BENEFITS OF STANDARD
COSTING
Companies that use process-
costing systems produce masses
of identical or similar units of
output. In such companies,
it is fairly easy to set standards
for quantities of inputs needed to
produce output.
BENEFITS OF STANDARD
COSTING
finishes. The different types of
direct materials used and the
STANDARD-
operations performed are
few, but used in various
combinations, they yield a wide
variety of products.
BENEFITS OF STANDARD
COSTING
Under the standard-costing method,
teams of design and process
engineers, operations personnel, and
management
accountants work together to
Conversion Costs Control (similar
determine separate standard costs
per equivalent unit on the basis of
different technical
processing specifications for each
product.
BENEFITS OF STANDARD
COSTING BENEFITS OF STANDARD
Standard cost per input unit can
then be multiplied by input
quantity standards to develop
standard cost per output unit.
COSTING
METHOD
ACCOUNTING FOR
VARIANCES
Process-costing systems using
standard costs record actual
direct material costs in Direct
Materials Control and
actual conversion costs in
to Variable and Fixed Overhead
Control in Chapter 8).
COSTING
The weighted-average and FIFO
methods become very
complicated when used in
process industries that pro-
duce a wide variety of similar
products.
The weighted-average method
computes unit costs by dividing
total costs in the
Work in Process account by total
equivalent units completed to
date, and
assigns this average cost to units
completed and to units in ending
work in process inventory.
ACCOUNTING FOR
VARIANCES
In the journal entries that follow,
the first two record these actual
costs. In entries 3 and 4a, the
Work-in-Process—
Assembly account accumulates
direct material costs and
conversion costs at standard
costs.