-
8/8/2019 Ch 6 Process Costing - Usman Gaba
1/17
PROCESS COSTING
Cost of Production Report
Lost Unit Calculations
Chapter 6
-
8/8/2019 Ch 6 Process Costing - Usman Gaba
2/17
Characteristics of Process Costing1. A cost of production report
is used to collect ,
summarize, and compute total and unit costs.2. Production is
accumulated and reported by departments.3. Costs are posted to
departmental work in process
accounts.4. Production in process at the end of the period is
restatedin terms of completed units.
5. Total cost charged to a department is divided by
totalcomputed production of the department in order todetermine a
unit cost for a specific period.
6. Costs of completed units of a department are transferredto
the next processing department in order to arrive atthe total costs
of the finished products during a period.At the same time, costs
are assigned to units still inprocess.
-
8/8/2019 Ch 6 Process Costing - Usman Gaba
3/17
Procedures of Process Costing1. Accumulate materials, labor and
factory
overhead costs by departments.
2. Determine a unit cost for each department.
3. Transfer costs from one department to thenext and to finished
goods.
4. Assign costs to the inventory of work still inprocess.
-
8/8/2019 Ch 6 Process Costing - Usman Gaba
4/17
Product flow Sequential Product Flow
Parallel Product Flow
Selective Product Flow
-
8/8/2019 Ch 6 Process Costing - Usman Gaba
5/17
Procedures for Materials CostsWork in process dept. 1 24,500
Materials 24,500
Work in process dept. 2 10,500
Materials 10,500
-
8/8/2019 Ch 6 Process Costing - Usman Gaba
6/17
Procedures for Labor CostsWork in process dept. 1 29,140
Work in process dept. 2 37,310
Work in process dept. 3 32,400
Payroll payable 98,850
-
8/8/2019 Ch 6 Process Costing - Usman Gaba
7/17
Procedures for Factory Overhead CostsWork in process dept. 1
28,200
Work in process dept. 2 32,800
Work in process dept. 3 19,800
Applied Factory Overhead 80,800
-
8/8/2019 Ch 6 Process Costing - Usman Gaba
8/17
Cost of Production Report Departmental cost of production report
shows all
costs chargeable to a department. A cost of production report
shows:
1. Total and unit costs transferred to it from a preceding
department;2. Materials, labor and factory overhead added by
the
department;3. Unit costs added by the department;4. Total and
unit costs accumulated to the end of
operations in the department;
5. The cost of beginning and ending work in processinventories;
and6. Cost transferred to a succeeding department or to a
finished goods storeroom.
-
8/8/2019 Ch 6 Process Costing - Usman Gaba
9/17
Cost of Production Report
Department 1
-
8/8/2019 Ch 6 Process Costing - Usman Gaba
10/17
-
8/8/2019 Ch 6 Process Costing - Usman Gaba
11/17
Work in process testing dept. 77,400
Work in process blending dept. 77,400
-
8/8/2019 Ch 6 Process Costing - Usman Gaba
12/17
Cost of Production Report
Department 2
-
8/8/2019 Ch 6 Process Costing - Usman Gaba
13/17
-
8/8/2019 Ch 6 Process Costing - Usman Gaba
14/17
Work in process terminal dept. 140,400
Work in process testing dept. 140,400
-
8/8/2019 Ch 6 Process Costing - Usman Gaba
15/17
Cost of Production Report
Department 3
-
8/8/2019 Ch 6 Process Costing - Usman Gaba
16/17
-
8/8/2019 Ch 6 Process Costing - Usman Gaba
17/17
Finished Goods 176,750
Work in process terminal dept. 176,750
