Gíao trình kế toán bằng tiếng anh ch03

Chapter Process Costing Learning Objectives After studying this chapter, you should be able to: [1] Understand who uses process cost systems [2] Explain the similarities and differences between job order cost and process cost systems [3 Explain the flow of costs in a process cost system [4] Make the journal entries to assign manufacturing costs in a process cost system [5] Compute equivalent units [6] Explain the four steps necessary to prepare a production cost report [7] Prepare a production cost report 3-1 Preview of Chapter Managerial Accounting Sixth Edition Weygandt Kimmel Kieso 3-2 Nature of Process Cost Systems Uses of Process Cost Systems  Use to apply costs to similar products that are massproduced in a continuous fashion  Examples include the production of Cereal, Paint, Manufacturing Steel, Oil Refining and Soft Drinks Illustration 3-1 3-3 LO Understand who uses process cost systems Nature of Process Cost Systems Process and Job Cost Comparison Illustration 3-2 3-4 LO Understand who uses process cost systems Nature of Process Cost Systems Review Question Which of the following items is not a characteristic of a process cost system: a Once production begins, it continues until the finished product emerges b The focus is on continually producing homogenous products c When the finished product emerges, all units have precisely the same amount of materials, labor, and overhead d The products produced are heterogeneous in nature 3-5 LO Understand who uses process cost systems Nature of Process Cost Systems Process Costing for Service Companies Service companies that provide specific, nonroutine services will probably benefit from using a job order cost system Those that perform routine, repetitive services will probably be better off with a process cost system 3-6 LO Understand who uses process cost systems Nature of Process Cost Systems Similarities and Differences Between Job Order Cost and Process Cost Systems Job Order Cost 3-7  Costs assigned to each job  Products have unique characteristics Process Cost  Costs tracked through a series of connected manufacturing processes or departments  Products are uniform or relatively homogeneous and produced in a large volume LO Explain the similarities and differences between job order cost and process cost systems Nature of Process Cost Systems Illustration 3-3 Job order cost and process cost flow Illustration 3-3 3-8 LO Explain the similarities and differences between job order cost and process cost systems Nature of Process Cost Systems Similarities Differences Manufacturing cost elements Number of work in process accounts used Accumulation of the costs of materials, labor, and overhead Documents used to track costs Flow of costs Point at which costs are totaled Unit cost computations 3-9 LO Explain the similarities and differences between job order cost and process cost systems Nature of Process Cost Systems Illustration 3-4 Job order versus process cost systems 3-10 LO Explain the similarities and differences between job order cost and process cost systems APPENDIX 3A FIFO METHOD Equivalent Units Under FIFO 3-55 Illustration 3A-1 Physical unit flow— Assembly Department LO Compute equivalent units using the FIFO method APPENDIX 3A FIFO METHOD Equivalent Units Under FIFO 3-56 Illustration 3A-2 Computation of equivalent units—FIFO method LO Compute equivalent units using the FIFO method APPENDIX 3A FIFO METHOD Illustration 3A-3 Unit and cost data—Mixing Department 3-57 LO APPENDIX 3A FIFO METHOD Compute the Physical Unit Flow (1) 3-58 Illustration 3A-4 Physical unit flow— Mixing Department LO Compute equivalent units using the FIFO method APPENDIX 3A FIFO METHOD Compute the Physical Unit Flow (1) 3-59 Illustration 3A-5 Physical unit flow (FIFO)— Mixing Department LO APPENDIX 3A FIFO METHOD Compute Equivalent Units of Production (2) Equivalent Units For Materials Kellogg adds materials at the beginning of the process 100% of the materials costs has been incurred on ending WIP Illustration 3A-6 3-60 LO Compute equivalent units using the FIFO method APPENDIX 3A FIFO METHOD Compute Equivalent Units of Production (2) Equivalent Units For Conversion Costs The Mixing Department required 30,000 equivalent units (30% 100,000 units) of conversion costs to complete the beginning inventory In addition, the 200,000 units of ending work in process were 60 percent complete in terms of conversion costs Illustration 3A-7 3-61 LO APPENDIX 3A FIFO METHOD Compute Unit Production Costs (3) Under the FIFO method, the unit costs of production are based entirely on the production costs incurred during the month Illustration 3A-8 Costs incurred during production in June 3-62 LO Compute equivalent units using the FIFO method APPENDIX 3A FIFO METHOD Compute Unit Production Costs (3) Compute unit materials cost, unit conversion costs, and total unit cost Illustration 3A-9 3-63 LO Compute equivalent units using the FIFO method APPENDIX 3A FIFO METHOD Prepare a Cost Reconciliation Schedule (4) Kellogg is now ready to determine the cost of goods transferred out of the Mixing Department to the Baking Department and the costs in ending work in process The total costs charged to the Mixing Department in June are as follows Illustration 3A-10 Costs charged to Mixing Department 3-64 LO Compute equivalent units using the FIFO method APPENDIX 3A FIFO METHOD Prepare a Cost Reconciliation Schedule (4) Illustration 3A-11 Illustration 3A-11 3-65 LO APPENDIX 3A FIFO METHOD Prepare the Production Cost Report 3-66  Internal document for management that shows production quantity and cost data for a production department  Provides a basis for evaluating the productivity of a department  Managers can use the cost data to assess whether unit costs and total costs are reasonable  Top management can also judge whether current performance is meeting planned objectives LO Compute equivalent units using the FIFO method APPENDIX 3A FIFO METHOD Prepare the Production Cost Report 3-67 Illustration 3A-12 LO APPENDIX 3A FIFO METHOD FIFO and Weighted-Average 3-68  Weighted-average is simple to understand and apply  In cases where prices not fluctuate significantly, weighted-average will be very similar to FIFO  Conceptually, the FIFO method is superior because it measures current performance using only costs incurred in the current period  FIFO method provides current cost information, which the company can use to establish more accurate pricing strategies for goods manufactured and sold LO Compute equivalent units using the FIFO method Copyright “Copyright © 2012 John Wiley & Sons, Inc All rights reserved Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Copyright Act without the express written permission of the copyright owner is unlawful Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc The purchaser may make back-up copies for his/her 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