Process Costing
Submitted by: Submitted by desiderata
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Pages: 8
Category: Business and Industry
Date Submitted: 11/12/2011 12:48 AM
Process Costing
November 20, 2010
Process Costing
November 20, 2010
Process Cost Flows
One Production Department
Work in Process
Direct materials Direct labor Applied manufacturing f t i overhead Cost of goods completed and transferred to finished fi i h d goods d
Finished Goods
Cost of Goods Sold
Cost of goods sold during current period
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Process Cost Flows
Two Sequential Production Departments
Work in Process – Dept. A
Direct materials Direct labor Applied manufacturing f t i overhead Cost of goods completed in Dept. A and transferred to Dept. B Direct materials Direct labor Applied manufacturing overhead
Work in Process – Dept. B
Cost of goods completed and transferred to finished fi i h d goods d
Finished Goods
Cost of goods completed and transferred to finished goods Cost of goods sold during current period
Cost of Goods Sold
3
FEU - Makati
1
Process Costing
November 20, 2010
Key Concept: Equivalent Units
Expresses partially completed products as a smaller number of fully completed products
o Costs are accumulated for a period of time for products in work in process inventory products in work‐in‐process inventory o Products in work‐in‐process inventory at the beginning and end of the period are only partially complete
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Illustration of Equivalent Units
Two one-half completed products are equivalent to one completed product.
+
=
l
Ten thousand units 70 percent complete are equivalent to 7,000 complete units.
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Equivalent Units
For the current period, Jones started 15,000 units and completed 10,000 units, leaving 5,000 units in process 30 percent complete. How many equivalent units of production did Jones have for the period? A. 10,000 A 10 000 B. 11,500 10,000 units + (5,000 units x 30%) = 11,500 equivalent units C. 13,500 D. 15,000
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FEU - Makati
2
Process Costing
November 20, 2010
Calculating and Using the Equivalent Units of Production...
