Bba ii cost and management accounting u 3.1 output costing (or unit costing or single costing )
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Output or unit costing is used for industries that produce a single or similar products continuously. It can be used for industries like brick works, cement, dairies, steel mills, breweries, sugar mills, and paper mills. Unit costing involves preparing periodic cost sheets to calculate the average cost per unit by dividing total costs by units produced. Cost units may be things like 1000 bricks, a barrel of beer, or a ton of steel. The cost sheet shows total costs and cost per unit. Items like interest, taxes, and dividends are excluded from the cost sheet calculation. Stocks of raw materials, work in progress, and finished goods are accounted for using opening and closing balances when calculating costs.
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Process Costing
Process costing is a costing method used when homogeneous units are produced continuously in large quantities. It assigns costs equally over the units produced in a period. There are five steps to process costing: 1) analyze physical flows, 2) calculate equivalent units, 3) determine total costs, 4) calculate unit costs, and 5) assign costs to completed and ending work-in-process units. Process costing uses journal entries to record raw material costs, conversion costs, and transfers between departments. The weighted average and first-in, first-out (FIFO) methods are two approaches to assign costs in process costing.
Job order costing
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COST ACCOUNTING CONCEPTSSSSS
Cost accounting is used to track the various costs of production and services. It involves maintaining detailed records of materials, labor, and expenses for products. This allows businesses to understand per-unit costs, control costs, and provide reliable cost data for decision making. Cost accounting techniques include standard costing, marginal costing, single costing for uniform products, process costing for multi-step production, and departmental costing for multiple products. Key factors for an effective cost accounting system include timely cost information, cooperation across departments, efficient production processes, qualified accounting staff, and honest management.
Bba ii cost and management accounting u 3.2 job and batch costing
This document discusses job costing and batch costing. It begins by defining job order industries and mass production industries. It then explains that job costing is used in job order industries where production is done according to customer orders. Batch costing is a variation of job costing used when a definite number of identical items are produced in batches to be held in stock. It discusses the objectives of job costing and provides an example of a job cost sheet. Finally, it explains the concept of economic batch quantity and how to calculate it.
Product costing system
This document provides information about job order costing and process costing systems. It defines job order costing as a system that separately accumulates costs for each unique job, while process costing collects costs by department for mass produced homogeneous items. The key differences are that job order costing tracks heterogeneous jobs individually, while process costing tracks homogeneous production on a departmental basis. The document also includes examples of journal entries, a job order cost sheet, and a process costing production report with calculations.
Job costing
Job costing and process costing are two types of costing methods. Job costing is used when production is done in small batches to meet specific customer orders, with identifiable units tracked through production. Process costing is used for continuous production like chemicals, where costs are averaged over total units produced. Key differences are job costing tracks individual jobs while process costing averages costs over production batches. Both aim to determine accurate costs to measure profitability.
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This document discusses job order costing and process costing systems. Job order costing accumulates costs for each unique job or batch of products, and is used by companies that produce specialized or custom products. Process costing accumulates costs for each production step and is used by companies that mass produce similar products. The document provides examples of companies that would use each type of system and outlines the key differences between how costs are traced and allocated under job order versus process costing.
Job costing power point show
This document discusses job costing, including its definition, purpose, characteristics, applicability, differences from process costing, basic terminology, the seven steps of job costing, related journal entries, and an example problem involving actual, normal, and variance costing for a job. Job costing involves collecting and assigning costs to identifiable jobs or orders, and is used when production involves made-to-order or custom goods of short duration. It helps with planning, cost control, and decision making.
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Cost accounting is used to track the various costs of production and services. It involves maintaining detailed records of materials, labor, and expenses for products. This allows businesses to understand per-unit costs, control costs, and provide reliable cost data for decision making. Cost accounting techniques include standard costing, marginal costing, single costing for uniform products, process costing for multi-step production, and departmental costing for multiple products. Key factors for an effective cost accounting system include timely cost information, cooperation across departments, efficient production processes, qualified accounting staff, and honest management.
