems compute unit costs by job on the job cost sheet.
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Processing Departments Any unit in an organization where materials, labour or overhead are added to the product. The activities performed in a processing The activities performed in a processing department are department are performed uniformly on all units of production. Furthermore, the output of units of production. Furthermore, the output of a processing department must be a processing department must be Learning Objective 1 Record the flow of Record the flow of materials, labour, and materials, labour, and overhead through a overhead through a process cost system. process cost system. Comparing Job-Order and Process Costing Finished Goods Cost of Goods Sold Direct Materials Direct Labour Manufacturing Overhead
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Raw Materials Process Cost Flows (in T-account form) Work in Process Department B Work in Process Department A Direct Materials Direct Materials Direct Materials Process Cost Flows (in T-account form) Work in Process Department B Work in Process Department A Wages Payable Direct
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Chapter 4 - Process Costing - 3-1 MGT223 Systems Design:...

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