CHh.18 Flashcards
2 costing systems
- job costing system
- process costing system
the cost object is a unit or multiple of a distinct product or service which we call a job. each job generally uses different amounts of resources
job costing system
the cost object is masses of identical or similar units of a product or service. therefore process costing calculates an average production cost for all units produced
process costing system
the main difference between process costing and job costing is the extent of
averaging used to compute the unit costs of products or services
description - no beginning or ending work in process inventories
objective - assign all costs that are incurred during the period to finished goods
case 1
description - no beginning work in process inventory and some ending work in process inventory
objective - assign all costs that are incurred during the period to finished goods and ending wip
case 2
an approximated amount of output units that converts the quantity of input used into the amount of equivalent completed output units that could have been produced with that quanitty of input
equivalent units
equivalent units are calculated
seperately for each input (direct materials and conversion cost)
description - both beginning and ending work in process inventories are present
objective - assign all costs that are incurred during the period to finished goods and ending wip
case 3
2 methods of case 3
- weighted average method
- FIFO method
both rely on calculating equivalent units
____ systems use process costing to account for the conversion costs and job costing for the material and customizable components
hybrid systems
