1 / 66

Process Cost Accounting

Chapter 3. Process Cost Accounting. Keep your eye on the goal of Cost Accounting!. +. Direct Material. Direct Labor. What did the Finished Goods cost???. +. Manufacturing Overheads. =. Job order costing One (or more) work in process account. Costs are determined for each job.

betty_james
Télécharger la présentation

Process Cost Accounting

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Chapter3 Process Cost Accounting

  2. Keep your eye on the goal of Cost Accounting! + Direct Material Direct Labor What did the Finished Goods cost??? + Manufacturing Overheads =

  3. Job order costing One (or more) work in process account. Costs are determined for each job. Job cost sheet is the key document. Unit cost computed by costs added to job /units in the job. Process costing WIP account for each department. Costs are determined by department. Production cost report is the key document. Unit costs computed by total department costs/units produced. Differences Between Job-Order and Process Costing

  4. Process Costing DirectMaterials Direct labor costsmay be smallin comparison toother product costs in processcost systems. ManufacturingOverhead Dollar Amount DirectLabor Type of Product Cost

  5. Process Costing DirectMaterials Direct labor costsmay be smallin comparison toother product costs in processcost systems. Conversion Dollar Amount Type of Product Cost So, direct labor and manufacturing overhead are oftencombined into one cost called conversion costs.

  6. Comparing Job-Order and Process Costing Direct Materials FinishedGoods Work inProcess Direct Labor ManufacturingOverhead Cost of GoodsSold

  7. Comparing Job-Order and Process Costing Direct Labor Raw Materials ManufacturingOverhead Job A Dept 1 Dept 2 Dept 3

  8. Comparing Job-Order and Process Costing Direct Labor Raw Materials ManufacturingOverhead Job A Dept 1 Dept 2 Dept 3

  9. Comparing Job-Order and Process Costing Direct Labor Raw Materials ManufacturingOverhead Job A FinishedGoods Dept 1 Dept 2 Dept 3 Cost of GoodsSold Costs are traced andapplied to individualjobs in a job-ordercost system.

  10. Comparing Job-Order and Process Costing Direct Labor Raw Materials ManufacturingOverhead Job B Dept 1 Dept 2 Dept 3

  11. Comparing Job-Order and Process Costing Direct Labor Raw Materials ManufacturingOverhead Job B Dept 1 Dept 2 Dept 3

  12. Comparing Job-Order and Process Costing Direct Labor Raw Materials ManufacturingOverhead Job B FinishedGoods Dept 1 Dept 2 Dept 3 Cost of GoodsSold Costs are traced andapplied to individualjobs in a job-ordercost system.

  13. Comparing Job-Order and Process Costing Direct Labor Raw Materials ManufacturingOverhead Job C Dept 1 Dept 2 Dept 3

  14. Comparing Job-Order and Process Costing Direct Labor Raw Materials ManufacturingOverhead Job C Dept 1 Dept 2 Dept 3

  15. Comparing Job-Order and Process Costing Direct Labor Raw Materials ManufacturingOverhead Job C FinishedGoods Dept 1 Dept 2 Dept 3 Cost of GoodsSold Costs are traced andapplied to individualjobs in a job-ordercost system.

  16. Comparing Job-Order and Process Costing Costs are traced and applied to departments in a process cost system. Direct Materials FinishedGoods Processing Department Direct Labor ManufacturingOverhead Cost of GoodsSold

  17. Comparing Job-Order and Process Costing Direct Labor Raw Materials ManufacturingOverhead WIP Dept 1 WIP Dept 2 WIP Dept 3 FinishedGoods Cost of GoodsSold

  18. Comparing Job-Order and Process Costing Direct Labor Raw Materials ManufacturingOverhead WIP Dept 1 WIP Dept 2 WIP Dept 3 FinishedGoods Cost of GoodsSold

  19. Comparing Job-Order and Process Costing Direct Labor Raw Materials ManufacturingOverhead WIP Dept 1 WIP Dept 2 WIP Dept 3 FinishedGoods Cost of GoodsSold

  20. Raw Materials or other overheads (Purchase material) A/P or Cash WIP - Dept A WIP – Dept B Raw Materials (Transfer direct material) Manufacturing O/H Raw Materials (Transfer indirect material) Process Cost FlowsMaterials Journal Entry

  21. Process Cost Flows Work in Process Department A Raw Materials • DirectMaterials • DirectMaterials • Purchases • Indirect Materials Work in Process Department B Manufacturing Overhead Actual Applied • Direct Materials • OtherOverhead • Indirect Materials

  22. Factory Wages (Payroll) Cash WIP - Dept A WIP – Dept B Factory Wages (Transfer direct labor) Process Cost FlowsLabor Journal Entry Manufacturing O/H Factory Wages (Transfer indirect labor)

  23. Factory Wages (Payroll) Cash OR WIP - Dept A WIP – Dept B Manufacturing O/H Factory Wages (Transfer manufacturing labor)

  24. Process Cost Flows Work in Process Department A Factory Wages • Direct Materials • Direct Labor • Direct Labor • IndirectLabor Work in Process Department B Manufacturing Overhead Actual Applied • Direct Materials • OtherOverhead • Direct Labor • IndirectMaterials • IndirectLabor

  25. WIP - Dept A WIP – Dept B Manufacturing Overhead (Apply overheads) Process Cost FlowsOverhead Journal Entry

  26. Process Cost Flows Work in Process Department A Factory Wages • Direct Materials • Direct Labor • Direct Labor • IndirectLabor • AppliedOverhead Work in Process Department B Manufacturing Overhead Actual Applied • Direct Materials • OtherOverhead • OverheadApplied to Work inProcess • Direct Labor • IndirectMaterials • AppliedOverhead • IndirectLabor

