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Process Costing

Process Costing. Purpose. assign material, labor, and manufacturing overhead costs to products and to provide a mechanism for computing unit product costs . Same accounts and same cost flow as Job Costing. Three Inventory Accounts. Raw Materials Work In Process Finished Goods

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Process Costing

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  1. Process Costing

  2. Purpose • assign material, labor, and manufacturing overhead costs to products and to provide a mechanism for computing unit product costs. • Same accounts and same cost flow as Job Costing

  3. Three Inventory Accounts • Raw Materials • Work In Process • Finished Goods • WIP and FG is easy with Job Cost. The job is either finished or not. • Use process costing if there is an amount for beginning and ending inventory.

  4. Unit Cost • Direct Materials • Direct Labor • Overhead • PRIME COSTS: DM, DL • CONVERSION COSTS: DL , OH

  5. Process vs Job • Process is one product, continuous basis • Costs are accumulated by department • Total unit cost is the total of each department’s unit cost.

  6. Production Data

  7. Cost Reconciliation Report • Summary information on Quantity Schedule • Three parts • Schedule of Equivalent Units for Materials and Conversion • Unit Cost Analysis • Cost Summary– what balance is in WIP and FG

  8. Exercises • 4-10 • 4-11 • 4-13 • 4-15 Quiz– on the problems, if there is no answer write it in

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