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    MODULE 8 Learning Activity 1-8

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    Regina Phalange
    Process costing is used to accumulate manufacturing costs for a single product produced continuously. Costs are accumulated in each production department until the product is transferred to the next department or finished goods. There are three types of product flow: sequential, parallel, and selective. Process costing systems use either the first-in, first-out or average costing methods. Equivalent production converts partially completed units into fully completed units to assign costs. The cost of production report tracks costs incurred by each department.

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    MODULE 8 Learning Activity 1-8

    Uploaded by

    Regina Phalange
    42 views2 pages
    Process costing is used to accumulate manufacturing costs for a single product produced continuously. Costs are accumulated in each production department until the product is transferred to the next department or finished goods. There are three types of product flow: sequential, parallel, and selective. Process costing systems use either the first-in, first-out or average costing methods. Equivalent production converts partially completed units into fully completed units to assign costs. The cost of production report tracks costs incurred by each department.

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    Process costing is used to accumulate manufacturing costs for a single product produced continuously. Costs are accumulated in each production department until the product is transferred to the next department or finished goods. There are three types of product flow: sequential, parallel, and selective. Process costing systems use either the first-in, first-out or average costing methods. Equivalent production converts partially completed units into fully completed units to assign costs. The cost of production report tracks costs incurred by each department.

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    42 views2 pages

    MODULE 8 Learning Activity 1-8

    Uploaded by

    Regina Phalange
    Process costing is used to accumulate manufacturing costs for a single product produced continuously. Costs are accumulated in each production department until the product is transferred to the next department or finished goods. There are three types of product flow: sequential, parallel, and selective. Process costing systems use either the first-in, first-out or average costing methods. Equivalent production converts partially completed units into fully completed units to assign costs. The cost of production report tracks costs incurred by each department.

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    of 2

    TOPIC 1: INTRODUCTION PROCESS COSTING SYSTEMS - OVERVIEW OF THE PROCESS

    COSTING
    Learning Activity 8-1
    1. Process costing is used in a manufacturing process of a single product on a Continuing basis
    2. In process costing manufacturing costs is accumulated in each Processing Department until
    completed and transferred to finished goods

    TOPIC 2: NATURE AND CHARACTERISTICS OF PROCESS COSTING


    Learning Activity 8-2
    1. What are the characteristics of process costing?

    2. List at least two (2) similarities of Job Order Costing and Process Costing?
    a.
    3. The nature of a product under Job Order Costing is each job is different and Process Costing is all
    products are identical

    TOPIC 3: PRODUCT FLOW IN PROCESS COSTING


    Learning Activity 8-3
    1. What are the three (3) product flow in process costing?
    a. Sequential Product Flow
    b. Parallel Product Flow
    c. Selective Product Flow
    2. Sequential Product Flow This product flow occurs when each manufactured product undergoes the
    same set of operations
    3. Parallel Product Flow This product flow occurs when processes are done simultaneously and then
    brought together to the final process for completion
    4. Selective Product Flow This product flow occurs when a product is transferred from the initial
    processing department to different departments within the plant depending on the desired final product

    TOPIC 4: METHODS OF PROCESS COSTING: FIRST-IN, FIRST-OUT METHOD AND AVERAGE


    METHOD
    Learning Activity 8-4
    1. FIFO Method This is the method of process costing that assumes units that were first place into
    process are the first units to be completed
    2. Average Method This is the method of process costing that assumes that all units completed are all
    processed at the same time?

    TOPIC 5: EQUIVALENT PRODUCTION 


    Learning Activity 8-5
    1. What is the concept of equivalent production as used in the process costing system?
    - Partially completed units are converted equivalent to fully completed units for purpose of
    assigning costs
    2. Equivalent production of an ending inventory of 100 units 50% completed is 50 units.

    TOPIC 6. COST OF PRODUCTION REPORT


    Learning Activity 8-6
    1. What is the Cost of Production Report?
    - It is the report used in process costing that shows the costs incurred by a given department
    during the period
    2. List the information shown in the Cost of Production Report.
    a. Total unit costs from preceding department
    b. Materials, Labor, and Overhead added by the department during the current period
    c. Unit cost added by the department
    d. Total and unit cost accumulated by the department to the end of operations
    e. The cost of the beginning and ending work in process inventories
    f. The total costs transferred to the succeeding processing department of finished goods

    TOPIC 7. RECORDING OF MANUFACTURING COSTS


    Learning Activity 8-7
    1. What are the entries to record the assignment of manufacturing costs to departments?
    Work in Process- Department xxx
    Raw Materials xxx
    Payroll xxx
    Applied Factory Overhead xxx
    2. What are the entries for the transfer of cost to a succeeding department assuming the whole process
    was composed of three (3) departments?

    3. What is the entry for the transfer of finished goods from the final department?

    TOPIC 8. APPLICATION OF COST ELEMENTS TO PRODUCTION


    Learning Activity 8-8
    1. What are the two (2) kinds of application of cost elements to production?
    a. Even Application of Cost Element
    b. Uneven Application od Cost Element
    2. Even Application of Cost Element This method considers that all cost elements are added uniformly
    or proportionately at any stage during the production process
    3. Uneven Application of Cost Element This method considers that each cost element incurred during
    production varies at any stage

    TOPIC 9: COMPREHENSIVE ILLUSTRATION – PROCESS COSTING 


    Learning Activity 8-9
    1. How to determine equivalent production when cost elements are applied evenly?
    - It is determined by multiplying all cost element by the percentage of work done
    2. Cost of production report has two parts. The 1st part is the Quantity Schedule that accounts for the
    units in the production and the 2nd part is the Cost Analysis that accounts for the cost of the units in
    the production
    3. Cost of the completed units from department A when transferred to department B is debited to Work
    in Process Department- B and credited to Work in Process- Department A

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