tailieunhanh - Lecture Cost management: Measuring, monitoring, and motivating performance (3rd edition) – Chapter 6

Chapter 6 - Process costing. In this chapter students will be able to: Assign costs to mass-produced products using equivalent units to the production process, apply and compare FIFO and the weighted average methods in process costing, apply alternative methods in mass production for multiple departments,. | Chapter 6: Process Costing LO1 Assign costs to mass-produced products using equivalent units to the production process LO2 Apply and compare FIFO and the weighted average methods in process costing LO3 Apply alternative methods in mass production for multiple departments LO4 Describe how spoilage costs are handled in process costing LO5 Explain how process costing information affects managers’ incentives and decisions LO1 Assign costs to mass-produced products using equivalent units to the production process Introduction to Process Costing Process costing is a method of assigning product costs to mass-produced products. This is necessary to determine the cost of the units transferred out of a department, as well as the cost of the department’s ending WIP inventory. WIP Inventory - Units BI Units started EI Units completed & transferred out WIP Inventory - $ BI DM CC EI Units completed & transferred out This information is all known Unlike job costing, there are no job cost records to give us this information This slide is automated, except for the red and blue text. The first click brings in the red text and the second click brings in the blue text. Assigning Direct Materials and Conversion Costs In process costing all costs are first assigned to departments. Costs are then allocated from departments to individual product units. Conversion costs are direct labour and production overhead costs. Process Costing with all Units Completed Riker Co. had June costs for Department 1 as follows: DM $60,000 CC 30,000 $90,000 There were no units in beginning or ending WIP inventory in June. During June Department 1 started 45,000 units, and all 45,000 were completed in June. What is the manufacturing cost/unit? WIP Inventory - Units 0 45,000 0 45,000 WIP Inventory - $ 0 90,000 0 90,000 The manufacturing cost/unit is $90,000/45,000 units = $2/unit. Everything on this slide is automated except the text box computing the manufacturing cost/unit. Process Costing with Some Units | Chapter 6: Process Costing LO1 Assign costs to mass-produced products using equivalent units to the production process LO2 Apply and compare FIFO and the weighted average methods in process costing LO3 Apply alternative methods in mass production for multiple departments LO4 Describe how spoilage costs are handled in process costing LO5 Explain how process costing information affects managers’ incentives and decisions LO1 Assign costs to mass-produced products using equivalent units to the production process Introduction to Process Costing Process costing is a method of assigning product costs to mass-produced products. This is necessary to determine the cost of the units transferred out of a department, as well as the cost of the department’s ending WIP inventory. WIP Inventory - Units BI Units started EI Units completed & transferred out WIP Inventory - $ BI DM CC EI Units completed & transferred out This information is all known Unlike job costing, there are no job cost records .