Bba ii cost and management accounting u 3.2 job and batch costing
This document discusses job costing and batch costing. It begins by defining job order industries and mass production industries. It then explains that job costing is used in job order industries where production is done according to customer orders. Batch costing is a variation of job costing used when a definite number of identical items are produced in batches to be held in stock. It discusses the objectives of job costing and provides an example of a job cost sheet. Finally, it explains the concept of economic batch quantity and how to calculate it.
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This document provides information about job order costing and process costing systems. It defines job order costing as a system that separately accumulates costs for each unique job, while process costing collects costs by department for mass produced homogeneous items. The key differences are that job order costing tracks heterogeneous jobs individually, while process costing tracks homogeneous production on a departmental basis. The document also includes examples of journal entries, a job order cost sheet, and a process costing production report with calculations.
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Job costing and process costing are two types of costing methods. Job costing is used when production is done in small batches to meet specific customer orders, with identifiable units tracked through production. Process costing is used for continuous production like chemicals, where costs are averaged over total units produced. Key differences are job costing tracks individual jobs while process costing averages costs over production batches. Both aim to determine accurate costs to measure profitability.
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This document discusses key concepts in job costing, including:
1) Job costing systems track costs for distinct jobs or orders, as opposed to process costing for mass production.
2) Direct costs like materials and labor can be traced to specific jobs, while indirect costs like overhead must be allocated using cost pools and allocation bases.
3) The seven steps of job costing include identifying the job, direct costs, allocation bases, overhead rates, applying overhead, and calculating total job costs. Journal entries track costs through production.
4) Variances between actual and allocated overhead are written off to cost of goods sold at completion to adjust for over or under allocation.
Topic 8
This document summarizes key concepts from Chapter Eight of a management accounting textbook, including:
1) The differences between managerial and financial accounting in terms of users, reports, purpose, and verification.
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3) Cost concepts including classification of costs by behavior, function, and period.
4) Preparing financial statements for manufacturing companies including statements of cost of goods manufactured and income.
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This document discusses different types of costing methods used in manufacturing including job costing, batch costing, contract costing, and process costing. Job costing is used to determine the costs of specific jobs or orders. Batch costing is a variant of job costing where similar products are manufactured in batches. Contract costing is a variant of job costing applied to construction projects. Process costing is used for mass production of standardized goods and tracks costs at each stage of production. The document outlines key features, advantages, and disadvantages of each costing method.
Job costing 3 a
Here are the steps to solve this problem:
1. Calculate the factory cost of each existing job:
Job 1011: Direct materials (Rs. 37,500) + Direct wages (Rs. 30,000) = Rs. 67,500
Factory overheads @ 25% of wages = Rs. 30,000 * 25% = Rs. 7,500
Factory cost = Rs. 67,500 + Rs. 7,500 = Rs. 75,000
Job 1012: Direct materials (Rs. 54,000) + Direct wages (Rs. 42,000) = Rs. 96,000
Factory overheads @ 25% of wages = Rs. 42,000 * 25% = Rs. 10
Process costing
- Process costing is used to determine average costs for standardized goods produced through continuous processes. It involves allocating costs for multiple processes to the finished goods.
- The key steps are: recording costs by process, calculating production quantities, determining normal losses, and allocating costs between processes and finished goods using weighted average or FIFO methods.
- Process costing is common in industries like manufacturing, mining, chemicals where standardized goods are produced through sequential processes and normal losses are inherent.
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This document provides an overview of job order costing and batch costing methods. It defines job order costing as a method used for customer specific orders that are short in duration, such as for consulting firms or manufacturers of specialized goods. Batch costing is used when similar products are made in batches, like pharmaceuticals or garments. The key steps of job order costing include identifying the job, issuing a production order, tracking material, labor and overhead costs, computing total costs, and completing a job cost report. Batch costing similarly tracks costs for a group of similar products produced as a batch.
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The document discusses job costing, which is a product costing method used for unique products made to customer specifications. It describes job costing systems, different costing methods (actual, normal, standard), and reasons why normal and standard costing are preferable to actual costing. The document also provides examples of job costing sheets and case studies calculating costs for different job orders.
