1. A process cost system is used to apply costs to mass-produced, homogeneous products made through continuous production processes. Examples include cereal, steel, and oil refining.
2. In a process cost system, costs flow through multiple work in process accounts as products move between connected manufacturing departments or processes. Journal entries are made to assign costs to each work in process account.
3. A production cost report is prepared for each department and involves four steps: computing physical unit flows, equivalent units of production, unit production costs, and a cost reconciliation schedule. This allows costs to be tracked and understood for each manufacturing process.
This document discusses inventory classification and costing methods. It begins by explaining how companies classify inventory into raw materials, work in process, and finished goods. The document then discusses how companies determine inventory quantities by taking physical counts and considering goods in transit. It also explains different inventory cost flow methods like FIFO, LIFO, and average costing and their effects on financial statements. Finally, it discusses how inventory errors can affect income statements and balance sheets in both the current and subsequent periods.
Managerial accounting provides economic and financial information for internal use by managers. It differs from financial accounting which produces reports for external users. Managerial accounting helps with planning, directing, and controlling a business. It involves tracking costs including direct materials, direct labor, and manufacturing overhead. These costs are either product costs, which are included in inventory, or period costs which are expenses. Managerial accounting also computes cost of goods manufactured using total manufacturing costs for the period plus beginning work in process, less ending work in process.
The document compares periodic and perpetual inventory systems. A periodic system only counts inventory at the end of a period, while a perpetual system continuously updates inventory records. The periodic system requires a physical count and has less control, while the perpetual system has ongoing costs but provides continuous, accurate inventory and cost of goods sold information needed for management decisions. Overall, the perpetual system is preferred as it avoids inventory counts and provides more timely data.
The document provides information about adjusting entries for Micro Computer Services for August 2017. It states that accrued revenues of $500 were earned but not recorded for services performed. It also states that accrued expenses of $300 were incurred for unpaid utilities. The adjusting entries would debit Accounts Receivable and credit Service Revenue for $500 to record accrued revenues. For accrued expenses, the adjusting entries would debit Utilities Expense and credit Accounts Payable for $300 to record accrued expenses.
The document discusses the steps in preparing a worksheet. It begins by explaining how to prepare a trial balance on the worksheet by transferring account balances from the ledger. The second step is to enter adjusting entries in the adjustments columns. The third step is to complete the adjusted trial balance columns by totaling debits and credits. The fourth step extends adjusted account balances to the appropriate financial statement columns. The final step is to compute net income or loss by totaling the columns and determining the difference between revenues and expenses.
This document provides an overview of Chapter 6 from the textbook Financial Accounting IFRS 3rd Edition. The chapter covers several key topics related to inventories:
1. It outlines six learning objectives for the chapter, which include how to classify inventory, apply inventory cost flow methods, understand the effects of cost flow assumptions, apply the lower-of-cost-or-net realizable value principle, address inventory errors, and present and analyze inventory.
2. It provides examples and illustrations of inventory costing methods like specific identification, FIFO, average cost, and LIFO. It also discusses how inventory errors impact financial statements.
3. Appendices at the end cover additional topics like applying cost flow
This document discusses inventory classification and costing methods. It begins by explaining how companies classify inventory into raw materials, work in process, and finished goods. The document then discusses how companies determine inventory quantities by taking physical counts and considering goods in transit. It also explains different inventory cost flow methods like FIFO, LIFO, and average costing and their effects on financial statements. Finally, it discusses how inventory errors can affect income statements and balance sheets in both the current and subsequent periods.
Managerial accounting provides economic and financial information for internal use by managers. It differs from financial accounting which produces reports for external users. Managerial accounting helps with planning, directing, and controlling a business. It involves tracking costs including direct materials, direct labor, and manufacturing overhead. These costs are either product costs, which are included in inventory, or period costs which are expenses. Managerial accounting also computes cost of goods manufactured using total manufacturing costs for the period plus beginning work in process, less ending work in process.
The document compares periodic and perpetual inventory systems. A periodic system only counts inventory at the end of a period, while a perpetual system continuously updates inventory records. The periodic system requires a physical count and has less control, while the perpetual system has ongoing costs but provides continuous, accurate inventory and cost of goods sold information needed for management decisions. Overall, the perpetual system is preferred as it avoids inventory counts and provides more timely data.
The document provides information about adjusting entries for Micro Computer Services for August 2017. It states that accrued revenues of $500 were earned but not recorded for services performed. It also states that accrued expenses of $300 were incurred for unpaid utilities. The adjusting entries would debit Accounts Receivable and credit Service Revenue for $500 to record accrued revenues. For accrued expenses, the adjusting entries would debit Utilities Expense and credit Accounts Payable for $300 to record accrued expenses.
The document discusses the steps in preparing a worksheet. It begins by explaining how to prepare a trial balance on the worksheet by transferring account balances from the ledger. The second step is to enter adjusting entries in the adjustments columns. The third step is to complete the adjusted trial balance columns by totaling debits and credits. The fourth step extends adjusted account balances to the appropriate financial statement columns. The final step is to compute net income or loss by totaling the columns and determining the difference between revenues and expenses.
This document provides an overview of Chapter 6 from the textbook Financial Accounting IFRS 3rd Edition. The chapter covers several key topics related to inventories:
1. It outlines six learning objectives for the chapter, which include how to classify inventory, apply inventory cost flow methods, understand the effects of cost flow assumptions, apply the lower-of-cost-or-net realizable value principle, address inventory errors, and present and analyze inventory.
2. It provides examples and illustrations of inventory costing methods like specific identification, FIFO, average cost, and LIFO. It also discusses how inventory errors impact financial statements.
3. Appendices at the end cover additional topics like applying cost flow
1) The document discusses accounting for merchandising operations under a perpetual inventory system. It describes how purchases, sales, returns and allowances are recorded.
2) Purchases are recorded by debiting inventory and crediting accounts payable. Sales are recorded by crediting sales revenue and debiting cost of goods sold and inventory.
3) Returns and allowances are contra accounts that are credited to offset original debit entries for purchases or sales. This summary highlights the key accounting entries for a merchandising business.
The document discusses capacity planning and measurement. It defines capacity as the maximum output that can be achieved in a given time period. Capacity is measured in terms of output units or input resources required. The document outlines different types of capacity, including design capacity (maximum output under ideal conditions) and effective capacity (maximum realistic output under normal conditions). It provides examples of how to calculate utilization, efficiency, break-even point, and determines optimal capacity based on cost-volume analysis. The key aspects of capacity planning, measurement, and analysis are summarized.
This document discusses standard costs and variances. It begins by describing what standard costs are and how they are set. It then discusses how to calculate different types of variances, including direct materials, direct labor, and manufacturing overhead variances. It provides formulas for calculating total, price, and quantity variances for each of these cost elements. It also discusses what may cause variances and who is responsible for addressing different types of variances.
This document discusses key concepts related to analyzing financial statements including horizontal and vertical analysis, ratio analysis, and sustainable income. It defines horizontal analysis as evaluating financial statement data over time to determine increases and decreases. Vertical analysis expresses each financial statement item as a percentage of a base amount. Ratio analysis is used to analyze a company's performance using ratios that measure liquidity, profitability, and solvency. Sustainable income differs from actual net income by excluding unusual revenues, expenses, gains, and losses to determine a company's most likely future income level.
This document discusses inventory models, including the basic economic order quantity (EOQ) model and quantity discounts. It begins by defining inventory and explaining the importance of inventory control. It then covers the basic EOQ model assumptions and formulas for calculating optimal order quantity, expected number of orders per year, time between orders, total cost, and average inventory value. The document also discusses using a reorder point and provides an example calculation. Finally, it introduces quantity discount models, where purchasing larger quantities results in decreased unit costs.
This document is from a PowerPoint presentation on managing supply and demand in a supply chain. It discusses how predictable variability in demand can increase costs and decrease responsiveness. It presents two approaches to address this issue: managing supply through capacity, inventory and subcontracting, and managing demand using short-term price discounts and promotions. The document provides examples of how promotions at different times can impact inventory levels, costs and profits. It concludes that the optimal timing of a promotion depends on factors like forward buying behavior and product margins.
