Professional Documents
Culture Documents
Chap 004
Chap 004
Chapter 4
PowerPoint Authors:
Susan Coomer Galbreath, Ph.D., CPA
Charles W. Caldwell, D.B.A., CMA
Jon A. Booker, Ph.D., CPA, CIA
Cynthia J. Rooney, Ph.D., CPA
Copyright2012byTheMcGrawHillCompanies,Inc.Allrightsreserved.
4-2
Quick Check
Process costing is used for products
that are:
a. Different and produced continuously.
b. Similar and produced continuously.
c. Individual units produced to customer
specifications.
d. Purchased from vendors.
4-5
Quick Check
Process costing is used for products
that are:
a. Different and produced continuously.
b. Similar and produced continuously.
c. Individual units produced to customer
specifications.
d. Purchased from vendors.
4-6
Processing Departments
Any unit in an organization where materials, labor,
or overhead are added to the product.
The activities performed in a processing
department are performed uniformly on all
units of production. Furthermore, the output of
a processing department must be homogeneous.
Products in a process costing environment
typically flow in a sequence from one department
to another.
4-7
Learning Objective 1
Work in Finished
Direct Labor
Process Goods
Manufacturing Cost of
Overhead Goods
Sold
4-9
Finished
Direct Labor Jobs
Jobs Goods
Manufacturing Cost of
Overhead Goods
Sold
4-10
Direct Labor
Processing Finished
Department Goods
Manufacturing Cost of
Overhead Goods
Sold
4-11
Work in Process
Department B
Direct
Materials
4-13
Work in Process
Department B
Direct
Materials
Direct
Labor
4-15
Department
Department Department
Department
A
A B
B
4-19
+ = 1
So,
So, 10,000
10,000 units
units 70%
70% complete
complete
are
are equivalent
equivalent to
to 7,000
7,000 complete
complete units.
units.
4-26
Quick Check
For the current period, Jones 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 Jones
have for the period?
a. 10,000
b. 11,500
c. 13,500
d. 15,000
4-27
Quick Check
For the current period, Jones 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 Jones
have for the period?
a. 10,000
10,000 units + (5,000 units 0.30)
b. 11,500 = 11,500 equivalent units
c. 13,500
d. 15,000
4-28
The
The Weighted-Average
Weighted-Average Method
Method This
This method
method
will
will be
be covered
covered in
in the
the main
main portion
portion of
of the
the chapter.
chapter.
4-29
Learning Objective 2
Manufacturing in comparison to
Overhead
other product
Direct costs in process
Labor cost systems.
Weighted-Average An Example
Smith Company reported the following activity in
the Assembly Department for the month of June:
Percent Completed
Units Materials Conversion
Work in process, June 1 300 40% 20%
Weighted-Average An Example
The first step in calculating the equivalent units is to
identify the units completed and transferred out of
Assembly Department in June (5,400 units)
4-35
Weighted-Average An Example
The second step is to identify the equivalent units of production in
ending work in process with respect to materials for the month
(540 units) and adding this to the 5,400 units from step one.
4-36
Weighted-Average An Example
The third step is to identify the equivalent units of production in
ending work in process with respect to conversion for the month
(270 units) and adding this to the 5,400 units from step one.
4-37
Weighted-Average An Example
Equivalent units of production always equals:
Units completed and transferred
+ Equivalent units remaining in work in process
4-38
Weighted-Average An Example
6,000 Units Started
Materials
Beginning Ending
Work in Process 5,100 Units Started Work in Process
300 Units and Completed 900 Units
40% Complete 60% Complete
Weighted-Average An Example
6,000 Units Started
Conversion
Beginning Ending
Work in Process 5,100 Units Started Work in Process
300 Units and Completed 900 Units
20% Complete 30% Complete
Learning Objective 3
Learning Objective 4
Applying Costs
4-47
Applying Costs
4-48
Applying Costs
4-49
Learning Objective 5
Prepare a cost
reconciliation report.
4-53
Reconciling Costs
4-54
Reconciling Costs
4-55
Operation Costing
Operation cost is a hybrid of job-order and
process costing because it possesses
attributes of both approaches.
Operation
Operation costing
costing is
is
commonly
commonly used
used when
when
batches
batches of
of many
many
different
different products
products pass
pass
through
through the
the same
same
processing
processing department.
department.