Process costing (1)
Process costing is a method used to calculate production costs for industries that produce standardized, homogeneous goods continuously through multiple processes. Costs are accumulated for each stage of production and divided by normal output to determine the cost per unit at each stage. Key terms include work-in-progress, normal and abnormal losses/gains, equivalent units, and features like continuous production and accumulation of direct and indirect costs by process. Process costing allows for periodic cost calculations and allocation of expenses to processes for accurate costs. It is simpler than job costing but provides only historical costs and average costs that are less useful for control.
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Here are the key steps to determine the price to charge for the customer enquiry:
(i) Calculate direct labour cost:
Preparation: 100 hrs x ¢3.60/hr = ¢360
Machine shop: 500 hrs x ¢4.20/hr = ¢2,100
Assembling: 400 hrs x ¢1.50/hr = ¢600
Total direct labour cost = ¢360 + ¢2,100 + ¢600 = ¢3,060
(ii) Calculate fixed overhead absorption based on direct labour hours using the absorption rate of ¢12 per hour.
Total direct labour hours = 100 + 500 + 400 = 1,000
Process costing
The document discusses process costing systems used in manufacturing. Process costing is used for continuous production of similar goods and involves accumulating costs by department. Key points include:
1. Costs are accumulated by department and a unit cost is calculated for each department by dividing total costs by units produced.
2. Costs and units are transferred between departments until reaching finished goods.
3. Inventory of work in process is tracked and assigned costs for incomplete units.
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The document discusses two methods for calculating equivalent units of production: weighted average and first-in, first-out (FIFO). The weighted average method considers beginning inventory but not the stage of completion, while the FIFO method fully considers beginning and ending inventory stages of completion. Equivalent units represent the quantity of fully completed units when accounting for partially completed units. The FIFO method formula calculates equivalent units as beginning units to complete plus units started and finished plus equivalent units in ending inventory.
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This document discusses principles and examples of process costing. Some key points covered include:
- Production is classified by processes and each process account tracks direct materials, labor, expenses and overheads. Cost per unit is calculated at the end of each process.
- Normal loss is credited to the process account at scrap value while abnormal loss is credited at full cost.
- Examples show setting up process accounts to track costs of different products as they move through multiple processes, and calculating unit costs and profits.
- Process loss and wastage distinguishes between normal and abnormal loss.
- Joint products and by-products examples show allocating joint costs between products.
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process costing
- The group members presented on process costing and differences between job order costing and process costing. Job order costing tracks costs by individual jobs while process costing accumulates costs by department for mass produced identical units.
- Weighted average and FIFO methods were discussed for assigning costs in process costing. Cost reconciliation reports track costs through work in process and finished goods accounts.
- Questions provided examples of process costing data to prepare journal entries and cost reconciliation reports tracking materials, labor, and overhead costs through departments.
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This document discusses key concepts in job costing, including:
1) Job costing systems track costs for distinct jobs or orders, as opposed to process costing for mass production.
2) Direct costs like materials and labor can be traced to specific jobs, while indirect costs like overhead must be allocated using cost pools and allocation bases.
3) The seven steps of job costing include identifying the job, direct costs, allocation bases, overhead rates, applying overhead, and calculating total job costs. Journal entries track costs through production.
4) Variances between actual and allocated overhead are written off to cost of goods sold at completion to adjust for over or under allocation.
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This document summarizes key concepts from Chapter Eight of a management accounting textbook, including:
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3) Cost concepts including classification of costs by behavior, function, and period.
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This document discusses different types of costing methods used in manufacturing including job costing, batch costing, contract costing, and process costing. Job costing is used to determine the costs of specific jobs or orders. Batch costing is a variant of job costing where similar products are manufactured in batches. Contract costing is a variant of job costing applied to construction projects. Process costing is used for mass production of standardized goods and tracks costs at each stage of production. The document outlines key features, advantages, and disadvantages of each costing method.
