Process costing - Instsy - PROCESS COSTING SYSTEMS PROCESS...

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Unformatted text preview: PROCESS COSTING SYSTEMS PROCESS COSTING SYSTEMS Process costing is used when many units of a single homogenous product are manufactured continuously. Since the units are identical, each unit of the product is assigned the same cost. Industries that use process costing include paper, petroleum, chemicals, and beverage. Comparison between Job-Order and Process Costing: Job-Order Costing : Many different jobs are manufactured during the period Costs are accumulated by individual jobs using a job cost sheet Unit costs are computed by job Process Costing : A large number of like units are manufactured in a continuous flow Costs are accumulated by departments using a department production report Unit costs are computed by departments The goal of both job-order costing systems and process costing systems is to accumulate total product costs and to assign those costs to each unit manufactured. Finished Goods Finished Goods Cost of Goods Sold Cost of Goods Sold Direct Labor Direct Labor Manufacturing Overhead Manufacturing Overhead Jobs Jobs Costs are traced and applied to individual jobs in a job-order cost system. Costs are traced and applied to individual jobs in a job-order cost system. Direct Materials Direct Materials Comparing Job-Order and Process Costing Finished Goods Finished Goods Cost of Goods Sold Cost of Goods Sold Direct Labor Direct Labor Manufacturing Overhead Manufacturing Overhead Processing Department Processing Department Costs are traced and applied to departments in a process cost system. Costs are traced and applied to departments in a process cost system. Direct Materials Direct Materials Comparing Job-Order and Process Costing Two half completed products are equivalent to one completed product. Two half completed products are equivalent to one completed product. So, 10,000 units 70% complete are equivalent to 7,000 complete units. So, 10,000 units 70% complete are equivalent to 7,000 complete units. Equivalent Units The Basic Idea Equivalent units = number of partially completed units x the percentage of completion of those units + completed units For the current period, Jones started 15,000 units and completed 10,000 units, leaving 5,000 units in process that are 30 percent complete. How many equivalent units of production did Jones have for the period? a. 10,000 b. 11,500 c. 13,500 d. 15,000 For the current period, Jones started 15,000 units and completed 10,000 units, leaving 5,000 units in process that are 30 percent complete. How many equivalent units of production did Jones have for the period? a. 10,000 b. 11,500 c. 13,500 d. 15,000 Quick Check For the current period, Jones started 15,000 units and completed 10,000 units, leaving 5,000 units in process that are 30 percent complete. How many equivalent units of production did Jones have for the period?...
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Process costing - Instsy - PROCESS COSTING SYSTEMS PROCESS...

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