  27. Process Cost Flows Next, transfer work from Dept. A to Dept. B. Then complete and sell them.

  28. Process Cost Flows Work in Process Department A Factory Wages • Direct Materials • Direct Labor • Direct Labor Transferred to Dept. B • AppliedOverhead • IndirectLabor Work in Process Department B Manufacturing Overhead Actual Applied • Direct Materials • OtherOverhead • OverheadApplied to Work inProcess • Direct Labor • AppliedOverhead • IndirectMaterials • Transferred from Dept. A • IndirectLabor

  29. Process Cost Flows Work in Process Department B Finished Goods • Direct Materials • Cost of Goods Manufactured • Cost of GoodsManufactured • Cost of GoodsSold • Direct Labor • AppliedOverhead • Transferred from Dept. A Cost of Goods Sold • Cost of GoodsSold

  30. Group Exercise Take 10 minutes to do BE3-1, 2, & 3 on page 130

  31. Group Exercise BE 3-1 Altex Manufacturing purchases $45,000 of raw materials on account, and it incurs $50,000 of factory labor costs. Journalize the two transactions on March 31 assuming the labor costs are not paid until April. BE 3-2 Supporting records show that (a) the Assembly Department used $24,000 of raw materials and $30,000 of the factory labor, and (b) the Finishing Department used the remainder. Journalize the assignment of the costs to the two departments on March 31. BE 3-3 Manufacturing overhead is assigned to departments on the basis of 200% of labor costs. Journalize the assignment of overhead to the Assembly and Finishing Departments.

  32. Try this problem: • Schiller Company has unit costs of $5 for materials and $15 for conversion costs. There are 4,200 units in ending work in process which are 25% complete as to conversion costs, and fully complete as to materials cost. How much is the total cost assignable to the ending work in process? • $36,750 • $84,000 • $21,000 • $15,750 $5 * 4,200 = $21,000 $15 * 4,200 * 25% = $15,750 $36,750

  33. Equivalent Units of Production Equivalent unitsare partially complete and are part of work in process inventory. Partially completed products are expressed in terms of a smaller number of fully completed units.

  34. Equivalent Units of Production Two half completed products areequivalentto one completed product. + = So, 10,000 units 70 percent completeare equivalent to 7,000 complete units.

  35. 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 b. 11,500 c. 13,500 d. 15,000

  36. 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 b. 11,500 c. 13,500 d. 15,000 10,000 units + (5,000 units × 0.30) = 11,500 equivalent units

  37. Calculating and Using Equivalent Units of Production To calculate the cost perequivalent unit for the period: Costs for the periodEquivalent units of productionfor the period Cost perequivalent unit =

  38. Equivalent Units Now assume that Jones incurred $27,600 in production costs for the 11,500 equivalent units of production. What was Jones’ cost per equivalent unit for the period? a. $1.84 b. $2.40 c. $2.76 d. $2.90 $27,600 ÷ 11,500 equivalent units = $2.40 per equivalent unit

  39. Equivalent Units of Production –Weighted Average Method The weighted average method . . . • Makes no distinction between work done in prior and current period. • Blends together units and costs from prior period and current period. Let’s see how this works!

  40. Weighted Average Example Smith Company reported the following activity in Department A for the month of June: @100% @100% @30% @60% Calculate the Equivalent Units of Production.

  41. Weighted Average Example Smith Company reported the following activity in Department A for the month of June: @100% @100% @30% @60% Equivalent Units of Production.

  42. Weighted Average Example Equivalent units of production always equals: Units completed and transferred out + Equivalent units remaining in work in process Smith Company reported the following activity in Department A for the month of June: @100% @100% @30% @60% Equivalent Units of Production.

  43. Equivalent Units Exercise 3-6 Do (a) only

  44. Equivalent Units Exercise 3-6 E3-6 The Cutting Department of Thakur Manufacturing has the following production and cost data for July. Materials are entered at the beginning of the process. Conversion costs are incurred uniformly during the process. (a)  Determine the equivalent units of production for (1) materials and (2) conversion costs.

  45. ProductionReport Production Cost Report Shows the flowof units and coststhrough work inprocess Provides costinformation forfinancial statements Becomes thejob cost sheetin job costing Helps managerscontrol theirdepartments

  46. Production Report Section 1 Section 2 Section 3 Production Report • A quantity schedule showing the flow of units and the computation of equivalent units.

  47. Production Report Section 1 Section 2 Section 3 Production Report • A computation ofcost per equivalent unit.

  48. Production Report Section 1 Section 2 Section 3 Production Report • A reconciliation of cost flows for the period, including: • Total cost for units completed and transferred from the processing department. • Total cost for partially completed units remaining in work in process.

  49. Production Report Example • Double Diamond Skis uses process costing to determine unit costs in its Milling Department. • Double Diamond uses the weighted average cost procedure. • Using the following information for the month of May, let’s prepare a production report for the Milling Department.

  50. Production Report Milling Cost Work in process, May 1: 200 units Materials: 50% complete. $ 3,000 Conversion: 30% complete. 1,000 Units started into production in May: 5,000 Units completed and transferred out in May: 4,800 Costs added to production in May Materials cost $ 74,000 Conversion cost 70,000 Work in process, May 31: 400 units Materials 40% complete. Conversion 25% complete.

More Related