Job costing 3 a
Here are the steps to solve this problem:
1. Calculate the factory cost of each existing job:
Job 1011: Direct materials (Rs. 37,500) + Direct wages (Rs. 30,000) = Rs. 67,500
Factory overheads @ 25% of wages = Rs. 30,000 * 25% = Rs. 7,500
Factory cost = Rs. 67,500 + Rs. 7,500 = Rs. 75,000
Job 1012: Direct materials (Rs. 54,000) + Direct wages (Rs. 42,000) = Rs. 96,000
Factory overheads @ 25% of wages = Rs. 42,000 * 25% = Rs. 10
Process costing
- Process costing is used to determine average costs for standardized goods produced through continuous processes. It involves allocating costs for multiple processes to the finished goods.
- The key steps are: recording costs by process, calculating production quantities, determining normal losses, and allocating costs between processes and finished goods using weighted average or FIFO methods.
- Process costing is common in industries like manufacturing, mining, chemicals where standardized goods are produced through sequential processes and normal losses are inherent.
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This document provides an overview of job order costing and batch costing methods. It defines job order costing as a method used for customer specific orders that are short in duration, such as for consulting firms or manufacturers of specialized goods. Batch costing is used when similar products are made in batches, like pharmaceuticals or garments. The key steps of job order costing include identifying the job, issuing a production order, tracking material, labor and overhead costs, computing total costs, and completing a job cost report. Batch costing similarly tracks costs for a group of similar products produced as a batch.
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The document discusses job costing, which is a product costing method used for unique products made to customer specifications. It describes job costing systems, different costing methods (actual, normal, standard), and reasons why normal and standard costing are preferable to actual costing. The document also provides examples of job costing sheets and case studies calculating costs for different job orders.
Process costing (1)
Process costing is a method used to calculate production costs for industries that produce standardized, homogeneous goods continuously through multiple processes. Costs are accumulated for each stage of production and divided by normal output to determine the cost per unit at each stage. Key terms include work-in-progress, normal and abnormal losses/gains, equivalent units, and features like continuous production and accumulation of direct and indirect costs by process. Process costing allows for periodic cost calculations and allocation of expenses to processes for accurate costs. It is simpler than job costing but provides only historical costs and average costs that are less useful for control.
Job and batch costing
Here are the key steps to determine the price to charge for the customer enquiry:
(i) Calculate direct labour cost:
Preparation: 100 hrs x ¢3.60/hr = ¢360
Machine shop: 500 hrs x ¢4.20/hr = ¢2,100
Assembling: 400 hrs x ¢1.50/hr = ¢600
Total direct labour cost = ¢360 + ¢2,100 + ¢600 = ¢3,060
(ii) Calculate fixed overhead absorption based on direct labour hours using the absorption rate of ¢12 per hour.
Total direct labour hours = 100 + 500 + 400 = 1,000
Process costing
The document discusses process costing systems used in manufacturing. Process costing is used for continuous production of similar goods and involves accumulating costs by department. Key points include:
1. Costs are accumulated by department and a unit cost is calculated for each department by dividing total costs by units produced.
2. Costs and units are transferred between departments until reaching finished goods.
3. Inventory of work in process is tracked and assigned costs for incomplete units.
Topic 9 Comparison Of Financial Statements
There are three main types of business activities: service businesses, trading businesses, and manufacturing businesses. Service businesses generate revenue from fees for services provided. Trading businesses earn profits from the sale of finished goods purchased from others. Manufacturing businesses convert raw materials into finished goods and sell those goods to customers. The financial statements for each type of business are presented differently based on their activities.
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The document discusses two methods for calculating equivalent units of production: weighted average and first-in, first-out (FIFO). The weighted average method considers beginning inventory but not the stage of completion, while the FIFO method fully considers beginning and ending inventory stages of completion. Equivalent units represent the quantity of fully completed units when accounting for partially completed units. The FIFO method formula calculates equivalent units as beginning units to complete plus units started and finished plus equivalent units in ending inventory.
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This document discusses principles and examples of process costing. Some key points covered include:
- Production is classified by processes and each process account tracks direct materials, labor, expenses and overheads. Cost per unit is calculated at the end of each process.
