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Ch6 - Product N Service Costing
Ch6 - Product N Service Costing
Ch6 - Product N Service Costing
MANAGEMENT
PowerPoint Presentation by ACCOUNTING
Gail B. Wright
Professor Emeritus of Accounting 8th EDITION
Bryant University
BY
© Copyright 2007 Thomson South-Western, a part of The
Thomson Corporation. Thomson, the Star Logo, and
South-Western are trademarks used herein under license.
HANSEN & MOWEN
JOB-ORDER
JOB-ORDER COSTING:
COSTING:
Definition
Definition
4
LO 1
JOB-ORDER COSTING
The
The key
key feature
feature of
of job-order
job-order costing
costing
is
is that
that the
the cost
cost of
of 11 job
job differs
differs from
from
that
that of
of another
another and
and must
must be
be tracked
tracked
separately.
separately.
5
LO 1
PROCESS
PROCESS COSTING:
COSTING: Definition
Definition
6
LO 1
JOB-ORDER COSTING
The
The key
key feature
feature of
of process
process costing
costing is
is
that
that the
the products
products produced
produced are
are
homogeneous and therefore have
the same cost.
7
LO 1
COMPARING COSTING
SYSTEMS
Accumulates
costs by process.
Accumulates
costs by job.
EXHIBIT 6-1
8
LO 2
9
LO 2
SUPLISHAKE-001
Materials cost $1,780
Direct labor $300 (20 hours x $15)
Overhead $240 (20 hours x $12)
Job 001
Materials . . . . . . . . . . $1,780
Labor . . . . . . . . . . . . . 300
Overhead . . . . . . . . . . 240
Total . . . . . . . . . . . . . . $2,320
Unit cost ($2,320/200) $11.60
10
LO 2
11
LO 2
WORK-IN-PROCESS:
WORK-IN-PROCESS: Definition
Definition
12
LO 4
EQUIVALENT
EQUIVALENT FULL
FULL UNITS:
UNITS:
Definition
Definition
13
LO 4
DEFINING
DEFINING UNIT
UNIT OF
OF
PRODUCTION:
PRODUCTION: Concept
Concept
Equivalent full
units (EFU)
necessary to
calculate unit
cost.
EXHIBIT 6-13
14
LO 5
5 STEPS TO PREPARE
PRODUCTION REPORT
1. Physical units flow analysis
2. Calculation of equivalent units
3. Computation of unit cost
4. Valuation of inventories
a. Goods transferred out
b. Ending work in process
5. Cost reconciliation
15
LO 5
HEALTHBLEND’S
HEALTHBLEND’S PICKING
PICKING
DEPT.:
DEPT.: July
July Costs
Costs
Production
Units in process July 1, 75% complete 20,000
Units complete & transferred out 50,000
Units in process July 31, 25% complete 10,000
Costs
Work in process, July 1 $ 3,525
Cost added during July 10,125
16
LO 5
Reconciling units
to account for.
EXHIBIT 6-15
17
LO 5
EXHIBIT 6-14
18
LO 5
EXHIBIT 6-14
Unit cost = $13,625 / 52,500 = $0.26 per EFU
19
LO 5
EXHIBIT 6-14
Unit cost = $13,625 / 52,500 = $0.26 per EFU
Transferred out ($0.26 x 50,000 = $13,000
EWIP ($0.26 x 2,500) = 650
Total cost assigned = $13,650 20
LO 5
21
LO 5
WEIGHTED AVERAGE:
Evaluation
Major benefit
Simplicity
?
Major disadvantage
Accuracy
? in computing unit costs for
current period & for beginning WIP
22
LO 6
NONUNIFORM
NONUNIFORM INPUTS:
INPUTS:
Definition
Definition
23
LO 6
EXHIBIT 6-19
24
LO 7
HEALTHBLEND’S
HEALTHBLEND’S PICKING
PICKING
DEPT.:
DEPT.: July
July Costs
Costs
Production
Units in process July 1, 75% complete 20,000
Units complete & transferred out 50,000
Units in process July 31, 25% complete 10,000
Costs
Work in process, July 1 $ 3,525
Cost added during July 10,125
Remember
25
LO 7
EXHIBIT 6-21 26
LO 8
27
CHAPTER 6
THE
THE END
END
28