DEMAND MANAGEMENT AND CUSTOMER SERVICEAshish Hande
This chapter discusses demand management, customer service, and order fulfillment. It covers forecasting methods like traditional forecasting and collaborative planning, forecasting, and replenishment. Key aspects of order fulfillment discussed include order management, order cycles, and order placement trends. The chapter also examines customer service and the relationship between logistics and marketing. Effective demand management, order fulfillment, and customer service are important for supply chain management.
Introduction to Managerial Accounting and Cost ConceptsViệt Hoàng Dương
The document provides an overview of managerial accounting concepts including the four functions of management, planning and control cycles, classifications of manufacturing costs, and distinctions between product and period costs. It defines direct materials, direct labor, and manufacturing overhead as the three basic manufacturing cost categories. Product costs include direct materials, direct labor, and manufacturing overhead, and are recorded in inventory accounts. Period costs are expensed on the income statement as incurred rather than included in inventory.
The document also discusses the schedule of cost of goods manufactured, which calculates manufacturing costs to determine the cost of goods produced during a period. It distinguishes between variable costs, which change with activity levels, and fixed costs, which remain constant with changes in activity.
Here are the key steps to solving this problem:
1. Calculate 10% of accounts receivable to estimate uncollectible accounts:
- 10% of $30,000 is 0.1 * $30,000 = $3,000
2. Add the existing balance in the allowance account:
- $2,000 existing balance
3. The total estimated uncollectible accounts is $3,000 + $2,000 = $5,000
Therefore, the adjusting entry is:
Bad Debt Expense 5,000
Allowance for Doubtful Accounts 5,000
1. The document discusses process costing, which is used for mass-produced, homogeneous products like cereal, paint, and oil refining. It tracks costs through multiple connected manufacturing processes rather than by individual jobs.
2. A process cost system assigns manufacturing costs of materials, labor, and overhead to work-in-process accounts for each department through journal entries. Completed units are then transferred to the next department or finished goods.
3. Equivalent units are computed to determine the average level of completion for work-in-process and finished units, which is needed to calculate cost per equivalent unit for a production cost report. The weighted-average method is most widely used.
1) The document provides an overview of chapter 1 of the textbook "Financial Accounting" which covers accounting basics. It defines accounting, identifies its users and uses, and explains key concepts like ethics, standards, assumptions and the accounting equation.
2) The accounting equation states that assets must equal liabilities plus equity. It defines the components of the equation as assets being resources owned, liabilities being debts or obligations, and equity being the ownership claim.
3) Business transactions impact the accounting equation by increasing or decreasing at least two elements as a transaction has a dual effect.
The above slides brought to you by Welingkar’s Distance Learning Division are on Operation Research Techniques in Transportation. Suitable operation research techniques are used to derive optimum solution to a distribution problem. North-West rule is explained in the presentation and PERT and CPM is used for timely completion of a project.
For more such innovative content on management studies, join WeSchool PGDM-DLP Program: http://bit.ly/DistMang
Join us on Facebook: http://www.facebook.com/welearnindia
Follow us on Twitter: https://twitter.com/WeLearnIndia
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The document discusses various accounting concepts related to adjusting accounts and preparing financial statements. It includes questions about the differences between cash basis and accrual basis accounting, examples of accounts that require adjustment such as prepaid expenses, depreciation, accrued revenues and expenses, and unearned revenues. It also provides examples of adjusting journal entries companies would make.
The document provides an overview of accounting information systems. It discusses the basic concepts of an AIS, including that an AIS collects and processes transaction data and communicates financial information. It also describes the nature and purpose of subsidiary ledgers, which are used to track individual account balances like accounts receivable. Additionally, the document explains how to record transactions in special journals, including sales, purchases, cash receipts and payments journals, in order to organize similar transactions and reduce general journal entries. It compares AIS under GAAP and IFRS.
Fin man 5 break even point and leverage analysisJimmi Sinton
This document provides an overview and examples of break-even analysis for a financial management class. It defines break-even analysis as a method to determine the sales volume needed for total revenue to equal total costs. It also discusses how to calculate break-even points in units and dollars, how to set target earnings levels, and provides homework on calculating break-even points under different cost and price scenarios.
This document discusses stockholders' equity, which is increased in two ways: paid-in capital from investor contributions for stock, and retained earnings from corporate profits. It describes different types of stock like preferred stock and common stock. Preferred stock typically has priority over common stock in dividends and asset distribution. The document also discusses stock splits which increase outstanding shares while decreasing par value, treasury stock which is reacquired shares recorded at cost, and accounting treatment of stocks by issuers and investors.
The document discusses the statement of cash flows, including its usefulness, format, and how to prepare it using the indirect method. It explains that the statement of cash flows provides information about a company's cash receipts and payments during a period and is separated into operating, investing, and financing activities. It also discusses how to classify transactions and adjust net income to reconcile it to net cash provided by operating activities. Key steps include adding back non-cash expenses, and analyzing changes in current assets and liabilities.
This document provides an overview of accounting for receivables. It defines different types of receivables like accounts receivable and notes receivable. It explains how companies recognize, value, and dispose of both accounts receivable and notes receivable. Specific topics covered include recognizing revenue on credit sales, estimating and recording allowance for doubtful accounts, accounting for uncollectible accounts, determining maturity dates and interest on notes, and presenting receivables on financial statements. The document aims to help students understand the key accounting concepts and entries related to receivables.
This document discusses accounting for cash and receivables. It defines cash and cash equivalents, and explains how to report restricted cash and bank overdrafts. Accounts receivable and notes receivable are defined as the main types of receivables. Recognition and valuation of accounts receivable are explained, including issues like trade discounts, cash discounts, and allowance for doubtful accounts. Estimating bad debts through percentage of sales and receivables approaches is covered.
ch21 process costing managerial accountingReema975562
1. The document discusses process costing, which is used to apply costs to mass-produced, homogeneous products like cereal, paint, steel, oil, and soft drinks. It tracks costs through interconnected manufacturing processes.
2. It explains how process costing assigns manufacturing costs of materials, labor, and overhead to work in process accounts through journal entries, and how finished units are transferred out.
3. Computing equivalent units is discussed, which considers degree of completion by weighting units transferred and in ending work in process, to determine average costs per unit. The weighted-average method is most widely used.
1. The document describes the job order costing system used to track costs in a manufacturing environment. It discusses accumulating raw material, labor, and overhead costs and assigning them to work in process and finished goods using a job cost sheet.
2. It explains how a predetermined overhead rate is established and used to apply manufacturing overhead costs based on direct labor costs. Completed jobs are transferred from work in process to finished goods inventory at total cost.
3. When jobs are sold, the cost is transferred from finished goods inventory to cost of goods sold, and revenue is recorded. The document provides examples of journal entries for accumulating, assigning, and transferring costs through the various stages.
1) The document discusses accounting for merchandising operations under a perpetual inventory system. It describes how purchases, sales, returns and allowances are recorded.
2) Purchases are recorded by debiting inventory and crediting accounts payable. Sales are recorded by crediting sales revenue and debiting cost of goods sold and inventory.
3) Returns and allowances are contra accounts that are credited to offset original debit entries for purchases or sales. This summary highlights the key accounting entries for a merchandising business.
The document discusses capacity planning and measurement. It defines capacity as the maximum output that can be achieved in a given time period. Capacity is measured in terms of output units or input resources required. The document outlines different types of capacity, including design capacity (maximum output under ideal conditions) and effective capacity (maximum realistic output under normal conditions). It provides examples of how to calculate utilization, efficiency, break-even point, and determines optimal capacity based on cost-volume analysis. The key aspects of capacity planning, measurement, and analysis are summarized.
This document discusses standard costs and variances. It begins by describing what standard costs are and how they are set. It then discusses how to calculate different types of variances, including direct materials, direct labor, and manufacturing overhead variances. It provides formulas for calculating total, price, and quantity variances for each of these cost elements. It also discusses what may cause variances and who is responsible for addressing different types of variances.
