chapter 3- process costing Flashcards
process cost systems
used to apply costs to similar products that are mass produced continuously
similarities between job order and process cost systems
- manufacturing cost elements
- accumulation of the cost of materials, labor, and overhead.
- the flow of costs
differences between job order and process cost systems
- The number of work in process accounts used.
- Documents used to track costs.
- The point at which costs are totaled.
- Unit cost computations.
unit cost calculation
total manufacturing costs for the period / units produces during the period
equivalent units of production
weighted average method
units completed and transferred out + equivalent units of ending work in process
conversion costs
the sum of labor costs and overhead costs
equivalent units of production meterials
units completed and transferred out-materials+equivalent units of ending WIP - materials
equivalent units of production conversion costs
units completed and transferred out-conversion costs + equivalent units of WIP- conversion costs
steps to prepare production cost report
- Compute the physical unit flow.
- Compute the equivalent units of production.
- Compute unit production costs.
- Prepare a cost reconciliation schedule.
physical units
The actual units to be accounted for during a period, irrespective of any work performed.
To keep track of these units, it is necessary to add the units started (or transferred) into production during the period to the units in process at the beginning of the period.
unit production costs
When equivalent units of production are different for materials and conversion costs, three unit costs are computed: (1) materials, (2) conversion, and (3) total manufacturing.
to compute: total materials cost/ equivalent units
Total manufacturing cost per unit
unit materials cost + unit conversion cost
