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

Comparing Job Order
and Process Operations

Job Order Systems

Custom orders

Heterogeneous products

Low production volume

High product flexibility

Low to medium standardization

Process Systems

Repetitive operations

Homogeneous products

High production volume

Low product flexibility

High standardization


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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 ORDER AND PROCESS OPERATIONSJob Order Systems Custom ordersHeterogeneous productsLow production volumeHigh product flexibilityLow to medium standardizationProcess Systems Repetitive operationsHomogeneous productsHigh production volume Low product flexibilityHigh standardizationA 1Direct MaterialsFinished GoodsCost for each jobDirect LaborFactory Overhead JobsThe goods in process account consists of individual jobs in a job order system.COMPARING JOB ORDER AND PROCESS OPERATIONSA 1Direct MaterialsFinished GoodsDirect LaborFactory Overhead ProcessesThe goods in process account consists of specific processes in a process cost system.Cost per unit processedCOMPARING JOB ORDER AND 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 ORDER AND 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 per equivalent unit=Product costs for the period Equivalent 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, material is 40% complete, but labor and overhead are only 25% complete. Stage 140% of Material25% of Labor and OverheadEQUIVALENT UNITSC 2Stage 225% of Labor and Overhead60% of MaterialStage 140% of Material25% of Labor and Overhead++==100% 50%EQUIVALENT UNITSC 2Stage 350% of Labor and OverheadThe process is now complete. Stage 225% of Labor and Overhead60% of MaterialStage 140% of Material25% of Labor and OverheadEQUIVALENT UNITSC 2Process Cost SummaryPROCESS COST SUMMARYHelps managers control their departments.Provides cost information for financial statements.Shows the flow of units and costs through work in process.Helps factory managers evaluate department manager performance.C 3TRENDS IN PROCESS OPERATIONSProcess designJust-in-time productionAutomationServicesCustomer orientationC 3Hybrid costing systems contain features of both job order and process operations.Job Order CostingProcess CostingHybrid CostingMaterial costs are accounted for using a job order system.Conversion costs are accounted for using a process system.HYBRID COSTING SYSTEMSA 2END OF CHAPTER 20

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