This document discusses key concepts related to analyzing financial statements including horizontal and vertical analysis, ratio analysis, and sustainable income. It defines horizontal analysis as evaluating financial statement data over time to determine increases and decreases. Vertical analysis expresses each financial statement item as a percentage of a base amount. Ratio analysis is used to analyze a company's performance using ratios that measure liquidity, profitability, and solvency. Sustainable income differs from actual net income by excluding unusual revenues, expenses, gains, and losses to determine a company's most likely future income level.
This document discusses inventory models, including the basic economic order quantity (EOQ) model and quantity discounts. It begins by defining inventory and explaining the importance of inventory control. It then covers the basic EOQ model assumptions and formulas for calculating optimal order quantity, expected number of orders per year, time between orders, total cost, and average inventory value. The document also discusses using a reorder point and provides an example calculation. Finally, it introduces quantity discount models, where purchasing larger quantities results in decreased unit costs.
This document is from a PowerPoint presentation on managing supply and demand in a supply chain. It discusses how predictable variability in demand can increase costs and decrease responsiveness. It presents two approaches to address this issue: managing supply through capacity, inventory and subcontracting, and managing demand using short-term price discounts and promotions. The document provides examples of how promotions at different times can impact inventory levels, costs and profits. It concludes that the optimal timing of a promotion depends on factors like forward buying behavior and product margins.
DEMAND MANAGEMENT AND CUSTOMER SERVICEAshish Hande
This chapter discusses demand management, customer service, and order fulfillment. It covers forecasting methods like traditional forecasting and collaborative planning, forecasting, and replenishment. Key aspects of order fulfillment discussed include order management, order cycles, and order placement trends. The chapter also examines customer service and the relationship between logistics and marketing. Effective demand management, order fulfillment, and customer service are important for supply chain management.
Introduction to Managerial Accounting and Cost ConceptsViệt Hoàng Dương
The document provides an overview of managerial accounting concepts including the four functions of management, planning and control cycles, classifications of manufacturing costs, and distinctions between product and period costs. It defines direct materials, direct labor, and manufacturing overhead as the three basic manufacturing cost categories. Product costs include direct materials, direct labor, and manufacturing overhead, and are recorded in inventory accounts. Period costs are expensed on the income statement as incurred rather than included in inventory.
The document also discusses the schedule of cost of goods manufactured, which calculates manufacturing costs to determine the cost of goods produced during a period. It distinguishes between variable costs, which change with activity levels, and fixed costs, which remain constant with changes in activity.
Here are the key steps to solving this problem:
1. Calculate 10% of accounts receivable to estimate uncollectible accounts:
- 10% of $30,000 is 0.1 * $30,000 = $3,000
2. Add the existing balance in the allowance account:
- $2,000 existing balance
3. The total estimated uncollectible accounts is $3,000 + $2,000 = $5,000
Therefore, the adjusting entry is:
Bad Debt Expense 5,000
Allowance for Doubtful Accounts 5,000
1. The document discusses process costing, which is used for mass-produced, homogeneous products like cereal, paint, and oil refining. It tracks costs through multiple connected manufacturing processes rather than by individual jobs.
2. A process cost system assigns manufacturing costs of materials, labor, and overhead to work-in-process accounts for each department through journal entries. Completed units are then transferred to the next department or finished goods.
3. Equivalent units are computed to determine the average level of completion for work-in-process and finished units, which is needed to calculate cost per equivalent unit for a production cost report. The weighted-average method is most widely used.
1) The document provides an overview of chapter 1 of the textbook "Financial Accounting" which covers accounting basics. It defines accounting, identifies its users and uses, and explains key concepts like ethics, standards, assumptions and the accounting equation.
2) The accounting equation states that assets must equal liabilities plus equity. It defines the components of the equation as assets being resources owned, liabilities being debts or obligations, and equity being the ownership claim.
3) Business transactions impact the accounting equation by increasing or decreasing at least two elements as a transaction has a dual effect.
The above slides brought to you by Welingkar’s Distance Learning Division are on Operation Research Techniques in Transportation. Suitable operation research techniques are used to derive optimum solution to a distribution problem. North-West rule is explained in the presentation and PERT and CPM is used for timely completion of a project.
For more such innovative content on management studies, join WeSchool PGDM-DLP Program: http://bit.ly/DistMang
Join us on Facebook: http://www.facebook.com/welearnindia
Follow us on Twitter: https://twitter.com/WeLearnIndia
Read our latest blog at: http://welearnindia.wordpress.com
Subscribe to our Slideshare Channel: http://www.slideshare.net/welingkarDLP
The document discusses various accounting concepts related to adjusting accounts and preparing financial statements. It includes questions about the differences between cash basis and accrual basis accounting, examples of accounts that require adjustment such as prepaid expenses, depreciation, accrued revenues and expenses, and unearned revenues. It also provides examples of adjusting journal entries companies would make.
The document provides an overview of accounting information systems. It discusses the basic concepts of an AIS, including that an AIS collects and processes transaction data and communicates financial information. It also describes the nature and purpose of subsidiary ledgers, which are used to track individual account balances like accounts receivable. Additionally, the document explains how to record transactions in special journals, including sales, purchases, cash receipts and payments journals, in order to organize similar transactions and reduce general journal entries. It compares AIS under GAAP and IFRS.
Fin man 5 break even point and leverage analysisJimmi Sinton
This document provides an overview and examples of break-even analysis for a financial management class. It defines break-even analysis as a method to determine the sales volume needed for total revenue to equal total costs. It also discusses how to calculate break-even points in units and dollars, how to set target earnings levels, and provides homework on calculating break-even points under different cost and price scenarios.
This document discusses stockholders' equity, which is increased in two ways: paid-in capital from investor contributions for stock, and retained earnings from corporate profits. It describes different types of stock like preferred stock and common stock. Preferred stock typically has priority over common stock in dividends and asset distribution. The document also discusses stock splits which increase outstanding shares while decreasing par value, treasury stock which is reacquired shares recorded at cost, and accounting treatment of stocks by issuers and investors.
The document discusses the statement of cash flows, including its usefulness, format, and how to prepare it using the indirect method. It explains that the statement of cash flows provides information about a company's cash receipts and payments during a period and is separated into operating, investing, and financing activities. It also discusses how to classify transactions and adjust net income to reconcile it to net cash provided by operating activities. Key steps include adding back non-cash expenses, and analyzing changes in current assets and liabilities.
This document provides an overview of accounting for receivables. It defines different types of receivables like accounts receivable and notes receivable. It explains how companies recognize, value, and dispose of both accounts receivable and notes receivable. Specific topics covered include recognizing revenue on credit sales, estimating and recording allowance for doubtful accounts, accounting for uncollectible accounts, determining maturity dates and interest on notes, and presenting receivables on financial statements. The document aims to help students understand the key accounting concepts and entries related to receivables.
This document discusses accounting for cash and receivables. It defines cash and cash equivalents, and explains how to report restricted cash and bank overdrafts. Accounts receivable and notes receivable are defined as the main types of receivables. Recognition and valuation of accounts receivable are explained, including issues like trade discounts, cash discounts, and allowance for doubtful accounts. Estimating bad debts through percentage of sales and receivables approaches is covered.
ch21 process costing managerial accountingReema975562
1. The document discusses process costing, which is used to apply costs to mass-produced, homogeneous products like cereal, paint, steel, oil, and soft drinks. It tracks costs through interconnected manufacturing processes.
2. It explains how process costing assigns manufacturing costs of materials, labor, and overhead to work in process accounts through journal entries, and how finished units are transferred out.
3. Computing equivalent units is discussed, which considers degree of completion by weighting units transferred and in ending work in process, to determine average costs per unit. The weighted-average method is most widely used.
1. The document describes the job order costing system used to track costs in a manufacturing environment. It discusses accumulating raw material, labor, and overhead costs and assigning them to work in process and finished goods using a job cost sheet.
