SAFHA MALİYET SİSTEMİ

1. Prof.Dr.Ahmet KIZIL
SAFHA MALİYET SİSTEMİ
PROCESS COSTING

2. Learning Objectives
 Contrast process costing and job order
costing
 Explain why equivalent units of production
are used in process costing
 Calculate equivalent units of production
using weighted average and FIFO methods
 Compute unit costs and inventory values
using weighted average and FIFO methods

3. Job order costing Process costing
COLA
Costing Systems

4. Process Costing
Averaging technique to assign
costs to units produced
Unit Cost = Production Costs
Production Quantity

5. Process Costing
 Production Costs
 Costs by department
 Costs by product
 Direct material from material requisitions
 Direct labor from time sheets and wage rates
 Overhead
 Actual
 Predetermined application rates

6. Materials Requisition Form
Date ___________________ No. ###
Job No. _________________
Authorized by ___________
Department _______________
Issued by _________________
Inspected by _______________
Item Part Unit of Quantity Quantity Unit Total
No. No. Descrip. Measure Required Issued Cost Cost
Received by _____________

7. Employee Time Sheet
Employee Name _______________
Employee No. _______________
Department _______________
Date
_______
Start Stop Total
Type of Work Job No. Time Time Day Hours
Employee Signature Supervisor’s Signature

8. Process Costing
 Units Produced
 Complicated by work in process
 Units started last period and completed this period
 Units started this period and not completed
 Convert partially completed units to equivalent
whole units

9. Equivalent Units
 Approximation of the number of whole units
of output that could have been produced from
the actual effort expended
 Includes units
 started last period and finished this period
 started and finished this period
 started this period and not finished

10. Process Costing Methods
 Weighted average method
 combine
 beginning work in process
 current period production
 FIFO method
 separate
 beginning work in process
 current period production

11. Process Costing Methods
Weighted Average
Beginning WIP 100%
Started and finished 100%
Ending WIP % completed
FIFO
Beginning WIP % completed
Started and finished 100%
Ending WIP % completed
THE
DIFFERENCE

12. Process Costing
 Direct material
 added at beginning, during, and/or end of
process
 Direct labor
 added throughout the process
 Overhead
 added throughout the process
 based on direct labor
 based on other, multiple cost drivers

13. Cost of Production Report
Name of Department
for the period ---
Production Data:
Units to account for (are given to the process)
Units accounted for (are obtained end of
the period)
Cost Data:
Costs
Cost per EU
Cost Assignment:
Transferred Out
Ending Work In Process Inventory

14. Step 1 - Units to Account For
Beginning WIP 0
Started 1 000
Units to account for 1 000

15. Step 2 - Units Accounted For
Finished and transferred 900
Closing (Ending)WIP 100
Units accounted for 1000
Beginning WIP 0
Started 1000
Units to account for 1000
must
be
equal

16. The work in progress had reached to
the following stages of completion:
%
Materials 100
Labor 60
Overheads 60

17. Step 3 - Compute Equivalent Units
Raw Material Labor&Overhead
Beginning WIP inventory 0 0
Started and completed 900 900
Closing WIP inventory 100* 60*
Equivalent units 1 000 960
* ending units * % complete
Material 100 * 100% = 100
Labor and Overhead 100 * 60% = 60
Weighted Average Method

18. Costs in the period:
YTL
Materials 8 000
Labor 6 720
Overheads 2 790
TOTAL 17 510

19. Step 4 - Costs to Account For
Costs per equivalent unit (eu)
Materials : 8 000 YTL / 1,000 eu = 8.00 YTL per eu
Labor : 6 720 YTL / 960 eu = 7.00 YTL per eu
Overheads: 2 790 YTL / 960 eu = 2.90 YTL per eu
-------
Total 17.90 YTL
per completed unit
Weighted Average Method

20. The value of transfer of completed goods
= Started and completed units * Total Costs per
equivalent unit
= 900*17.90 = 16 110 YTL

21. The Value of Closing work in process
The Value of Closing Stock = Opening stocks of
work in process + this period costs - Value of
transfer of completed goods
= 0 + 17 510 – (900*17.90)
= 17 510 – 16 110
= 1 400 YTL

22. The Other Account method of the Value of Closing
work in process :
Materials 100 eu x 8.00 YTL per eu = 800 YTL
Labor 60 eu x 7.00 YTL per eu = 420 YTL
Overheads 60 eu x 2.90 YTL per eu = 180 YTL
Total 1 400 YTL

23. Step 1 - Units to Account For
Beginning WIP 100
Started 1 000
Units to account for 1 000

24. Step 2 - Units Accounted For
Finished and transferred 900
Closing WIP 200
Units accounted for 1100
Beginning WIP 100
Started 1000
Units to account for 1100
must
be
equal

25. the opening work in progress of 100 units
was completed as follows:
%
Materials 80
Labor 60
Overheads 60
the closing work in progress of 200 units was
completed as follows:
%
Materials 100
Labor 50
Overheads 50

