Costing Systems Flashcards
Process costing
Production moves from one process to the next until final completion occurs
The completed production of the last department is transferred to the finished goods inventory
Batch costing
A group of similar units which remain the same through production are treated as a cost unit
Process accounts
DR inputs to the process
CR outputs from the process
Unit costs
Total input costs
/
Output units
Normal loss unit cost
Total input costs - scrap value of normal loss
/
Expected output
Abnormal losses
Actual loss > normal loss = abnormal loss
Actual loss < normal loss = abnormal gain
Valued at the same rate as good output
Equivalent units
Converts partially completed units into full units
Conversion costs
Cost of converting material into finished product includes direct labour, direct expense and production overhead
How to convert units
Draw up process account
Create workings table
Calculate costs per equivalent unit
Show costs in process account and balance