2. It explains how a predetermined overhead rate is established and used to apply manufacturing overhead costs based on direct labor costs. Completed jobs are transferred from work in process to finished goods inventory at total cost.
3. When jobs are sold, the cost is transferred from finished goods inventory to cost of goods sold, and revenue is recorded. The document provides examples of journal entries for accumulating, assigning, and transferring costs through the various stages.
This document discusses job costing, which is a costing system where the cost object is a distinct unit or job. It may use different amounts of resources than other jobs. The document outlines the key concepts of job costing, including actual and normal costing approaches, tracking costs through journal entries, and adjusting for over- or under-applied manufacturing overhead at year-end using different methods. It provides examples to illustrate job costing calculations and journal entries.
LO16-1 through LO16-5EXERCISE 16.1Accounting TerminologyLi.docxSHIVA101531
LO16-1 through LO16-5
EXERCISE 16.1
Accounting Terminology
Listed below are eight technical accounting terms introduced or emphasized in this chapter: Listed below are eight technical accounting terms introduced or emphasized in this chapter:
1) Work in Process
2) Inventory
3) Cost of finished goods manufactured
4) Conversion costs
5) Cost of Goods Sold
6) Period costs
7) Management accounting
8) Product costs
9) Manufacturing overhead
Each of the following statements may (or may not) describe one of these technical terms. For each statement, indicate the accounting term described, or answer “None” if the statement does not correctly
describe any of the terms.
a. The preparation and use of accounting information designed to assist managers in planning and controlling the operations of a business.
b. All manufacturing costs other than direct materials used and direct labor.
c. Direct materials and direct labor used in manufacturing a product.
d. A manufacturing cost that can be traced conveniently and directly to manufactured units of product.
e. The account debited at the time that the Manufacturing Overhead account is credited.
f. The amount transferred from the Work in Process Inventory account to the Finished Goods Inventory account.
g. Costs that are debited directly to expense accounts when the costs are incurred.
EXERCISE 16.2 (LO16-2)
Basic Types of
Manufacturing Costs
Into which of the three elements of manufacturing cost would each of the following be classified?
a. Tubing used in manufacturing bicycles.
b. Wages paid by an automobile manufacturer to employees who test-drive completed automobiles.
c. Property taxes on machinery.
d. Gold bullion used by a jewelry manufacturer.
e. Wages of assembly-line workers who package frozen food.
f. Salary of plant superintendent.
g. Electricity used in factory operations.
h. Salary of a nurse in a factory first-aid station.
EXERCISE 16.3 (LO16-3 & LO16-5)
Product Costs
and Period Costs
Indicate whether each of the following should be considered a product cost or a period cost. If you identify the item as a product cost, also indicate whether it is a direct or an indirect cost. For example, the answer to item 0 is “indirect product cost.” Begin with item a.
0. Property taxes on factory building.
a. Cost of disposal of hazardous waste materials to a chemical plant.
b. Amounts paid by a mobile home manufacturer to a subcontractor who installs plumbing in each mobile home.
c. Depreciation on sales showroom fixtures.
d. Salaries of security guards in an administrative office building.
EXERCISE 16.6 (LO16-3 & LO16-5)
Flow of Costs through
Manufacturing Accounts
The Ryde and Rowe Inc. had the following account balances as of January 1:
Direct Materials Inventory . . . .. . . . . . . . . . . . . . . . . . . . . . . . . $ 89,200
Work in Process Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178,400
Fin ...
1) Activity-based costing is an approach that allocates overhead costs to products and services through multiple cost pools and cost drivers, providing more accurate product costs than traditional costing.
2) The document provides an example of applying activity-based costing to Atlas Company, identifying activities, cost pools, cost drivers, and allocating overhead costs across four steps.
3) Activity-based costing provides benefits of more accurate costing through multiple cost pools, enhanced control of overhead costs, and better management decisions.
This document discusses different costing methods used in management accounting including job costing, process costing, batch costing, contract costing, and service costing. It provides examples and explanations of key concepts in job costing like job cost sheets, predetermined overhead rates, and manufacturing overhead. Process costing is explained as a method used for mass production of nearly identical units where costs are accumulated and assigned to units produced. Batch costing is defined as identifying and assigning costs to a set amount of similar goods produced in a batch. Contract costing applies especially to long-term construction projects performed over multiple periods. Finally, service costing calculates the full costs of services an entity provides using direct and indirect costs.
The document discusses process costing methods used in manufacturing. It covers key steps in process costing which include summarizing output flow, computing equivalent units, computing equivalent unit costs, summarizing total costs, and assigning costs to completed and ending work in process units. The document also discusses weighted average, FIFO, and standard costing inventory methods associated with process costing and provides examples to illustrate related concepts and calculations.
Managerial Accounting Tools for Business Decision Making 6th Edition Weygandt...nenoliruzu
This document provides an assignment classification table and answers to questions for a chapter on process costing. It includes:
- A table that classifies learning objectives, questions, exercises and problems by level of difficulty and time required.
- Answers to 22 questions on topics like the flow of costs in process cost systems, preparing production cost reports, computing equivalent units, and more.
- Solutions to 7 brief exercises involving journal entries, computing equivalent units and unit costs, and preparing production cost reports.
The document provides information and examples to help understand key concepts in process costing systems, from classifying assignments to solving specific accounting problems.
This document discusses process costing and compares it to job order costing. Process costing is used when a company mass produces uniform products continuously. Costs are tracked by production department rather than individual jobs. Equivalent units of production are calculated using the weighted average method to determine the cost per unit. The key document is the production cost report which shows quantity, costs and unit costs by department. A comprehensive example is provided to illustrate calculating equivalent units, unit costs and completing a production cost report for the mixing department of a company that makes waffles.
This document provides an overview of process cost accounting, including key concepts and steps. It defines process operations as those used for mass production of small, identical items. Equivalent units are used to calculate the total production when units are in different stages of completion. The four steps in accounting for production are: 1) determining physical flow, 2) computing equivalent units, 3) computing cost per equivalent unit, and 4) assigning and reconciling costs. A process cost summary helps managers evaluate costs and performance across periods.
Stanley Company produces specialized safety devices. It expects manufacturing overhead costs of $160,000 for the year and machine usage of 40,000 hours. To determine the predetermined overhead rate, Stanley will calculate overhead costs divided by the activity base of machine hours. This rate will then be used to assign a portion of manufacturing overhead to Work in Process based on actual machine hours used for each job. The predetermined overhead rate provides an estimated allocation of overhead costs, which are later compared to actual overhead costs at year end.
Akuntansi Manajemen Edisi 8 oleh Hansen & Mowen Bab 6Dwi Wahyu
1. The document discusses product and service costing methods, specifically job-order costing and process costing. It provides learning objectives and definitions for each method.
2. Job-order costing tracks costs for each individual job, while process costing accumulates costs for products produced through similar processes. The document compares the two methods and provides examples of calculating costs.
3. Process costing involves calculating equivalent units to determine a standard unit cost, then applying that cost to inventory valuations. The document outlines the five steps to prepare a production report using process costing.
1. The document describes key concepts and methods for product and service costing, including job-order costing and process costing. It lists 8 learning objectives related to describing characteristics and differences between the two methods, calculating costs, and preparing production reports using weighted average and FIFO methods.
2. The document provides examples to illustrate cost flows for job-order and process costing systems. It shows how costs like direct materials, direct labor and overhead are accumulated for individual jobs in job-order costing and pooled for homogeneous products in process costing.
3. Production reports and calculations of equivalent units are demonstrated for a multi-stage process manufacturer. Weighted average and FIFO methods are covered for valuing beginning
This document provides an overview of managerial accounting. It discusses the differences between managerial and financial accounting, managerial cost concepts including direct materials, direct labor, and manufacturing overhead, and job order cost accounting. Job order cost accounting involves accumulating manufacturing costs, assigning costs to work in process and finished goods, and recognizing cost of goods sold. Costs flow through the job cost sheet which tracks costs by job.
