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Reminder. Mid-semester exam (25%) 26 August 2007 - Sunday Starts at 10:00 am Group 1 at DKEP 1 Group 2 at DKEP 10. Week 6. Process Costing (Part II). Outline.

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Reminder

Reminder

  • Mid-semester exam (25%)

  • 26 August 2007 - Sunday

  • Starts at 10:00 am

  • Group 1 at DKEP 1

  • Group 2 at DKEP 10


Reminder

Week 6

Process Costing

(Part II)


Reminder

Outline

1.How process costing is affected by nonuniform application of manufacturing inputs and the existence of multiple processing departments.

2.Departmental production report using the FIFO method.


Reminder

Healthblend Nutritional Supplements

Nonuniform Application of Manufacturing Inputs


Reminder

Healthblend Nutritional Supplements

60,000 equivalent units of material and conversion cost transferred out

10,000 units

Beginning WIP inventory

50,000 units

Started and completed

Equivalent Units

Picking Department

Materials, 100% complete; conversion cost, 50% complete

100% complete as to both materials and conversion cost


Reminder

Healthblend Nutritional Supplements

10,000 units

Beginning WIP inventory

20,000 units

50,000 units

Ending WIP inventory

Started and completed

September

Equivalent Units

Picking Department

  • Conversion

  • MaterialsCosts

  • 60,00060,000

    Materials, 100% complete; conversion cost, 40% complete


    Reminder

    Healthblend Nutritional Supplements

    10,000 units

    Beginning WIP inventory

    20,000 units

    50,000 units

    Ending WIP inventory

    Started and completed

    September

    Equivalent Units

    Picking Department

    • Conversion

  • MaterialsCosts

  • 60,00060,000

    20,000 8,000


    Reminder

    Healthblend Nutritional Supplements

    10,000 units

    Beginning WIP inventory

    50,000 units

    20,000 units

    Started and completed

    Ending WIP inventory

    September

    Equivalent Units

    Picking Department

    • Conversion

  • MaterialsCosts

  • 60,00060,000

    September

    20,000 8,000

    Equivalent units

    80,00068,000


    Reminder

    Materials$12,000

    Conversion

    cost$3,200

    Materials $1,600

    Conversion

    cost$200

    Healthblend Nutritional Supplements

    Materials$13,600

    EU80,000

    Conver. Cost $3,400

    EU68,000

    10,000 units

    Beginning WIP inventory

    50,000 units

    20,000 units

    Started and completed

    Ending WIP inventory

    = Cost per EU$0.22

    = Cost per EU$0.05

    September

    August

    October


    Reminder

    Healthblend Company

    Picking Department

    Production Report for September 2004

    Weighted average

    UNIT INFORMATION

    Physical Flow

    Units to be accounted for:Units accounted for:

    Units in beginning Units completed60,000

    work in process10,000Units in ending

    Units started70,000 work in process20,000

    Total units to Total units

    account for80,000accounted for80,000

    Continued


    Reminder

    Equivalent Units

    Materials Conversion Cost

    Units completed60,00060,000

    Units in ending work in

    process20,000 8,000

    Total equivalent units80,00068,000

    Continued


    Reminder

    COST INFORMATION

    Conversion

    MaterialsCost Total

    Costs to account for:

    Beginning work in process$ 1,600$ 200$ 1,800

    Incurred during the period 12,000 3,200 15,200

    Total costs to account for$13,600$3,400 $17,000

    Cost per equivalent unit$ 0.17$ 0.05$ 0.22

    Continued


    Reminder

    Transferred Ending

    Out WIP Total

    Costs accounted for:

    Goods transferred out ($0.22 x

    60,000)$13,200---$13,200

    Goods in ending work in

    process:

    Materials ($0.17 x 20,000)--- $3,4003,400

    Conversion ($0.05 x 8,000) --- 400 400

    Total cost accounted for$13,200$3,800$17,000


    Reminder

    Units to account for:

    Units in beginning work in process15,000

    Units transferred in during September60,000

    Total units to account for75,000

    Multiple Departments

    Units accounted for:

    Units completed and transferred out:

    Started and completed55,000

    From beginning work in process15,000

    Units in ending work in process 5,000

    Total units accounted for75,000


    Reminder

    Multiple Departments

    Transferred in:

    Units completed70,000

    Add: Units in ending work in

    process X Fraction complete

    (5,000 x 100%) 5,000

    Equivalent units of output75,000

    Unit cost (transferred-in category) = ($13,200 + $3,000/75,000)

    = $16,200/75,000

    = $0.216


    Reminder

    Production Report—FIFO Costing


    Reminder

    $3,525

    $10,125

    FIFO Method

    BWIP Cost

    July Cost

    Current- Period Units

    BWIP Units


    Reminder

    5,000

    +

    Units Started and Completed

    30,000

    +

    EWIP, 25% complete

    2,500

    FIFO Method

    Output for July

    60,000 Total Physical Units BWIP

    Become 37,500 Equivalent Units

    37,500


    Reminder

    FIFO Method

    Cost Assignment:

    Unit Cost = $10,125 ÷ 37,500 = $0.27

    Transferred Out:From beginning work in process$ 3,525

    Complete BWIP ($0.27 x 5,000)1,350

    Started and Completed in July($0.27 x 30,000) 8,100

    EWIP ($0.27 x 2,500) 675

    Total Cost Assigned$13,640


    Reminder

    Healthblend Company

    Picking Department

    Production Report for July 2004

    FIFO

    UNIT INFORMATION

    Units accounted for:

    Units in beginning

    work in process20,000

    Units started during

    the period40,000

    Total units to

    account for60,000

    Continued


    Reminder

    PhysicalEquivalent

    FlowUnits

    • Units accounted for:

    • Units started and completed30,00030,000

    • Units completed from beginning work

    • in process20,0005,000

    • Units in ending work in process10,000 2,500

    • Total units accounted for60,00037,500

    Continued


    Reminder

    Cost per equivalent unit$ 0.27

    COST INFORMATION

    Costs to account for:

    Beginning work

    in process$ 3,525

    Incurred during

    period 10,125

    Total cost to

    account for$13,650

    Continued


    Reminder

    Transferred Ending

    Out WIP Total

    Costs accounted for:

    Units in beginning work in process:

    From prior period$ 3,525---$ 3,525

    From current period

    ($0.27 x 5,000)1,350---1,350

    Units started and completed

    ($0.27 x 30,000)8,100---8,100

    Goods in ending work in process

    ($0.27 x 2,500) ---$675 675

    Total cost accounted for$12,975$675$13,650


    Summary process vs job order costing

    Summary: Process vs. Job-Order Costing

    Homogeneous units passes through a series of similar processes

    Costs are accumulated by processing department

    Unit costs are computed by dividing the processing departments’ costs by output (measured in equivalent units)

    The production report provides the details for the WIP account for each processing department

    Unique jobs are worked on during a time period

    Costs are accumulated by individual job

    Unit costs are determined by dividing total costs on the job-order cost sheet by the number of units in the job

    The job-order cost sheet provides details for the WIP account


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