Lecture_4_Chapter4

Lecture_4_Chapter4 - Process Costing& Intro to ABC...

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Unformatted text preview: Process Costing & Intro. to ABC Lecture #4 (Chapter 4) Dr. Minlei Ye 1 Learning Objectives • Record the cost flow in a process costing system. • Weighted-average method: – Compute the equivalent units of production (EUP) – Compute the costs per EUP – Assign cost to units • Activity-based costing (ABC) concepts 2 Job-Order costing & Process costing • Job-Order costing – Different products/jobs – Accumulate costs by jobs – Job cost sheet – Unit cost calculated by job • Process costing – Single product – Accumulated by process – Department production report 3 Comparing Job-Order and Process Costing Finished Goods Cost of Goods Sold Work in Process Direct Materials Direct Labour Manufacturing Overhead 4 Comparing Job-Order and Process Costing Finished Goods Cost of Goods Sold Direct Labour Manufacturing Overhead Jobs Costs are traced and applied to individual jobs in a job-order cost system. Direct Materials 5 Comparing Job-Order and Process Costing Finished Goods Cost of Goods Sold Direct Labour Manufacturing Overhead Processing Department Costs are traced and applied to departments in a process cost system. Direct Materials 6 T-Account and Journal Entry Views of Cost Flows For purposes of this example, assume there are two processing departments – Departments A and B. We will use T-accounts and journal entries. 7 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 8 Process Cost Flows (in T-account form) Work in Process Department B Work in Process Department A Wages Payable • Direct Materials • Direct Materials • Direct Labour • Direct Labour • Direct Labour 9 Process Cost Flows (in T-account form) Work in Process Department B Work in Process Department A Manufacturing Overhead • Overhead Applied to Work in Process • Applied Overhead • Applied Overhead • Direct Labour • Direct Materials • Direct Labour • Direct Materials • Actual Overhead 10 Process Cost Flows (in T-account form) Work in Process Department B Work in Process Department A • Direct Materials • Direct Labour • Applied Overhead • Direct Materials • Direct Labour • Applied Overhead Transferred to Dept. B • Transferred from Dept. A 11 Finished Goods Process Cost Flows (in T-account form) Work in Process Department B • Cost of Goods Manufactured • Direct Materials • Direct Labour • Applied Overhead • Transferred from Dept. A • Cost of Goods Manufactured 12 Finished Goods Cost of Goods Sold Process Cost Flows (in journal entry form) Work in Process Department B • Cost of Goods Manufactured • Direct Materials • Direct Labour • Applied Overhead • Transferred from Dept. A • Cost of Goods Sold • Cost of Goods Sold • Cost of Goods Manufactured 13 Accumulating Costs • Assign costs to each process (department) during period • Determine unit costs for each component • Cost of completed units – Sum of costs per unit for All process through which product passes 14 Process costing assigns costs to both fully and...
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Lecture_4_Chapter4 - Process Costing& Intro to ABC...

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