- Process costing is used for products that are similar and produced continuously, while job-order costing is used for unique jobs.
- Process costing accumulates costs by department rather than individual jobs. Costs flow through manufacturing accounts like Work in Process and are ultimately transferred to Finished Goods.
- Equivalent units of production considers partially completed units by calculating a percentage of completion and combining it with fully completed units to determine total production for the period.
1. Khalid Aziz teaches financial accounting and cost accounting courses for various qualifications including ICMAP stages 1-4, ICAP modules B and D, B.Com, BBA, MBA, and PIPFA.
2. He provides crash courses and fresh classes in financial accounting and cost accounting for individuals and groups.
3. Contact information is provided for Khalid Aziz located in Karachi, Pakistan.
Cost and Management Accounting I Chapter 3 (2)(2)-1 (1).pptxObsaKamil
This document discusses cost allocation, which is the process of assigning indirect costs to cost objects like products or services using an allocation base. It provides definitions for key terms like cost object, cost pool, and cost driver. It also outlines the steps in the cost allocation process, including planning, application, recording, and reconciliation. Finally, it compares traditional cost allocation using a single overhead rate to activity-based costing, which uses multiple cost pools and drivers.
Akuntansi Manajemen Edisi 8 oleh Hansen & Mowen Bab 6Dwi Wahyu
This document provides an overview of product and service costing methods, including job-order costing and process costing. It defines key terms, outlines learning objectives, and provides examples to illustrate how to calculate costs and equivalent units. Specifically, it explains how to (1) calculate costs for a job using direct materials, labor and overhead, (2) prepare a departmental production report using weighted average and FIFO methods, and (3) make related journal entries.
This document is a project report submitted by Kavitake Chhaya Laxman for their M.Com program. The report focuses on process costing and includes the following sections:
1. An introduction to process costing, including its meaning, applicability, advantages, and differences from job costing.
2. The accounting procedure for a simple process costing system including a sample process account worksheet.
3. A discussion of waste and losses in process costing, how they are accounted for, and includes sample calculations and journal entries.
4. Methods for valuing work-in-process inventory including equivalent units and illustrative examples.
5. A case study of process
Product Costing and Cost Accumulation in a Batch Productio.docxstilliegeorgiana
The document discusses product costing and cost accumulation in a batch production environment. It explains that product costs are used for financial accounting, managerial accounting, and cost management purposes. It also describes how costs flow through a manufacturing firm, beginning with being added to work-in-process inventory, then transferred to finished goods inventory when production is complete, and finally expensed as cost of goods sold when products are sold. The document provides an overview of job-order costing and process costing systems.
The document provides an overview of the structure and contents of the Bible. It discusses that the Bible includes the Old Testament accepted by Jews and the New Testament accepted by Christians. It also explores reading the Bible as a work of literature, noting it was written by humans in various literary forms for different purposes. Key characters, stories, symbols and numbers that recur throughout the Bible are also summarized.
The document outlines the three branches of the US government - legislative, executive, and judicial. The legislative branch is composed of Congress which has two chambers, the Senate and House of Representatives. The executive branch is led by the President and also includes the Vice President and Cabinet. The judicial branch is the federal court system. It also provides details on different employment-based green card preference categories for immigrants.
Coca-Cola introduced New Coke in 1985 to replace the original formula after losing market share to Pepsi. However, consumers strongly rejected the change and demanded the return of Coca-Cola Classic. After receiving thousands of complaints, Coca-Cola re-introduced the original formula just 79 days later. The company had underestimated the brand loyalty and cultural significance of the original Coca-Cola to many consumers. This marketing failure showed that consumer research does not always accurately predict public response.
Poor communication is one of the biggest inhibitors of group performance as individuals spend most of their waking hours communicating. Communication is central to an organization's existence as it involves both external communication with clients and internal communication with employees. Effective communication helps clarify tasks and goals while reducing ambiguities, but various barriers like language differences, emotions, and information overload can distort communication.
It is illegal in the US to ask about personal details such as nationality, religion, age, marital status, military background, health, union membership, and place of residence when hiring or interviewing applicants. Questions about these topics are prohibited under anti-discrimination laws aimed at protecting job seekers' privacy and preventing bias in employment decisions. Employers must evaluate candidates solely based on their qualifications for the job.
This document discusses health and wellness, mentioning courage, yoga, emotion, focus, illness, research, habit, unhealthy habits, and working out in a healthy way. Maintaining good habits and an active lifestyle can help overcome illness and other challenges with courage, mindfulness, and focus on emotional and physical well-being.
Manners at the dinner table have traditionally included not using your cell phone, keeping elbows off the table, and waiting for everyone to be seated before eating. However, some question if manners have changed too much over generations and how the pandemic may further influence accepted behaviors.
The lights festival is returning to the Talladega GP Raceway in Munford, Alabama and will serve communities in Huntsville, Birmingham, Montgomery, Atlanta, and Chattanooga. Adult entry tickets are $40. The document also briefly mentions engagement rings, TVs, watches and restaurant escargots priced in US dollars along with photos of urban landscapes, lakes, woods, modern architecture, traffic, fields and a statement about Memphis being located in Tennessee.
The document provides instructions to choose one of several products and make a short sales presentation about it. It then lists several products including a goatee shaping template, a hair clipping umbrella, a neck traction device, a cooling neck collar, a hair dryer cap, and a portable urinal. It concludes with a pheromone-infused lingerie wash.
The document discusses multicultural interactions and the extinction of mammoths. It mentions multiculturalism and the location where mammoths lived and eventually died out while interacting with other groups.
The document discusses various crises and disasters including running out of resources, assembling in response to environmental issues, and providing affordable alternatives to pollution, natural disasters like tornadoes, volcanoes, earthquakes, and floods.
The document presents several common stereotypes or generalizations about different groups of people. It suggests that stereotypes are often not accurate reflections of reality and questions whether others perceive us in the same way we see ourselves. Some of the stereotypes mentioned include assumptions about gender differences in style, the relationship between social media use and social skills, the healthiness of vegetarian versus meat-eating diets, how easy younger generations have it compared to their parents, the endurance of school friendships, how siblings get along, and the relationship between taste and healthiness in food.
The document asks a variety of questions about personal finances, relationships, opinions on controversial issues, and appropriate responses to greetings and farewells in different social situations. It inquires about saving habits, purchasing used goods, tipping servers, donating to those in need, preferred and least-liked stores, handling finances in marriage, how money impacts happiness, if money is more important than love, appropriate pay for different jobs, food in schools, television content, amusement parks, the death penalty, discipline in schools, dependency on technology, and balancing family and career. It also provides greeting and farewell scenarios to determine appropriate responses.
Success is defined as something you wanted or planned to do that you have done well, with related terms including the noun success, adjective successful, and verb succeed. In contrast, the opposite of success is failure, with related terms being the noun fail and adjective failed.
This document provides conversation starters for properly introducing oneself to someone for the first time by asking them to describe themselves, their family, best friend, job, or neighborhood in just 3 words. It suggests asking open-ended questions as an icebreaker to learn more about the other person in a concise yet insightful way.
The document provides advice around family relationships, including that families should eat together daily, parents and teen children should spend quality time together, elderly parents should live with their adult children when unable to live alone due to issues like loneliness and health problems, and the most important advice to give children is to cherish time with family. It also asks questions about relationships with parents and advice received from them.
This document provides words and phrases to use when generating interest in products and making sales. It discusses 12 important buzz words or phrases to remember: sale, off, now, new, best sellers, be the first, your, thank you, remember, free/at no extra charge, try, and ends. For each word, it gives examples of how to incorporate the word when talking to customers to encourage them to buy a product or take advantage of a promotion. The overall purpose is to provide salespeople with effective language to use in their pitches to customers.
ESL 0823L week 7 a job-interview-oneonone-activities-pronunciation-exercises-...BHUOnlineDepartment
The document provides a list of potential questions that may be asked during a job interview. Some of the questions include asking about the applicant's personal information, work history, qualifications, strengths and weaknesses, availability, and long term career goals. The questions cover a range of topics to evaluate an applicant's suitability for the position.
