Process Costing

Question 1

What industries is it used in?
What is there no attempt to do?
What is cost of order assumed to be?

Answer 1

Industries where end products are more or less identical
Allocate manufacturing costs to specific order
Average cost of all units produced during the period

Question 2

Basic features
What do they go from to and through?
What is it unable to identify and why?

Answer 2

From raw material to finished product through a number of distinct changes
One unit of output because I put continual added

Question 3

What 3 things is knowing what products cost important for?

Answer 3

Valuation of inventory
Pricing decisions
Product profitability analysis

Question 4

Problems
What can you not?
What occurs through a process? Through what? What can they be split into?
How do we obtain accurate costs?
What’s often found at start and end of process?

Answer 4

Identify particular unit of output
Losses, evaporation and chemical function, split into scrap sold for portion or discarded
Measure production at varying stages
Partially complete units WIP

Question 5

Calculation for calculating cost of output, AL and AG

Answer 5

Total cost of production-scarp value of normal loss / expected output in units of material