06 Prosess Costing
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Transcript of 06 Prosess Costing
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PPT 6 -1
AGUS SISWANDI
01153056
MANAGEMENT ACCOUNTING
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PPT 6 -2
Chapter Six
Process Costing
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PPT 6 -3
Learning Objectives
q Describe the basic characteristics and
cost flows associated with process
manufacturing.q Defineequivalent units and explain their
role in process costing. Explain the
differences between the weightedaverage method and the FIFO method of
accounting for process costs.
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PPT 6 -4
Learning Objectives (continued)
q Prepare a departmental production report
using the weighted average method.
q Explain how process costing is affected by
nonuniform application of manufacturing
inputs and the existence of multiple
processing departments.
q Prepare a departmental production report
using the FIFO method. (Appendix)
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PPT 6 -5
Comparison of Job-Order and
Process Costing
Job-Order Costing Process Costing
1. Wide variety of distinct 1. Homogeneous products
products
2. Cost accumulated by job 2. Costs accumulated by
process or department
3. Unit cost computed by 3. Unit cost computed by
dividing total job costs dividing process costs of
by units produced on that the period by the unitsjob produced in the period
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PPT 6 -6
q Homogeneous units passthrough a series of similar
processes.
q Each unit in each processreceives a similar dose of
manufacturing costs.
q Manufacturing costs are
accumulated for a process
for a given period of time.
Characteristics of Process Costing
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PPT 6 -7
Characteristics of Process Costing
(continued)
q Manufacturing cost flows and the
associated journal entries are
generally similar to job-order costing.
q The departmental production report
is the key document for tracking
manufacturing activity and costs.q Unit costs are computed by dividing
the departmental costs of the period
by the output for the period.
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PPT 6 -8
Units
Started
Work in
Process
Units
in
EWIP
Units
Completed
Units in
BWIP
1,000 units - 20% of materials added;
60% of conversion costs added
10,000 units;
1,500 units - 33% of materials added;
50% of conversion costs added
9,500 units
Units to account for = Units accounted for
Units in BWIP + Units Started = Units in EWIP + Units Completed
1,000 + 10,000 = 1,500 + 9,500
The Concept of Equivalent Units
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PPT 6 -9
The Concept of Equivalent Units(continued)
Equivalent Units Calculation:
Direct Materials Conversion Costs
Units Completed 9,500 9,500
Ending WIP Inventory 500 750
Total Units Processed *10,000 *10,250
Less beginning WIP Inventory 200 600Units Processed
This Period **9,800 **9,650
==== ====
*Equivalent units for weighted average (total units worked on)
** Equivalent units for FIFO (units worked on this period)
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PPT 6 -10
A Cost Analysis
Cost of
Units Started
Work in
Process
Costs added
to EWIP
Cost of Units
Completed
Cost added
to BWIP
1,000 units - $5,000 materials added;
$10,000 conversion costs added
10,000 units; $23,000
matl added; $120,175conversion cost added
1,500 units - $8,000 materials added;
$13,000 conversion costs added
9,500 units
Costs to account for = Costs accounted for
$158,175 = $158,175
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PPT 6 -11
Steps for Preparing a
Production Report
1. Analysis of the flow of physical
units
2. Calculation of equivalent units
3. Computation of unit cost
4. Valuation of inventories (goodstransferred out and ending work
in process)
5. Cost reconciliation
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PPT 6 -12
Weighted Average Costing
Step 1- Physical Flow Analysis
Units to account for: Units accounted for:
Units, BWIP 1,000 Units, Completed 9,500Units, Started 10,000 Units, EWIP 1,500
Total 11,000 Total 11,000
===== =====
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PPT 6 -13
Weighted Average Costing (continued)
Step 2 - Calculation of Equivalent Units
Materials Conversion CostsCompleted 500 750
EWIP 9,500 9,500
Total Equivalent Units 10,000 10,250
===== =====
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PPT 6 -14
Weighted Average Costing (continued)
Step 3 - Computation of Unit Cost
Materials CC Total
Beginning WIP $ 5,000 $ 10,000 $ 15,000Added this period 23,000 120,175 143,000
Total $ 28,000 $130,175 $158,175
Equivalent units 10,000 10,250Unit cost $ 2.80 $ 12.70 $ 15.50
======= ======= =======
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PPT 6 -15
Weighted Average Costing (continued)
Step 4 - Valuation of Inventories
Goods Transferred out (9,500 x 15.50) $147,250
EWIP
Materials (500 x $2.80) $1,400
Conversion Cost (750 x $12.70) 9,525 $ 10,925
$158,175========
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PPT 6 -16
Weighted Average Costing (continued)
Step 5 - Cost Reconciliation:
Costs to account for:
BWIP $ 15,000
Cost added 143,000$158,175
======
Costs accounted for:Goods Transferred out $147,250
EWIP 10,925
$158,175
=======
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PPT 6 -17
Nonuniform Inputs: Example
Materials are added at the beginning of the process.