This document lists various body parts and common physical ailments. It includes a list of 20 body parts from head to toe as well as common illnesses and feelings of sadness. It also provides sample sentences to ask someone what body part hurts or what illness they have such as "She has a sore throat" or "He's feeling sad."
How to Setup Warehouse & Location in Odoo 17 InventoryCeline George
In this slide, we'll explore how to set up warehouses and locations in Odoo 17 Inventory. This will help us manage our stock effectively, track inventory levels, and streamline warehouse operations.
Beyond Degrees - Empowering the Workforce in the Context of Skills-First.pptxEduSkills OECD
Iván Bornacelly, Policy Analyst at the OECD Centre for Skills, OECD, presents at the webinar 'Tackling job market gaps with a skills-first approach' on 12 June 2024
This slide is special for master students (MIBS & MIFB) in UUM. Also useful for readers who are interested in the topic of contemporary Islamic banking.
Reimagining Your Library Space: How to Increase the Vibes in Your Library No ...Diana Rendina
Librarians are leading the way in creating future-ready citizens – now we need to update our spaces to match. In this session, attendees will get inspiration for transforming their library spaces. You’ll learn how to survey students and patrons, create a focus group, and use design thinking to brainstorm ideas for your space. We’ll discuss budget friendly ways to change your space as well as how to find funding. No matter where you’re at, you’ll find ideas for reimagining your space in this session.
Walmart Business+ and Spark Good for Nonprofits.pdfTechSoup
"Learn about all the ways Walmart supports nonprofit organizations.
You will hear from Liz Willett, the Head of Nonprofits, and hear about what Walmart is doing to help nonprofits, including Walmart Business and Spark Good. Walmart Business+ is a new offer for nonprofits that offers discounts and also streamlines nonprofits order and expense tracking, saving time and money.
The webinar may also give some examples on how nonprofits can best leverage Walmart Business+.
The event will cover the following::
Walmart Business + (https://business.walmart.com/plus) is a new shopping experience for nonprofits, schools, and local business customers that connects an exclusive online shopping experience to stores. Benefits include free delivery and shipping, a 'Spend Analytics” feature, special discounts, deals and tax-exempt shopping.
Special TechSoup offer for a free 180 days membership, and up to $150 in discounts on eligible orders.
Spark Good (walmart.com/sparkgood) is a charitable platform that enables nonprofits to receive donations directly from customers and associates.
Answers about how you can do more with Walmart!"
Leveraging Generative AI to Drive Nonprofit InnovationTechSoup
In this webinar, participants learned how to utilize Generative AI to streamline operations and elevate member engagement. Amazon Web Service experts provided a customer specific use cases and dived into low/no-code tools that are quick and easy to deploy through Amazon Web Service (AWS.)
Chapter wise All Notes of First year Basic Civil Engineering.pptxDenish Jangid
Chapter wise All Notes of First year Basic Civil Engineering
Syllabus
Chapter-1
Introduction to objective, scope and outcome the subject
Chapter 2
Introduction: Scope and Specialization of Civil Engineering, Role of civil Engineer in Society, Impact of infrastructural development on economy of country.
Chapter 3
Surveying: Object Principles & Types of Surveying; Site Plans, Plans & Maps; Scales & Unit of different Measurements.
Linear Measurements: Instruments used. Linear Measurement by Tape, Ranging out Survey Lines and overcoming Obstructions; Measurements on sloping ground; Tape corrections, conventional symbols. Angular Measurements: Instruments used; Introduction to Compass Surveying, Bearings and Longitude & Latitude of a Line, Introduction to total station.
Levelling: Instrument used Object of levelling, Methods of levelling in brief, and Contour maps.
Chapter 4
Buildings: Selection of site for Buildings, Layout of Building Plan, Types of buildings, Plinth area, carpet area, floor space index, Introduction to building byelaws, concept of sun light & ventilation. Components of Buildings & their functions, Basic concept of R.C.C., Introduction to types of foundation
Chapter 5
Transportation: Introduction to Transportation Engineering; Traffic and Road Safety: Types and Characteristics of Various Modes of Transportation; Various Road Traffic Signs, Causes of Accidents and Road Safety Measures.
Chapter 6
Environmental Engineering: Environmental Pollution, Environmental Acts and Regulations, Functional Concepts of Ecology, Basics of Species, Biodiversity, Ecosystem, Hydrological Cycle; Chemical Cycles: Carbon, Nitrogen & Phosphorus; Energy Flow in Ecosystems.
Water Pollution: Water Quality standards, Introduction to Treatment & Disposal of Waste Water. Reuse and Saving of Water, Rain Water Harvesting. Solid Waste Management: Classification of Solid Waste, Collection, Transportation and Disposal of Solid. Recycling of Solid Waste: Energy Recovery, Sanitary Landfill, On-Site Sanitation. Air & Noise Pollution: Primary and Secondary air pollutants, Harmful effects of Air Pollution, Control of Air Pollution. . Noise Pollution Harmful Effects of noise pollution, control of noise pollution, Global warming & Climate Change, Ozone depletion, Greenhouse effect
Text Books:
1. Palancharmy, Basic Civil Engineering, McGraw Hill publishers.
2. Satheesh Gopi, Basic Civil Engineering, Pearson Publishers.
3. Ketki Rangwala Dalal, Essentials of Civil Engineering, Charotar Publishing House.
4. BCP, Surveying volume 1
How to Make a Field Mandatory in Odoo 17Celine George
In Odoo, making a field required can be done through both Python code and XML views. When you set the required attribute to True in Python code, it makes the field required across all views where it's used. Conversely, when you set the required attribute in XML views, it makes the field required only in the context of that particular view.
it describes the bony anatomy including the femoral head , acetabulum, labrum . also discusses the capsule , ligaments . muscle that act on the hip joint and the range of motion are outlined. factors affecting hip joint stability and weight transmission through the joint are summarized.
Strategies for Effective Upskilling is a presentation by Chinwendu Peace in a Your Skill Boost Masterclass organisation by the Excellence Foundation for South Sudan on 08th and 09th June 2024 from 1 PM to 3 PM on each day.
LAND USE LAND COVER AND NDVI OF MIRZAPUR DISTRICT, UPRAHUL
This Dissertation explores the particular circumstances of Mirzapur, a region located in the
core of India. Mirzapur, with its varied terrains and abundant biodiversity, offers an optimal
environment for investigating the changes in vegetation cover dynamics. Our study utilizes
advanced technologies such as GIS (Geographic Information Systems) and Remote sensing to
analyze the transformations that have taken place over the course of a decade.
The complex relationship between human activities and the environment has been the focus
of extensive research and worry. As the global community grapples with swift urbanization,
population expansion, and economic progress, the effects on natural ecosystems are becoming
more evident. A crucial element of this impact is the alteration of vegetation cover, which plays a
significant role in maintaining the ecological equilibrium of our planet.Land serves as the foundation for all human activities and provides the necessary materials for
these activities. As the most crucial natural resource, its utilization by humans results in different
'Land uses,' which are determined by both human activities and the physical characteristics of the
land.
The utilization of land is impacted by human needs and environmental factors. In countries
like India, rapid population growth and the emphasis on extensive resource exploitation can lead
to significant land degradation, adversely affecting the region's land cover.
Therefore, human intervention has significantly influenced land use patterns over many
centuries, evolving its structure over time and space. In the present era, these changes have
accelerated due to factors such as agriculture and urbanization. Information regarding land use and
cover is essential for various planning and management tasks related to the Earth's surface,
providing crucial environmental data for scientific, resource management, policy purposes, and
diverse human activities.
