Module 2: Cost Accounting Part 2 Flashcards
COGM or cost of jobs completed formual
Direct material used + Direct labor + overhead applied + beg WIP - end WIP
Computation of total labor cost of direct labor in ending inventory using Weighted Average Method applied
3 Steps:
- Compute equivalent units of production
- Compute unit cost of production
- Apply unit cost to the equivalent units in ending inventory
Normal spoilage & abnormal spoilage
Normal cost is a neccesary cost of production and is a product cost (inventoriable cost). Abnormal spoilage is a period cost.
Under FIFO method: the equivalent units of production are composed of three parts:
- Beg WIP x % to be completed
- Units completed - Beg WIP
- Ending WIP x % completed
Under Weighted avg method: the equivalent units of production are composed of:
- Units completed
2. Ending WIP x % completed
WIP transfer to Finished Goods
Cost of goods transferred to finished goods is the total manufacturing cost adjusted for the changes in the WIP account
Overhead over applied/under-applied
Overhead applied occurs when more overhead was applied than actually occurred. Under head applied occurs when less over head was applied than actually occured.
Equivalent unit cost for FIFO
Current cost only/Equivalent units
Equivalent unit cost for Weighted Avg
Beg Cost + Current Cost/Equivalent units
Weighted avg vs FIFO calculated equivalent units methods
The same equivalent units are produced when their is no beginning inventory. Major between difference between the two methods is the consideration of beginning inventory amounts for FIFO method.
Process costing system
a method of allocating production costs to products and services by averaging the cost over the total units produced.
Job costing system
Job costing is used in the production of tailor made or unique goods
Process costing system
Production is composed is composed of mass produced homogenous units
