Kế toán, kiểm toán - Chapter 4: Systems design: Process costing

Systems Design:Process Costing Chapter4Types of Costing Systems Used to Determine Product CostsJob-orderCostingProcessCosting Many units of a single, homogeneous product flow evenly through a continuous production process. One unit of product is indistinguishable from any other unit of product.. Each unit of product is assigned the same average cost. Typical process cost applications: Petrochemical refinery Paint manufacturer Paper millJob order costingMany jobs are worked during the period.Costs are accumulated by individual jobs.Job cost sheet is the key document.Unit cost computed by job.Process costingA single product is produced for a long period of time.Costs are accumulated by departments. Department production report is key document. Unit costs are computed by department.Differences Between Job-Order and Process CostingSequential Processing DepartmentsProcessing Department 1Processing Department 2Processing Department 3Finished GoodsStartBasic raw materialsProcessing costsPartially completed goodsPartially completed goodsProcessing costsCompleted goodsProcessing costsParallel Processing DepartmentsProcessing Department 1Processing Department 2Processing Department 3Finished GoodsStartBasic raw materialsProcessing costsPartially completed goodsPartially completed goodsProcessing costsCompleted goodsProcessing costsProcessing Department AFlow of Materials, Labor and Overhead CostsFinishedGoodsCost of GoodsSoldDirect LaborProcessingDepartmentDirect MaterialManufacturingOverhead Raw MaterialsPurchasesDirectMaterialOtherOverheadManufacturing OverheadFlow of Materials, Labor and Overhead Costs Work in Process Finishing Department Work in Process Mixing DepartmentDirect MaterialDirect MaterialIndirect MaterialIndirect MaterialActualApplied Wages PayableDirect MaterialDirect MaterialFlow of Materials, Labor and Overhead CostsDirect LaborDirect LaborDirect LaborIndirectLaborOtherOverheadManufacturing OverheadIndirect MaterialActualAppliedIndirectLabor Work in Process Finishing Department Work in Process Mixing Department Wages PayableDirect MaterialDirect MaterialFlow of Materials, Labor and Overhead CostsDirect LaborDirect LaborDirect LaborIndirectLaborOverheadApplied to Work inProcessAppliedOverheadAppliedOverheadOtherOverheadManufacturing OverheadIndirect MaterialActualAppliedIndirectLabor Work in Process Finishing Department Work in Process Mixing DepartmentFlow of Materials, Labor and Overhead CostsNow, let’s transfer the partially completed goods fromMixing DepartmenttoFinishing Department.Flow of Materials, Labor and Overhead CostsDirect MaterialDirect LaborAppliedOverheadDirect MaterialDirect LaborAppliedOverheadTransferred to FinishingTransferred from Mixing Work in Process Finishing Department Work in Process Mixing DepartmentFlow of Materials, Labor and Overhead CostsThe goods have been completed in the Finishing Department and will be transferred to Finished Goods Inventory when they are ready to be sold.Finished Goods Cost of Goods SoldFlow of Materials, Labor and Overhead CostsDirect MaterialDirect LaborAppliedOverheadTransferred from Dept. ACost of GoodsSold Cost of GoodsSold Cost of GoodsManufactured Cost of Goods Manufactured Work in Process Finishing DepartmentMaterials, Labor, and Overhead Cost EntriesFlow of Materials, Labor and Overhead CostsFlow of Materials, Labor and Overhead CostsFlow of Materials, Labor and Overhead CostsFlow of Materials, Labor and Overhead CostsFlow of Materials, Labor and Overhead CostsEquivalent Units of ProductionEquivalent units are partially complete and are part of work in process inventory. It is the concept of expressing partially completed products as a smaller number of fully completed units.+=Two one-half completed products are equivalent to one completed product. So, 10,000 units 70% complete are equivalent to 7,000 complete units. For the current period, Matrix started 15,000 units and completed 10,000 units, leaving 5,000 units in process 30 percent complete. How many equivalent units of production did Matrix have for the period? a. 10,000 b. 11,500 c. 13,500 d. 15,000Quick  For the current period, Matrix started 15,000 units and completed 10,000 units, leaving 5,000 units in process 30 percent complete. How many equivalent units of production did Matrix have for the period? a. 10,000 b. 11,500 c. 13,500 d. 15,000Quick  10,000 units + (5,000 units × .30)  = 11,500 equivalent unitsEquivalent Units of ProductionTo calculate the cost perequivalent unit for the period:Cost perequivalent unit=Costs for the periodEquivalent units of productionfor the periodNow assume that Matrix incurred $27,600 in production costs for the 11,500 equivalent units of production. What was Matrix’s cost per equivalent unit for the period? a. $1.84 b. $2.40 c. $2.76 d. $2.90Quick Now assume that Matrix incurred $27,600 in production costs for the 11,500 equivalent units of production. What was Matrix’s cost per equivalent unit for the period? a. $1.84 b. $2.40 c. $2.76 d. $2.90Quick $27,600 ÷ 11,500 equivalent units = $2.40 per equivalent unitWeighted Average MethodUnder the weighted-average method equivalent units will always be calculated as follows:Weighted Average MethodMatrix, Inc. reported the following activity in Mixing Department for the month of June:Equivalent units are calculated as follows:Weighted Average MethodEquivalent units are calculated as follows:Weighted Average MethodEquivalent units are calculated as follows:Weighted Average MethodEquivalent units of production always equals: Units completed and transferred + Equivalent units remaining in work in processBeginningWork in Process300 Units40% CompleteEndingWork in Process900 Units60% Complete6,000 Units Started5,400 Units Completed5,100 Units Startedand CompletedWeighted Average MethodMaterials5,400 Units Completed 540 Equivalent Units900 × 60%5,940 Equivalent units of production6,000 Units Started5,400 Units Completed 270 Equivalent Units900 × 30%5,670 Equivalent units of productionWeighted Average MethodConversionBeginningWork in Process300 Units40% CompleteEndingWork in Process900 Units30% Complete5,100 Units Startedand CompletedProduction ReportProduction ReportSection 1Section 2Section 3A computation of cost per equivalent unit. Quantity schedule with computation of equivalent units. A reconciliation of cost flows for the period.Double Diamond Skis uses process costing to determine unit costs in its Shaping and Milling Department. Double Diamond uses the weighted average cost procedure.Using the following information for the month of May, let’s prepare a production report for Shaping and Milling. Production Report ExampleWork in process, May 1: 200 units Materials: 50% complete. $ 3,000 Conversion: 30% complete. 1,000 Units started into production in May: 5,000Units completed and transferred out in May: 4,800Costs added to production in May Materials cost $ 74,000 Conversion cost 70,000 Work in process, May 31: 400 units Materials 40% complete. Conversion 25% complete.CostProduction Report ExampleStep: Quantity Schedule with Equivalent UnitsProduction Report ExampleProduction Report ExampleStep: Quantity Schedule with Equivalent Units Section: Compute cost per equivalent unitProduction Report ExampleProduction Report Example$77,000 ÷ 4,960 units = $15.524 (rounded) Section: Compute cost per equivalent unitProduction Report Example$71,000 ÷ 4,900 units = $14.490 (rounded) Section: Compute cost per equivalent unit Section : Cost ReconciliationProduction Report Example4,800 units @ $30.014Production Report Example Section : Cost Reconciliation160 units @ $15.524Production Report Example100 units @ $14.49All costs accounted for Section : Cost ReconciliationEnd of Chapter 4