Accurate understanding of land use and cover is imperative for the development planning
of any area. Consequently, a wide range of professionals, including earth system scientists, land
and water managers, and urban planners, are interested in obtaining data on land use and cover
changes, conversion trends, and other related patterns. The spatial dimensions of land use and
cover support policymakers and scientists in making well-informed decisions, as alterations in
these patterns indicate shifts in economic and social conditions. Monitoring such changes with the
help of Advanced technologies like Remote Sensing and Geographic Information Systems is
crucial for coordinated efforts across different administrative levels. Advanced technologies like
Remote Sensing and Geographic Information Systems
9
Changes in vegetation cover refer to variations in the distribution, composition, and overall
structure of plant communities across different temporal and spatial scales. These changes can
occur natural.
2. 16-2
Explain the flow of costs in a process cost system and the
journal entries to assign manufacturing costs.
CHAPTER OUTLINE
Discuss the uses of a process cost system and how it
compares to a job order system.1
2
LEARNING OBJECTIVES
Compute equivalent units.3
Complete the four steps to prepare a production cost
report.4
3. 16-3
Use to apply costs to similar products that are mass-
produced in a continuous fashion.
Examples include the production of Cereal, Paint,
Manufacturing Steel, Oil Refining and Soft Drinks.
USES OF PROCESS COST SYSTEMS
ILLUSTRATION 16-1
Manufacturing processes
LO 1
LEARNING
OBJECTIVE
Discuss the uses of a process cost system
and how it compares to a job order system.1
4. 16-4
Examples of companies that primarily use either a process cost
system or a job order cost system.
USE OF PROCESS COST SYSTEMS
ILLUSTRATION 16-2
Process cost and job order cost companies and products
LO 1
5. 16-5
Which of the following items is not a characteristic of a process
cost system:
a. Once production begins, it continues until the finished
product emerges.
b. The focus is on continually producing homogenous products.
c. When the finished product emerges, all units have precisely
the same amount of materials, labor, and overhead.
d. The products produced are heterogeneous in nature.
Question
USE OF PROCESS COST SYSTEMS
LO 1
6. 16-6
Service companies that provide individualized, nonroutine
services will probably benefit from using a job order cost
system.
Those that perform routine, repetitive services will probably
be better off with a process cost system.
PROCESS COST FOR SERVICE
COMPANIES
LO 1
7. 16-7
Job Order Cost
Costs assigned to each job.
Products have unique
characteristics.
Process Cost
Costs tracked through a
series of connected
manufacturing processes or
departments.
Products are uniform or
relatively homogeneous and
produced in a large volume.
SIMILARITIES AND DIFFERENCES
BETWEEN JOB ORDER COST AND
PROCESS COST SYSTEMS
LO 1
9. 16-9
Similarities
1. Manufacturing cost
elements.
2. Accumulation of the
costs of materials,
labor, and overhead.
3. Flow of costs.
1. Number of work in
process accounts used.
2. Documents used to track
costs.
3. Point at which costs are
totaled.
4. Unit cost computations.
Differences
JOB ORDER COST AND PROCESS
COST FLOW
LO 1
11. 16-11
Indicate which of the following statements is not correct:
a. Both a job order and a process cost system track the same
three manufacturing cost elements – direct materials, direct
labor, and manufacturing overhead.
b. In a job order cost system, only one work in process account is
used, whereas in a process cost system, multiple work in
process accounts are used.
c. Manufacturing costs are accumulated the same way in a job
order and in a process cost system.
d. Manufacturing costs are assigned the same way in a job order
and in a process cost system.
Question
Use of Process Cost Systems
LO 1
12. 16-12
PROCESS COST FLOW
Tyler Company manufactures roller blade and skateboard wheels that it
sells to manufactures and retail outlets. Manufacturing consists of two
processes: machining and assembly. The Machining Department
shapes, hones, and drills the raw materials. The Assembly Department
assembles and packages the parts.
ILLUSTRATION 16-5
Flow of costs in process cost system
LO 2
LEARNING
OBJECTIVE
Explain the flow of costs in a process cost
system and the journal entries to assign
manufacturing costs.
2
13. 16-13
Accumulation of the cost of materials, labor, and overhead
is the same as in job order costing.
► Debit Raw Materials Inventory for purchases of raw
materials.
► Debit Factory Labor for factory labor incurred.
► Debit Manufacturing Overhead for overhead cost
incurred.
Assignment of the three manufacturing cost elements to
Work in Process in a process cost system is different from
a job order cost system.
ASSIGNING MANUFACTURING COSTS
LO 2
14. 16-14
A process cost system requires fewer material requisition
slips than a job order cost system.
Materials are used for processes and not specific jobs.
Requisitions are for larger quantities of materials.
Journal entry to record materials used:
Material Costs
ASSIGNING MANUFACTURING COSTS
LO 2
Work in Process—Machining XXXXX
Work in Process—Assembly XXXXX
Raw Materials Inventory XXXXX
15. 16-15
Time tickets may be used in both systems.
All labor costs incurred within a production department are a
cost of processing.
The journal entry to record factory labor costs:
Factory Labor Costs
ASSIGNING MANUFACTURING COSTS
LO 2
Work in Process—Machining XXXXX
Work in Process—Assembly XXXXX
Factory Labor XXXXX
16. 16-16
Objective of assigning overhead is to allocate overhead to
production departments on objective and equitable basis.
Use the activity that “drives” or causes the costs.
Machine time used - primary driver.
Journal entry to allocate overhead:
Manufacturing Overhead Costs
ASSIGNING MANUFACTURING COSTS
LO 2
Work in Process—Machining XXXXX
Work in Process—Assembly XXXXX
Manufacturing Overhead XXXXX
18. 16-18
Monthly Entry to transfer goods to next department:
Entry to transfer completed goods to Finished Goods:
Entry to record Cost of Goods sold at the time of sale:
Transfers
ASSIGNING MANUFACTURING COSTS
Work in Process—Assembly XXXXX
Work in Process—Machining XXXXX
Finished Goods Inventory XXXXX
Work in Process—Assembly XXXXX
Cost of Goods Sold XXXXX
Finished Goods Inventory XXXXX
LO 2
19. 16-19
In making the journal entry to assign raw materials costs:
a. The debit is to Finished goods Inventory.
b. The debit is often to two or more work in process
accounts.
c. The credit is generally to two or more work in process
accounts.
d. The credit is to Finished Goods Inventory.
ASSIGNING MANUFACTURING COSTS
Question
LO 2
20. 16-20
Illustration: Suppose you have a work-study job in the office of
your college’s president, and she asks you to compute the cost
of instruction per full-time equivalent student at your college.
The college’s vice president for finance provides the following
information.
Costs:
Total cost of instruction $9,000,000
Student population:
Full-time students 900
Part-time students 1,000
ILLUSTRATION 16-6
Information for full-time
student example
LO 3
LEARNING
OBJECTIVE Compute equivalent units.3
21. 16-21
Total cost of instruction $9,000,000
Number of full-time equivalent students ÷ 1,500
$ 6,000
Illustration: Part-time students take 60% of the classes of a full-
time student during the year. To compute the number of full-
time equivalent students per year, you would make the
following computation.
Cost of instruction per full-time equivalent student =
Compute Equivalent Units
ILLUSTRATION 16-7
Full-time equivalent unit computation
LO 3
22. 16-22
Considers the degree of completion (weighting) of
units completed and transferred out and units in ending
work in process.
Most widely used method.
Beginning work in process not part of computation of
equivalent units.
WEIGHTED-AVERAGE METHOD
ILLUSTRATION 16-8
Equivalent units of production formula
LO 3
23. 16-23
Illustration: The output of Kori Company’s Packaging
Department during the period consists of 10,000 units
completed and transferred out, and 5,000 units in ending work
in process which are 70% completed.
Calculate the equivalent units of production.
Completed units 10,000
Work in process equivalent units (5,000 x 70%) 3,500
Equivalent units of production 13,500
WEIGHTED-AVERAGE METHOD
LO 3
24. 16-24
Illustration: Kellogg Company has produced Eggo® Waffles
since 1970. Three departments produce these waffles: Mixing,
Baking, and Freezing/Packaging. The Mixing Department
combines dry ingredients, including flour, salt, and baking
powder, with liquid ingredients, including eggs and vegetable
oil, to make waffle batter.
