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Cost Management ACCOUNTING AND CONTROL

Cost Management ACCOUNTING AND CONTROL. HANSEN & MOWEN. 6. CHAPTER. Product and Service Costing: A Process Systems Approach. 1. OBJECTIVE. Tableting. Bottling. Process-Costing Systems: Basic Operational and Cost Concepts. An Operational Process System. Mixing. Selecting Sifting

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Cost Management ACCOUNTING AND CONTROL

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  1. Cost ManagementACCOUNTING AND CONTROL HANSEN & MOWEN

  2. 6 CHAPTER Product and Service Costing: A Process Systems Approach

  3. 1 OBJECTIVE Tableting Bottling Process-Costing Systems: Basic Operational and Cost Concepts An Operational Process System Mixing Selecting Sifting Measuring Blending Loading Pressing Costing Loading Counting Capping Packaging

  4. 1 OBJECTIVE Job 205 Job 206 Job 207 Finished Goods Finished Goods Finished Goods Process-Costing Systems: Basic Operational and Cost Concepts Job-Order Costing Manufacturing Costs Direct Materials Direct Labor Applied Overhead

  5. 1 OBJECTIVE Picking Tableting Bottling Finished Goods Process-Costing Systems: Basic Operational and Cost Concepts Process Costing Manufacturing Costs Direct Materials Direct Labor Applied Overhead

  6. 1 OBJECTIVE Process-Costing Systems: Basic Operational and Cost Concepts Operational Model of an Accounting Information System

  7. 1 OBJECTIVE Process-Costing Systems: Basic Operational and Cost Concepts Basic Features of a Process Costing System

  8. 2 OBJECTIVE Process Costing with No Work-in-Process Inventories Services that are homogeneous and repetitively produced can use the process-costing approach. Examples: check processing in a bank, changing oil, dental cleaning, surgical procedures

  9. 2 OBJECTIVE Process Costing with No Work-in-Process Inventories JIT manufacturing firms minimize inventories and strive to reduce work-in-process inventories to insignificant levels.

  10. 3 OBJECTIVE Process Costing with Ending Work-in-Process Inventories PSA Department Production Report for January

  11. 3 OBJECTIVE Process Costing with Ending Work-in-Process Inventories PSA Department Production Report for January

  12. 3 OBJECTIVE Unit Information Units to be accounted for: Units in beginning work in process 0 Units started and completed 24,000 Units to be accounted for 24,000 Physical Flow Equivalent Units Units accounted for: Units 20,000 20,000 20,000 Units in ending work in process (25% complete) 4,000 1,000 Units accounted for 24,000 Work completed 21,000 Process Costing with Ending Work-in-Process Inventories • Analysis of the flow of physical units • Calculation of equivalent units • Computation of unit cost • Valuation of inventories (goods transferred out and ending work in process) • Cost reconciliation Cost of Production Report

  13. 3 OBJECTIVE Process Costing with Ending Work-in-Process Inventories Nonuniform Application of Productive Inputs

  14. 4 OBJECTIVE FIFO Costing Method Under the FIFO costing method, the equivalent units and manufacturing costs in beginning work in process are excluded from the current-period unit cost calculation. Thus, FIFO recognizes that the work and costs carried over from the prior period legitimately belong to that period.

  15. 4 OBJECTIVE FIFO Costing Method Estrella Company Mixing Department Product and Cost Data: October

  16. 4 OBJECTIVE FIFO Costing Method Step 1: Physical Flow Analysis Physical Flow Schedule: Mixing Department

  17. 4 OBJECTIVE FIFO Costing Method Step 2: Calculation of Equivalent Units Equivalent Units of Production: FIFO Method

  18. 4 OBJECTIVE FIFO Costing Method Step 3: Computation of Unit Cost

  19. 4 OBJECTIVE FIFO Costing Method Step 4: Valuation of Inventories

  20. 4 OBJECTIVE FIFO Costing Method Step 5: Cost Reconciliation

  21. 4 OBJECTIVE FIFO Costing Method Production Report: Mixing Department

  22. 4 OBJECTIVE FIFO Costing Method

  23. 5 OBJECTIVE Weighted Average Costing Method Step 1: Physical Flow Analysis Physical Flow Schedule: Mixing Department

  24. 5 OBJECTIVE Weighted Average Costing Method Step 2: Calculation of Equivalent Units Equivalent Units of Production: Weighted Average Method

  25. 5 OBJECTIVE Weighted Average Costing Method Step 3: Computation of Unit Cost

  26. 5 OBJECTIVE Weighted Average Costing Method Step 4: Valuation of Inventories

  27. 5 OBJECTIVE Weighted Average Costing Method Step 5: Cost Reconciliation

  28. 5 OBJECTIVE Weighted Average Costing Method Production Report: Mixing Department

  29. 5 OBJECTIVE Weighted Average Costing Method

  30. 5 OBJECTIVE Weighted Average Costing Method FIFO Compared with Weighted Average

  31. 6 OBJECTIVE Treatment of Transferred-In Goods Estrella Company Tableting Department Production and Cost Data: October

  32. 6 OBJECTIVE Treatment of Transferred-In Goods Step 1: Physical Flow Analysis

  33. 6 OBJECTIVE Treatment of Transferred-In Goods Step 2: Calculation of Equivalent Units Equivalent Units of Production: Weighted Average Method

  34. 6 OBJECTIVE Treatment of Transferred-In Goods Step 3: Computation of Unit Cost

  35. 6 OBJECTIVE Treatment of Transferred-In Goods Step 4: Valuation of Inventories

  36. 6 OBJECTIVE Treatment of Transferred-In Goods Production Report: Tableting Department

  37. 6 OBJECTIVE Treatment of Transferred-In Goods

  38. 7 OBJECTIVE Process 1 (a) Batch B (b) Batch B (c) Process 2 Batch A (f) (d) Batch B Operation Costing Basic Features of Operating Costing Direct Materials Continued on the next slide Panel A: Physical Flow

  39. 7 OBJECTIVE (g) Batch A Process 3 (h) (i) Batch A (j) (e) Finished Goods Operation Costing Process 1 (b) Batch B (c) Process 2 (d) Batch B

  40. 7 OBJECTIVE Operation Costing

  41. 7 OBJECTIVE Operation Costing Operation Costing Example

  42. 7 OBJECTIVE Operation Costing Operation Costing Example The following costs are collected from work orders:

  43. 7 OBJECTIVE Operation Costing Operation Costing Example 1. Work in Process—Picking 4,000 Materials 4,000 2. Work in Process—Picking 1,000 Conversion Costs Applied 1,000 3. Work in Process—Encapsulating 5,000 Work in Process—Picking 5,000 4. Work in Process—Encapsulating 3,000 Conversion Costs Applied 3,000 Continued

  44. 7 OBJECTIVE Operation Costing Operation Costing Example 5. Work in Process—Bottling 8,000 Work in Process—Encapsulating 8,000 6. Work in Process—Bottling 1,500 Conversion Costs Applied 1,500 7. Finished Goods 9,500 Work in Process—Bottling 9,500 The journal entries for the other work order are not shown but would follow a similar pattern.

  45. 8 OBJECTIVE Appendix: Spoiled Units

  46. 8 OBJECTIVE Appendix: Spoiled Units

  47. 8 OBJECTIVE Appendix: Spoiled Units

  48. 8 OBJECTIVE Appendix: Spoiled Units

  49. 8 OBJECTIVE Appendix: Spoiled Units

  50. 8 OBJECTIVE Appendix: Spoiled Units

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