In this chapter, the learning objectives are: Discuss the uses of a process cost system and how it compares to a job order system, explain the flow of costs in a process cost system and the journal entries to assign manufacturing costs, Compute equivalent units.
Trang 1Chapter 21-1
Trang 5In contrast, job order cost accounting focuses on the individual job.
Trang 6Equivalent Units
Contemporary Developments
Contemporary Developments
Weighted-Just-in-Time Processing Activity-Based Costing
Comprehensive Example of Process Costing
Comprehensive Example of Process Costing
Physical Units Equivalent Units of Production
Unit Production Costs Cost Reconciliation Schedule
Production Cost Report Costing Systems – Final Comment
Trang 7Examples include the production of Cereal, Paint, and Soft Drinks
LO 1: Understand who uses process cost systems.
Trang 8Chapter
21-8
Comparison of Products Produced Under Process and Job Order Cost Systems
Comparison of Products Produced Under Process and Job Order Cost Systems
LO 1: Understand who uses process cost systems.
Trang 10Products are uniform or relatively homogeneous and produced in a large volume
LO 2: Explain the similarities and differences between job order cost
and process cost systems
Trang 12manufacturing overhead.
Costs are assigned to the same general ledger accounts in both costing systems.
However, the methods of assigning the costs
differ significantly.
Trang 14Job Order – total cost per job divided by units
in job Process – total manufacturing costs for the
period divided by units produced during the period
Trang 17Materials, labor, and manufacturing overhead added in both departments
LO 3: Explain the flow of costs in a process cost system.
Trang 19Debit Factory Labor for factory labor incurred
Trang 21cost system.
Trang 22Chapter
21-22
Assignment of Manufacturing Costs
Assignment of Manufacturing Costs Manufacturing Overhead Costs
Trang 23system.
Trang 26Parttime students take 60% of the classes of a regular student.
LO 5: Compute equivalents units.
Trang 28Beginning work in process not part of computation of equivalent units
LO 5: Compute equivalent units.
Trang 29Chapter
21-29
Equivalent Units – Refinements Weighted Average Method
Equivalent Units – Refinements Weighted Average Method
Trang 30Chapter
21-30
Equivalent Units – Refinements Weighted Average Method
Equivalent Units – Refinements Weighted Average Method
Example Continued
Mixing Department Raw Materials information:
All ingredients (materials) are added at the beginning of the mixing process
All units, regardless of degree of completion, are 100%
complete as to materials
Mixing Department Conversion Cost information:
Conversion costs refers to the sum of labor costs and overhead costs.
The units are 70% complete with respect to conversion costs.
LO 5: Compute equivalent units.
Trang 31Chapter
21-31
Equivalent Units – Refinements Weighted Average Method
Equivalent Units – Refinements Weighted Average Method
Example Continued
Computation of Mixing Department’s Equivalent Units
LO 5: Compute equivalent units.
Trang 33Chapter
21-33
The Mixing Department’s output during the period consists of 20,000 units completed and transferred out, and 5,000 units in ending work in process 60% complete as to materials and conversions costs. Beginning inventory is 1,000 units, 40% complete as to materials and conversion
Trang 37Total units to be accounted for
period + units in production at beginning of period
Total units accounted for
at end of period
LO 6: Explain the four steps necessary to prepare a production cost report.
Trang 39LO 6: Explain the four steps necessary to prepare a production cost report.
Trang 43LO 6: Explain the four steps necessary to prepare a production cost report.
Trang 47Objective: To eliminate all manufacturing inventories to make funds and space available for more productive purposes
Elements of JIT: Dependable suppliers; Multiskilled workforce; Total quality control system
Benefits of JIT: Reduced inventory; Enhanced product quality; Reduced rework and storage costs; Savings from improved flow of goods
LO 8: Explain justintime (JIT) processing.
Trang 48Chapter
21-48
Contemporary Developments JIT
LO8: Explain justintime (JIT) processing
Trang 49ABC System: allocates overhead to multiple activity cost pools and assigns cost pools to products using cost drivers that represent activities used
Assumptions of ABC: All overhead costs for an activity must have the same cost driver and should respond proportionally to changes in the activity of the cost
driver.
LO 9: Explain activitybased costing (ABC).
Trang 51$.75 + $2.50 = $3.25 per unit
Trang 52Chapter
21-52
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