ILLUSTRATION 16-9 provides information related to the
Mixing Department at the end of June.
REFINEMENTS ON THE WEIGHTED-
AVERAGE METHOD
LO 3
25. 16-25
Illustration: Information related to the Mixing Department at the
end of June.
Refinements Weighted-Average Method
ILLUSTRATION 16-9
Information for Mixing Department
LO 3
26. 16-26
Conversion costs are labor costs plus
overhead costs.
Beginning work in process is not part of the
equivalent-units-of-production formula.
Refinements Weighted-Average Method
ILLUSTRATION 16-10
Computation of equivalent
units—Mixing Department
LO 3
28. 16-28
The Mixing Department’s output during the period consists of
20,000 units completed and transferred out, and 5,000 units in
ending work in process 60% complete as to materials and
conversions costs. Beginning inventory is 1,000 units, 40%
complete as to materials and conversion costs. The equivalent
units of production are:
a. 22,600 b. 23,000
c. 24,000 d. 25,000
Question
Compute Equivalent Units
LO 3
30. 16-30
A production cost report is the
Key document used to understand activities.
Prepared for each department and shows Production
Quantity and Cost data.
Four steps in preparation:
Step 1: Compute physical unit flow
Step 2: Compute equivalent units of production
Step 3: Compute unit production costs
Step 4: Prepare a cost reconciliation schedule
LO 4
LEARNING
OBJECTIVE
Complete the four steps to prepare a
production cost report.4
31. 16-31
ILLUSTRATION 16-12
Flow of costs in making
Eggo® Waffles
Production Cost Report
Flow of costs to make an Eggo® Waffle and the related production
cost reports for each department.
LO 4
33. 16-33
Physical units - actual units to be accounted for during
a period, regardless of work performed.
Total units to be accounted for - units started (or
transferred) into production during the period + units in
production at beginning of period.
Total units accounted for - units transferred out during
period + units in process at end of period.
Compute the Physical Unit Flow (Step 1)
Production Cost Report
LO 4
35. 16-35
Mixing Department
Department adds materials at beginning of process and
Incurs conversion costs uniformly during the process.
Compute Equivalent Units of Production (Step 2)
Production Cost Report
ILLUSTRATION 16-15
Computation of equivalent units—Mixing Department
LO 4
36. 16-36
Costs expressed in terms of equivalent units of
production.
When equivalent units of production are different for
materials and for conversion costs, three unit costs are
computed:
1. Materials
2. Conversion
3. Total Manufacturing
Compute Unit Production Costs (Step 3)
Production Cost Report
LO 4
37. 16-37
Work in process, June 1
Direct materials costs $ 50,000
Cost added to production during June
Direct material cost 400,000
Total material costs $450,000
Compute total materials cost related to Eggo® Waffles:
ILLUSTRATION 16-17
ILLUSTRATION 16-16
Production Cost Report
Compute Unit Production Costs (Step 3)
LO 4
38. 16-38
Work in process, June 1
Conversion costs $ 35,000
Costs added to production during June
Conversion costs 170,000
Total conversion costs $205,000
ILLUSTRATION 16-18
Production Cost Report
Compute total materials cost related to Eggo® Waffles:
Compute Unit Production Costs (Step 3)
LO 4
ILLUSTRATION 16-19
39. 16-39
Compute total manufacturing costs per unit:
ILLUSTRATION 16-20
Production Cost Report
Compute Unit Production Costs (Step 3)
ILLUSTRATION 16-19
LO 4
40. 16-40
Kellogg charged total costs of $655,000 to the Mixing
Department in June, calculated as follows.
Costs to be accounted for
Work in process, June 1 $ 85,000
Started into production 570,000
Total costs $655,000
ILLUSTRATION 16-21
Prepare a Cost Reconciliation Schedule (Step 4)
Production Cost Report
LO 4
43. 16-43
Largo Company has unit costs of $10 for materials and $30 for
conversion costs. If there are 2,500 units in ending work in
process, 40% complete as to conversion costs and fully
complete as to materials cost, the total cost assignable to the
ending work in process inventory is:
a. $45,000.
b. $55,000.
c. $75,000.
d. $100,000.
Production Cost Report
Question
LO 4
44. 16-44
Companies often use a combination of a process cost
and a job order cost system.
Called operations costing, this hybrid system is similar
to process costing in its assumption that standardized
methods are used to manufacture the product.
At the same time, the product may have some
customized, individual features that require the use of
a job order cost system.
COSTING SYSTEMS – FINAL COMMENTS
Production Cost Report
LO 4
45. 16-45
EQUIVALENT UNITS UNDER FIFO
Equivalent units are the sum of the work performed to:
1. Finish the units of beginning work in process inventory.
2. Complete the units started into production during the
period (referred to as the units started and completed).
3. Start, but only partially complete, the units in ending
work in process inventory.
LO 5
LEARNING
OBJECTIVE
APPENDIX 16A: Compute equivalent
units using the FIFO method.5
49. 16-49
Compute the Physical Unit Flow (1)
ILLUSTRATION 16A-4
Physical unit flow—Mixing Department
EQUIVALENT UNITS UNDER FIFO
LO 5
50. 16-50 LO 5
EQUIVALENT UNITS UNDER FIFO
ILLUSTRATION 16A-5
Physical unit flow (FIFO)—
Mixing Department
Compute the Physical Unit Flow (1)
51. 16-51
EQUIVALENT UNITS FOR MATERIALS
Kellogg adds materials at the beginning of the process. 100% of
the materials costs has been incurred on ending WIP.
Compute Equivalent Units of Production (2)
EQUIVALENT UNITS UNDER FIFO
ILLUSTRATION 16A-6
Computation of equivalent units—materials
LO 5
52. 16-52 LO 5
The Mixing Department required 30,000 equivalent units (100,000 units
x 30%) of conversion costs to complete the beginning inventory. In
addition, the 200,000 units of ending work in process were 60 percent
complete in terms of conversion costs.
EQUIVALENT UNITS FOR CONVERSION COSTS
EQUIVALENT UNITS UNDER FIFO
Compute Equivalent Units of Production (2)
ILLUSTRATION 16A-7
53. 16-53
Under the FIFO method, the unit costs of production are based entirely
on the production costs incurred during the month.
ILLUSTRATION 16A-8
Costs incurred during production in June
Compute Unit Production Costs (3)
EQUIVALENT UNITS UNDER FIFO
LO 5
54. 16-54
Compute unit materials cost, unit conversion costs, and total unit cost.
ILLUSTRATION 16A-9
Unit cost formulas and computations—Mixing Department
Compute Unit Production Costs (3)
EQUIVALENT UNITS UNDER FIFO
LO 5
55. 16-55
Kellogg is now ready to determine the cost of goods transferred out of
the Mixing Department to the Baking Department and the costs in
ending work in process. The total costs charged to the Mixing
Department in June are as follows.
ILLUSTRATION 16A-10
Costs charged to Mixing Department
Prepare a Cost Reconciliation Schedule (4)
EQUIVALENT UNITS UNDER FIFO
LO 5
56. 16-56 LO 5
EQUIVALENT UNITS UNDER FIFO
ILLUSTRATION 16A-11
Cost reconciliation report
Prepare a Cost Reconciliation Schedule (4)
57. 16-57
Internal document for management that shows production
quantity and cost data for a production department.
Provides a basis for evaluating the productivity of a
department.
Managers can use the cost data to assess whether unit
costs and total costs are reasonable.
Top management can also judge whether current
performance is meeting planned objectives.
Prepare the Production Cost Report
EQUIVALENT UNITS UNDER FIFO
LO 5
59. 16-59
Weighted-average is simple to understand and apply.
In cases where prices do not fluctuate significantly,
weighted-average will be very similar to FIFO.
Conceptually, the FIFO method is superior because it
measures current performance using only costs incurred
in the current period.
FIFO method provides current cost information, which the
company can use to establish more accurate pricing
strategies for goods manufactured and sold.
FIFO AND WEIGHTED-AVERAGE
LO 5