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Process Cost System - that provide services such as mail...

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Process Cost System Some companies have homogeneous or very similar products that are not made to order and are  produced in large volumes. They continually process their product, moving it from one function to the  next until it is completed. In these companies, the manufacturing costs incurred are allocated to the  proper functions or departments within the factory process rather than to specific products.  Examples of products that companies produce continuously are cereal, bread, candy, steel,  automotive parts, chips, and computers. Companies that refine oil or bottle drinks and companies 
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Unformatted text preview: that provide services such as mail sorting and catalog order are also examples of continuous, homogeneous processing. To illustrate, assume the Best Chips company manufactures potato chips. The company has three work areas they call preparation, baking, and packaging. The preparation area includes cutting potatoes and adding flavorings. Conveyor belts are used to move the product from one function to the next. In this company, raw materials are added in two of the functions: the preparation function and the packaging function. Labor and overhead are incurred in each function....
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  • Spring '09
  • staff
  • similar products, Best Chips company, flavorings. Conveyor belts, packaging function. Labor, homogeneous processing

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