26. Step 3 - Compute Equivalent Units
Raw Material Labor&Overhead
Beginning WIP inventory 80 60*
Started and completed 900 900
Closing WIP inventory 200 100*
•Beginning and ending units * % complete
• beginning ending
Material 100 * 80% = 80 200 * 100% = 200
Labor and Overhead 100 * 60% = 60 200 * 50% = 100

27. Step 3 - Compute Equivalent Units
for weighted average method
Raw Material Labor&Overhead
Beginning WIP inventory
Started and completed 900 900
Closing WIP inventory 200 100*
Equivalent units 1100 1 000
* Beginning and ending units * % complete
beginning closing
Material 100 * 80% = 80 200 * 100% = 200
Labor and Overhead 100 * 60% = 60 200 * 50% = 100

28. Step 3 - Compute Equivalent Units
for fifo method
Raw Material Labor&Overhead
Beginning WIP inventory 80 60*
Started and completed 900 900
Closing WIP inventory 200 100*
Equivalent units 1 020 940
* Beginning and ending units * % complete
beginning ending
Material 100 * 80% = 80 200 * 100% = 200
Labor and Overhead 100 * 60% = 60 200 * 50% = 100

29. Costs of the opening work in
progress of 100 units
YTL
Materials 400
Labor 300
Overheads 200 900
Costs in the period:
YTL
Materials 8 000
Labor 6 720
Overheads 2 790 17 510

30. Step 4 - Costs to Account For
Costs per equivalent unit (eu)
Materials : 8 400 YTL / 1 100 eu = 7.63 YTL per eu
Labor : 7 020 YTL / 1 000 eu = 7.02 YTL per eu
Overheads: 2 990 YTL / 1 000 eu = 2.99 YTL per eu
-------
Total 17.64 YTL
per completed unit
Weighted Average Method

31. Step 4 - Costs to Account For
Evaluation Statement
Materials Labor Overheads Total
YTL YTL YTL YTL
__________________________________
Completed units 6 873 6 318 2 691 15 882
Closing WIP 1 527 702 299 2 528
__________________________________
8 400 7 020 2 990 18 410
Weighted Average Method

32. The value of transfer of completed goods
= Started and completed units * Total Costs per
equivalent unit
= 900*17.64 = 15 882 YTL

33. The Value of Closing work in process
The Value of Closing WIP Stock = Opening
stocks of work in process + this period costs -
Value of transfer of completed goods
= 900 + 17 510 – (900*17.64)
= 900 + 17 510 – 15 882
= 2 528 YTL
Weighted Average Method

34. The Other Account method of the Value of Closing
work in process :
Materials 200 eu x 7.63 YTL per eu = 1 527 YTL
Labor 100 eu x 7.02 YTL per eu = 702 YTL
Overheads 100 eu x 2.99 YTL per eu = 299 YTL
Total 2 528 YTL
Weighted Average Method

35. Step 4 - Costs to Account For
Costs per equivalent unit (eu)
Materials : 8 000 YTL / 1 020 eu = 7.84 YTL per eu
Labor : 6 720 YTL / 940 eu = 7.15 YTL per eu
Overheads: 2 790 YTL / 940 eu = 2.97 YTL per eu
-------
Total 17.96 YTL
per completed unit
FIFO Method

36. Step 4 - Costs to Account For
Evaluation Statement
Materials Labor Overheads Total
YTL YTL YTL YTL
__________________________________
Beginning WIP 400 300 200 900
To finish Beg.WIP 156 * 285 119 560
Completed units 6 274 * 5 720 2 376 14 370
Closing WIP 1 568 715 297 2 580
__________________________________
8 398 7 020 2 992 18 410
FIFO Method

37. Step 4 - Costs to Account For
*
Materials Labor Overheads Total
YTL YTL YTL YTL
__________________________________
To finish Beg.WIP 156 285 119 560
100*0.20*7.84 100*0.40*7.15 100*0.40*2.97
Completed units 6 274 5 720 2 376 14 370
800* 1 *7.84 800* 1 *7.15 800* 1 *2.97
__________________________________
FIFO Method

38. The value of transfer of completed goods
= Beginning WIP + Costs of finished Beg.WIP +
Completed units costs
= 900 + 560 + (800*17.96)
= 900 + 560 + 14 370
= 15 830 YTL

39. The Value of Closing work in process
The Value of Closing WIP Stock = Opening
stocks of work in process + this period costs -
Value of transfer of completed goods
= 900 + 17 510 – (900+560+14370)
= 900 + 17 510 – 15 830
= 2 580 YTL
FIFO Method

40. The Other Account method of the Value of Closing
work in process :
Materials 200 eu x 7.84 YTL per eu = 1 568 YTL
Labor 100 eu x 7.15 YTL per eu = 715 YTL
Overheads 100 eu x 2.97 YTL per eu = 297 YTL
Total 2 580 YTL
FIFO Method

41. Hybrid Costing Systems
 Characteristics of job order and process costing
systems
 Various Product Lines
 different direct material - job order costing
 same process - process costing
 Hybrid costing used for furniture, clothing, jam