Chapter 17
This presentation is the property of its rightful owner.
Sponsored Links
1 / 19

Chapter 17 PowerPoint PPT Presentation


  • 113 Views
  • Uploaded on
  • Presentation posted in: General

Chapter 17. Sequential Processing Departments. T-Account Model of Process Costing Flows. Process Costing and Direct Labor. Direct Materials. Direct labor costs may be small in comparison to other product costs in process cost systems. Mfg. Ovhd. Dollar Amount. Direct Labor.

Download Presentation

Chapter 17

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Chapter 17

Chapter 17


Sequential processing departments

Sequential Processing Departments


T account model of process costing flows

T-Account Model of Process Costing Flows


Process costing and direct labor

Process Costing and Direct Labor

DirectMaterials

Direct labor costsmay be smallin comparison toother product

costs in processcost systems.

Mfg. Ovhd.

Dollar Amount

DirectLabor

Type of Product Cost


Process costing and direct labor1

Process Costing and Direct Labor

DirectMaterials

Direct labor costsmay be smallin comparison toother product

costs in processcost systems.

Conversion

Dollar Amount

Type of Product Cost

Direct labor and manufacturing overhead iscombined into one product cost called conversion.


Production report example

Production Report Example

  • Global Defense uses process costing to determine unit costs in its Assembly Department.

  • Upon completion, units are transferred to the Testing Department.

  • Direct materials are added at the beginning of the assembly process. Conversion costs are added evenly during assembly.


January 2009 assembly department no beginning no ending inventory

January 2009Assembly Department - No Beginning/No Ending Inventory

Work in process, January 1: 0 units

Materials: $ 0

Conversion: 0

Production started during January: 400 units

Production completed during January: 400 units

Costs added to production in January

Materials cost $ 32,000

Conversion cost 24,000

Work in process, January 31 0 units

Manufacturing Costs in Ending Inventory: ?

Manufacturing Costs transferred out in January: ?


February 2009 assembly department no beginning some ending inventory

February 2009Assembly Department - No Beginning/Some Ending Inventory

Work in process, February 1: 0 units

Materials: $ 0

Conversion: 0

Production started during February: 400 units

Production completed during February: 175 units

Costs added to production in February

Materials cost $ 32,000

Conversion cost 18,600

Work in process, February 29 225 units

Materials 100% complete

Conversion 60% complete

Manufacturing Costs in Ending Inventory: ?

Manufacturing Costs transferred out in February: ?


Equivalent units of production

Equivalent Units of Production

Equivalent unitsare partially complete and are part of work in process inventory. Partially completed products are expressed in terms of a smaller number of fully completed units.


Equivalent units of production1

+

=

1

Equivalent Units of Production

Two half completed products are equivalent to one completed product.

So, 10,000 units 70 percent completeare equivalent to 7,000 complete units.


Quick check

Quick Check 

For the current period, Jones started 15,000 units and completed 10,000 units, leaving 5,000 units in process that were 30 percent complete for conversion costs. How many equivalent units of production did Jones have for the period?

a. 10,000

b. 11,500

c. 13,500

d. 15,000


Calculating and using equivalent units of production

Calculating and Using Equivalent Units of Production

To calculate the cost perequivalent unit for the period:

Cost perequivalent unit

Costs for the periodEquivalent units of productionfor the period

=


Chapter 17

Quick Check 

Now assume that Jones incurred $27,600 in conversion costs for the 11,500 equivalent units of production. What was Jones’ conversion cost per equivalent unit for the period?

a.$1.84

b.$2.40

c.$2.76

d.$2.90


Chapter 17

Quick Check 

Now assume that Jones incurred $27,600 in production costs for the 11,500 equivalent units of production. What was Jones’ cost per equivalent unit for the period?

a.$1.84

b.$2.40

c.$2.76

d.$2.90

$27,600 ÷ 11,500 equivalent units

= $2.40 per equivalent unit


March 2009 assembly department some beginning some ending inventory

March 2009Assembly Department - Some Beginning/Some Ending Inventory

Work in process, March 1: 225 units

Materials: 100% complete $ 18,000

Conversion: 60% complete 8,100

Production started during March: 275 units

Production completed during March: 400 units

Costs added to production in March:

Materials cost $ 19,800

Conversion cost 16,380

Work in process, March 31: 100 units

Materials 100% complete

Conversion 50% complete

Manufacturing Costs in Ending Inventory: ?

Manufacturing Costs transferred out in March: ?


March 2009 testing department with transferred in costs w a method

March 2009Testing Department with Transferred-in Costs – W.A.Method

Work in process, March 1: 240 units

Transferred-in 100% complete $ 33,600

Materials: 0% complete 0

Conversion: 62.5% complete 18,000

Transferred-in during March: 400 units

Production completed during March: 440 units

Costs added to production in March:

Transferred-in cost $ 52,000

Materials cost 13,200

Conversion cost 48,600

Work in process, March 31: 200 units

Transferred-in 100% complete

Materials 0% complete

Conversion 80% complete

Manufacturing Costs in Ending Inventory: ?

Manufacturing Costs transferred out in March: ?


March 2009 testing department with transferred in costs fifo method

March 2009Testing Department with Transferred-in Costs – FIFO Method

Work in process, March 1: 240 units

Transferred-in 100% complete $ 33,600

Materials: 0% complete 0

Conversion: 62.5% complete 18,000

Transferred-in during March: 400 units

Production completed during March: 440 units

Costs added to production in March:

Transferred-in cost $ 52,480

Materials cost 13,200

Conversion cost 48,600

Work in process, March 31: 200 units

Transferred-in 100% complete

Materials 0% complete

Conversion 80% complete

Manufacturing Costs in Ending Inventory: ?

Manufacturing Costs transferred out in March: ?


  • Login