- Normal loss is credited to the process account at scrap value while abnormal loss is credited at full cost.
- Examples show setting up process accounts to track costs of different products as they move through multiple processes, and calculating unit costs and profits.
- Process loss and wastage distinguishes between normal and abnormal loss.
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Over head expensions IN process planning & cost estimation by G.DINESHPIRAN
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1. Calculate equivalent units (EUP)
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- Closing WIP: 3000 units (20% complete) = 600 EUP
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ACG 2071 Managerial Accounting Process Costing Systems .docx
ACG 2071 Managerial Accounting
Process Costing Systems
Minicase
PROCESS COSTING PROBLEM
Spectre Chemicals produces Zaloff in a two department process. Information on the two
departments for March and April, 2011 are as follows:
March 2011:
Department 1: The company had beginning inventory of 6,000 units, 40% completed with a
cost of $45,000. During the month, the department transferred in 22,000 units of the direct
materials with a cost of $10 per unit. Ending inventory was 7,000 units, 30% completed.
Direct labor is $310,500 and factory overhead is $103,500.
Department 2: The company had beginning inventory of 5,000 units, 70% completed with a
cost of $80,000. During the month, direct labor was $175,000 and factory overhead was
$87,500. Ending inventory was 10,000 units, 50% completed.
April 2011:
Department 1: During the month, the department transferred in 20,000 units of the direct
materials with a cost of $11 per unit. Direct labor is $209,000 and factory overhead is
$104,500. Ending inventory is 10,000 units 60% completed.
Department 2: The company had beginning inventory of 5,000 units, 70% completed with a
cost of $80,000. During the month, direct labor is $175,000 and factory overhead is
$87,500.
Required:
Compute the Equivalent Units of Production, Material costs, and Conversion costs for each
department for March and April, 2011.
Complete the attached chart – one for each department and each month
Prepare a cost of production report for March and April 2011.
ACG 2071
Process Cost Systems
Created by: M. Mari
Fall 2009-1
Page 1 of 13
Process Manufacturing
Is the mass production of products in a continuous flow
of steps
Products pass through a series of sequential processes
Each process is identified a separate production,
department, workstation, or work center.
With the exception of the first process or department,
each receives the output from the prior department as
a partially processed product.
Depending on the nature of the process, a company
applies direct labor, overhead, and additional direct
materials to move the product toward completion.
Process Cost System
Assigns direct materials, direct labor, and overhead
to specific processes.
Costs are allocated by department rather than jobs
Manufacturing costs are allocated to products based
on units of production
Manufacturing costs are accumulated and transferred
by department
The total costs associated with each process are then
divided by the number of units passing through that
process to determine the cost per equivalent units
for that process
ACG 2071
Process Cost Systems
Created by: M. Mari
Fall 2009-1
Page 2 of 13
To understand how costs are allocated, first we must decide
how the costs are accumulated. One method is First in, First
out method.
Beverage Production
Costs flow fr.
ACN3101 TOPIC 9 211224.ppt
This document provides information about process costing. It defines process costing as a method used to determine the cost of similar products that are continuously produced and flow through a production process. Costs are accumulated by production departments and assigned to products as an average cost per equivalent unit. The document includes sections on production reports, equivalent units of production, weighted average costing, and cost flows between departments, work in process, finished goods, and cost of goods sold.
Cost accounting
This document provides information on single or output costing including its meaning, utility, costing procedure, elements of cost, components of total cost, cost sheet format and examples. Single or output costing is used when production is uniform, continuous and units produced are identical. It involves determining prime cost, factory cost, total cost and cost per unit. A cost sheet systematically presents various cost elements and is useful
PROCESS COSTING.ppt
This document discusses process costing, including: calculating equivalent units using weighted average and FIFO methods; computing unit costs and inventory values; and contrasting process costing with job order costing. It provides examples of computing equivalent units, costs, inventory values, and cost of goods sold using both weighted average and FIFO process costing methods.
