tailieunhanh - Lecture Management accounting: An Australian perspective: Chapter 5 - Kim Langfield-Smith

Chapter 5 introduce the process costing and operation costing. Learning objectives of this chapter: Process costing at Spritz, Process costing with work in process inventories, process costing using the weighted average method, process costing using the FIFO method, process costing and spoilage, operation costing, other issues in process costing. | Chapter 5 Process costing and operation costing Product costing systems Job costing and process costing are two extremes of the continuum of conventional product costing systems Job costing systems accumulate the costs of each job Process costing systems accumulate the cost of each process, then average these costs across all units produced Many businesses use a combination of job and process costing—hybrid costing Process costing Used by businesses that mass-produce one product or a small range of almost identical products Involves a number of processes that are performed repetitively Used by oil refineries, food processors, manufactures of tobacco, chemicals and paper Also used by producers of repetitive services— routine processing of cheques in banks and delivery of standard letters in Australia Post continued Process costing Two main steps Estimate the cost of the production process Calculate the average cost per unit by dividing the cost of the process by the number of . | Chapter 5 Process costing and operation costing Product costing systems Job costing and process costing are two extremes of the continuum of conventional product costing systems Job costing systems accumulate the costs of each job Process costing systems accumulate the cost of each process, then average these costs across all units produced Many businesses use a combination of job and process costing—hybrid costing Process costing Used by businesses that mass-produce one product or a small range of almost identical products Involves a number of processes that are performed repetitively Used by oil refineries, food processors, manufactures of tobacco, chemicals and paper Also used by producers of repetitive services— routine processing of cheques in banks and delivery of standard letters in Australia Post continued Process costing Two main steps Estimate the cost of the production process Calculate the average cost per unit by dividing the cost of the process by the number of units produced Process costing can be used in situations where there is no opening or closing WIP inventory (see Chapter 4) More complex process costing takes place where there is WIP inventory Process costing with WIP WIP inventory Product is not complete at the beginning or end of the month Production costs will relate to Units started in the previous period and completed in current period (beginning WIP) Units started and completed in the period Units that are incomplete at the end of the period (ending WIP) continued Process costing with WIP Partially-completed goods at the beginning or end of the period change the way we allocate production costs Equivalent units The amount of production inputs that have been applied to the physical units in production Physical units are all units currently in production whether complete or incomplete WIP inventory needs to be converted to equivalent units continued Process costing with WIP Labour and overhead are incurred at different