Process Costing

1 Used for the production of large volume of homogenous products.

2 Accumulate cost by DEPARTMENT, no by job.

Reports

Every department prepares a report called cost of production report. It contains

1 Units to account for
2 Units accounted for
3 Cost to account for
4 Cost accounted for
5 Equivalent units of production (EUP)
Where did units placed go?
Where did costs go?
How many units if it wer

Techniques

1 Prepare EUP table

2 Compute unit cost
3 Reconcile UTAF with UAF and CTAF with CAF

FORMAT FOR PROCESS COSTING COMPUTATIONS

Compute EUP:
Materials Conversion Cost Transferred In
Units % complete EUP % Complete EUP % Complete
Transferred Out
EWIP
Normal lost
Abnormal Lost
EUP per Average
Less: BWIP (complete)
EUP per FIFO

Note:
1 If the problem is silent, materials are added at the beginning of production.
2 Transferred in is accounted similar to materials.
genous products.

on report. It contains

units placed go?

ow many units if it were completed as of the moment?

Compute Unit Cost: (Total Cost / EUP)

Transferred In Total Cost EUP Unit Cost
EUP Materials
CC
Transferred In

Reconciliation:

Cost of Goods transferred out XX

PLUS: Normal Lost XX XX

EWIP XX
Abnormal lost XX
Cost accounted for XX

g of production.