Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
7 Cards in this Set
- Front
- Back
Nature of Process Costing
Equivalent Units Comprehensive Example of Process Costing |
Nature of Process Costing
*Uses *Service Companies *Similarities & Differences *Process Cost Flow *Assigning Manufacturing Costs. Equivalent Units *Weighted-Average Method *Refinments *Production Cost Report Comprehensive Example of Process Costing *Physical Units *Equivalent Units of Production *Unit Production Costs *Cost Reconciliation Schedule *Production Cost Report *Costing Systems - Final Comments |
|
Uses
|
Examples pictured
Process Cost Systems are used to apply costs to similar products that are mass-produced in a continuous fashion. As opposed to Job Order Cost Systems which assign costs to a specific job. |
|
Service Companies
|
Service Companies that provide specific, non routine services will probably benefit from a Job Order Cost Systems. Those that perform routine, repetitive services will probably be better off with a Process Cost System.
|
|
Similarities & Differences between Job Order & Process Cost Systems
|
Similarities
*The manufacturing cost elements - Both systems track 3 manufacturing cost elements direct materials, direct labor, and manufacturing overhead. *The accumulation of the costs of materials, labor, and overhead - Both systems debit raw materials to Raw Materials Inventory, factory labor to Factory Labor, and manufacturing overhead costs to Manufacturing Overhead. *The flow of costs - Both systems accumulate all manufacturing costs, both systems then assign these costs to the same accounts in very different methods. Differences *The number of work in process accounts - Job Order Cost System uses only one work in process account, a Process Cost System uses multiple work in process accounts. *Documents used to track costs - Job Order Cost System charges costs to individual jobs and summarizes in a Job Cost Sheet. Process Cost System summarizes costs in a Production Cost Report for each department. *The point at which costs are totaled - Job Order Cost System totals costs when a job is completed, a Process Cost System totals costs after a predetermined period of time. *Unit cost computations - Job Order Cost System unit cost = total cost per job / units produced. Process Cost System unit cost = total manufacturing costs for period / units produced during period. |
|
Process Cost Flow
|
Assigning Manufacturing Costs - Process Cost System
|
|
Equivalent Units
|
Weighted-Average Method
Equivalent Units of Production = Units Completed & Transferred Out + Equivalent Units of ending work in Process(X*XX%complete) Refinments on Weighted-Average Method Equivalent Units of Production(materials) =units completed & transferred out(materials) + Equivalent Units of Ending Work in Process(materials) Equivalent Units of Production(conversion costs) =units completed & transferred out(conversion costs) + Equivalent Units of Ending Work in Process(conversion costs) Production Cost Report 1.Compute physical unit flow(account for total units) 2.Compute equivalent units of production 3.Compute unit production costs(unit cost = total cost / Equivalent Units) 4.Prepare a cost Reconciliation Schedule(Shows the total costs accounted for = total costs to be accounted for) |
|
Example of Process Costing
|
Step 1. Compute physical unit flow
Step 2. Compute equivalent units of production Step 3. Compute unit production costs Step 4. Prepare a cost Reconciliation Schedule |