Cost Accounting Foundations and Evolutions
اسلاید 1: Chapter 6Process CostingCost AccountingFoundations and EvolutionsKinney, Prather, Raiborn
اسلاید 2: Learning Objectives (1 of 3)Contrast process costing and job order costingExplain why equivalent units of production are used in process costingCalculate equivalent units of production, unit costs, and inventory values using weighted average method of process costing
اسلاید 3: Learning Objectives (2 of 3)Compute equivalent units of production, unit costs, and inventory values using FIFO method of process costingExplain how standard costs are used in a process costing systemExplain why a company would use a hybrid costing system
اسلاید 4: Learning Objectives (3 of 3)(Appendix 1) Explain the alternative methods used to calculate equivalent units of production(Appendix 2) Describe how normal and abnormal spoilage losses are treated in an EUP schedule
اسلاید 5: Job Order vs. Process CostingJob OrderAssign costs to job and then to units within the jobProcess CostingUsing an averaging technique, assign costs directly to units produced during the period
اسلاید 6: Process CostingThe Numerator - Production CostsAccumulate costs by departmentAccumulate costs by productDirect material from material requisitionsDirect labor from time sheets and wage ratesOverhead Actual Predetermined application ratesUnit Cost =Production Costs Production Quantity
اسلاید 7: Process CostingProduction CostsDirect material from material requisitionsDirect labor from time sheets and wage ratesOverhead Actual Predetermined application rates
اسلاید 8: Process CostingThe Denominator - Units ProducedComplicated by work in processUnits started last period and completed this periodUnits started this period and not completedConvert partially completed units to equivalent whole unitsUnit Cost =Production Costs Production Quantity
اسلاید 9: Equivalent Units of Production (EUP)Approximation of the number of whole units of output that could have been produced from the actual effort expendedIncludes unitsstarted last period and finished this periodstarted and finished this periodstarted this period and not finishedAssumes FIFO physical flow through the production department
اسلاید 10: Two Process Costing MethodsWeighted Average Methodcombinesbeginning work in process current period productionFIFO Methodseparatesbeginning work in processcurrent period production
اسلاید 11: Process Costing MethodsWeighted AverageBeginning WIP 100%Started and finished 100%Ending WIP % completedFIFOBeginning WIP % completedStarted and finished100%Ending WIP% completedTHEDIFFERENCE
اسلاید 12: Process CostingDirect materialadded at the beginning, during, and/or at the end of processDirect laboradded throughout the processOverheadadded throughout the processbased on direct laborbased on other, multiple cost drivers
اسلاید 13: Process Costing StepsUnits to account forUnits accounted forDetermine equivalent unitsCosts to account forCompute cost per equivalent unitAssign costs to inventoriesUnitsCosts
اسلاید 14: Cost of Production ReportName of Departmentfor the period ---Production Data:Units to account forUnits accounted forEUP for each costCost Data:Costs to account forCost per EUPCost Assignment:Transferred OutEnding Work In Process Inventory123456
اسلاید 15: Process Costing with Standard CostsSimplify costing processEliminate periodic cost recomputationsSame as FIFO computationsemphasize current period costs and productionInventories are stated at standard costVariances are calculated for material, labor, and overhead
اسلاید 16: Process Costing with Standard CostsAssigns a “normal” production cost to the equivalent units of output each periodAllows managers to quickly recognize and investigate significant deviations from expected production costsAllows benchmarking with other firms
اسلاید 17: Hybrid Costing SystemsCharacteristics of job order and process costing systemsVarious product linesdifferent direct material - job order costingdifferent direct labor – job order costingsame process - process costingHybrid costing used for furniture, clothing, jam
اسلاید 18: NormalSpoilageAbnormalSpoilageContinuousLossDiscreteLossLoss in all ending inventory and transferred out units on an EUP basisPeriod expensein EUPPeriod expensein EUPAppendix 2 - SpoilageLoss in all units past inspection point in ending inventory and transferred out on an EUP basis
اسلاید 19: QuestionsWhat is an equivalent unit of production?What is the difference between the weighted average and FIFO methods of calculating equivalent units?Why would a company use a hybrid costing system?
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