Kế toán, kiểm toán - Chapter 20: Process cost accounting

Chapter 20PROCESS COST ACCOUNTING Used for production of small, identical, low-cost items. Mass produced in automated continuous production process. Costs cannot be directly traced to each unit of product.PROCESS OPERATIONSC 1COMPARING JOB ORDERAND PROCESS OPERATIONSJob Order SystemsCustom ordersHeterogeneous productsLow production volumeHigh product flexibilityLow to medium standardizationProcess SystemsRepetitive operationsHomogeneous productsHigh production volume Low product flexibilityHigh standardizationA 1DirectMaterialsFinishedGoodsCost for each jobDirectLaborFactoryOverhead JobsThe goods in process account consists of individual jobs in a job order system.COMPARING JOB ORDERAND PROCESS OPERATIONSA 1DirectMaterialsFinishedGoodsDirectLaborFactoryOverhead ProcessesThe goods in process account consists of specific processes in a process cost system.Costper unit processedCOMPARING JOB ORDERAND PROCESS OPERATIONSA 1Same objective: to determine the cost of productsSame inventory accounts: raw materials, work in process, and finished goodsSame overhead assignment method:predetermined rate times actual activityCOMPARING JOB ORDERAND PROCESS OPERATIONSA 1EQUIVALENT UNITS OF PRODUCTIONCosts are accumulated for a period of time by process or department. Unit cost is computed by dividing the accumulated costs by the number of equivalent units produced in the period.C 2EQUIVALENT UNITS OF PRODUCTION Equivalent units is a concept expressing a number of partially completed units as a smaller number of fully completed units.Two one-half full pitchers are equivalent to one full pitcher.+=So, 4,000 units that are 60 percent complete would total 2,400 equivalent units. C 2For the current period, PencilCo 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 PencilCo have for the period? 10,000 units + (5,000 units × .30)  = 11,500 equivalent unitsC 2EQUIVALENT UNITS OF PRODUCTIONCost perequivalent unit=Product costs for the periodEquivalent units for the periodCOST PER EQUIVALENT UNITC 2$27,600 ÷ 11,500 equivalent units = $2.40 per equivalent unitIf PencilCo incurred $27,600 in production costs during the period, what is the cost per equivalent unit for the period?Equivalent units may be different for material, labor, and overhead, given that costs may be added at different stages of a process.At completion of Stage 1 of the process, materialis 40% complete, but labor and overhead are only25% complete. Stage 140% ofMaterial25% ofLabor andOverheadEQUIVALENT UNITSC 2Stage 225% ofLabor andOverhead60% ofMaterialStage 140% ofMaterial25% ofLabor andOverhead++==100% 50%EQUIVALENT UNITSC 2Stage 350% ofLabor andOverheadThe process is now complete. Stage 225% ofLabor andOverhead60% ofMaterialStage 140% ofMaterial25% ofLabor andOverheadEQUIVALENT UNITSC 2ProcessCostSummaryPROCESS COST SUMMARYHelps managerscontrol theirdepartments.Provides costinformation forfinancial statements.Shows the flowof units and coststhrough work inprocess.Helps factorymanagers evaluatedepartment managerperformance.C 3TRENDS IN PROCESS OPERATIONSProcess designJust-in-time productionAutomationServicesCustomer orientationC 3Hybrid costing systems contain featuresof both job order and process operations.Job OrderCostingProcessCostingHybrid CostingMaterial costs areaccounted for usinga job order system.Conversion costs areaccounted for usinga process system.HYBRID COSTING SYSTEMSA 2END OF CHAPTER 20