5. process cost systems
The document discusses process costing and provides examples of how it is applied. It begins with an overview of process costing and how it differs from job order costing. It then provides examples of the physical and cost flows for a process manufacturer, showing how direct and indirect materials, direct labor, and factory overhead flow through the production process. The document includes a detailed example of calculating the costs for the Melting Department of a steel manufacturer, including determining equivalent units, calculating unit costs, and allocating costs to completed and partially completed units. It concludes with an example cost of production report for the Melting Department.
Product costing
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 - Chapter 1.pptx
This document outlines the key topics and concepts covered in a course on cost accounting. It includes:
1. Definitions of important cost accounting terms like direct costs, indirect costs, variable costs, fixed costs, and inventoriable costs.
2. Explanations of cost classification frameworks including categorizing costs by elements, functions, behavior, and relationship to production volume.
3. Examples of calculating cost of goods manufactured, cost of goods sold, and unit costs using data from an income statement and manufacturing report.
4. An overview of the chapters that will be covered in the course, including introductions to cost terms and purposes, cost elements, cost-volume-profit analysis, and job costing
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Bba ii cost and management accounting u 3.1 output costing (or unit costing or single costing )
- 1. Output costing (or unit costing or single costing )
- 2. OUTPUT OR UNIT COSTING Output costing (or unit costing or single costing ) is a method of cost ascertainment which is used in those industries which have the following features: (a) Production consists of a single product or a few varieties of the same product with variation in size, shape, quality, etc. and (b) Production is uniform and continuous basis.
- 3. Output costing may be used in (1) Bricks works (2) cement industries (3) Dairies (4) steel mills (5) Breweries (6)sugar mills (7) paper mills, etc.
- 4. COSTING PROCEDURE In order to ascertain the cost of products , a cost sheet is prepared periodically. As the production is uniform and cost units are identical the cost per units are average cost. It is ascertained by dividing the total cost by the number of units produced .cost units may be 1000 bricks ,a barrel of beer, a gallon of milk, a tone of steel/cement/sugar etc. The cost sheet is designed to show the total cost as well as cost per unit of output for a given period.
- 5. Items excluded from cost 1 cash discount 2 interest paid 3 preliminary expenses written off 4 good will written off 5 provision for taxation 6 provision for bad debts 7 Transfer to reserves 8 Donations 9 Income tax paid 10 Dividend paid 11 Profit /loss on sale of fixed assets 12 damages payable at law etc.
- 6. TREATMENT OF STOCK Stocks may be following three types : (a) Stock of raw material (b) stock of work-in -progress (c) stocks of finished (a) Stock of raw material: opening stock of raw materials 10000 Add: purchases 42000 52000 less: closing stock of raw materials 9000 cost of materials consumed 43000
- 7. Stocks of work in progress This is the stock of semi- finished goods. In cost sheet , opening stock of work in progress is added in prime cost along with factory overhead and closing stock of work in progress is subtracted therefrom.Thus opening and closing stocks in work in progress are adjusted in works or factory cost .
- 8. Stock of finished goods In cost sheet , finished goods are adjusted after calculating cost of production . Opening stock of finished goods is added to cost of production and closing stock of finished goods is subtracted there from. The resultant figure is called cost of goods sold.
- 9. The following extract of costing information relates to commodity A for the year ending 31st december 2004 Purchase of raw material 60000/- Direct wages 50000/- Rent rates insurance & works on cost 20000/- carriage in ward 1000/- stock -1 January 2004: Raw materials 10000/- Finished products-2000 tons 8000/- stock 31st December 2004: Raw materials 11000/-
- 10. Con.. Finished product 4000 tons ----- work in progress -1 Jan. 2004 2400/- work in progress – 31st Dec.2004 8000/- Cost of factory supervision 4000/- Sales of finished products 150000/- advertising, discount allowed and selling costs 40 paisa per ton sold. 32000 tons of the commodity were produced during the period. Prepare production statement to ascertain: (a) the cost of the output of the period and cost per ton of production. The net profit.
- 11. References/Sources Cost Accounting by S.P jain K.L Naran Part 6 Chapter 4 Introduction of Unit Costing page no. 4.1
- 12. Thank U