Units in process, May 1, 60% complete 2,000
Units completed and transferred out 10,000
Units in process, May 31, 40% complete 1,000
Costs: BWIP Cost Current Cost
Materials $300 $3,000Conversion Costs 600 4,600
if
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PPT 6 -18
Nonuniform Inputs: Example
(continued)
Step 1 - Physical Flow Analysis:
Units to account for:
Units, BWIP 2,000
Units started 9,000
Total 11,000
=====
Units accounted for:Units completed 10,000
Units, EWIP 1,000
Total 11,000
====
N if I E l
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PPT 6 -19
Nonuniform Inputs: Example
(continued)
Step 2 - Calculation of Equivalent units (Weighted Average):
Materials Conversion
Units completed 10,000 10,000
EWIP 1,000 400
Total Equivalent Units 11,000 10,400
==== ====
N if I E l
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PPT 6 -20
Nonuniform Inputs: Example
(continued)
Step 3 - Unit Cost:
Unit Cost = $3,300/11,000 + $5,200/10,400
= $0.30 + $0.50
= $0.80
====
N if I t E l
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PPT 6 -21
Nonuniform Inputs: Example
(continued)
Step 4 - Valuation of Inventories:
Goods Transferred Out:
$0.80 x 10,000 = $8,000
=====
Ending Work in Process:
($0.30 x 1,000) + ($0.50 x 4000) = $500
N if I t E l
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PPT 6 -22
Nonuniform Inputs: Example
(continued)
Step 5 - Cost Reconciliation:
Costs to account for:
BWIP $ 900
Cost added 7,600$8,500
====
Costs accounted for:Goods transferred out $8,000
EWIP 500
$8,500
=====
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PPT 6 -23
FIFO Costing
Step 1- Physical Flow Analysis
Units to account for: Units accounted for:
Units, BWIP 1,000 Units, Completed 9,500Units, Started 10,000 Units, EWIP 1,500
Total 11,000 Total 11,000
===== =====
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PPT 6 -24
FIFO Costing (continued)
Step 2 - Calculation of Equivalent Units
Materials Conversion Costs
Units started and completed 8,500 8,500
Units in Beginning WIP x fraction 800 400
Units in Ending WIP x fraction 500 750
Total Equivalent Units 9,800 9,650
==== ====
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PPT 6 -25
FIFO Costing (continued)
Step 3 - Computation of Unit Cost
Materials CC Total
Beginning WIP $ 5,000 $ 10,000 $ 15,000Added this period 23,000 120,175 143,000
Total $ 28,000 $130,175 $158,175
Added this period $ 23,000 $ 120,175 $ 143,000
Equivalent units 9,800 9,650Unit cost $ 2.3469 $ 12.4534 $ 14.8003
======= ======= =======
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PPT 6 -26
FIFO Costing (continued)
Step 4 - Valuation of Inventories
Trans. Out EWIP Total
Units in BWIP:
From Prior Period $15,000 --- $15,000
From Current Period:
Materials (800 x $2.3469) 1,877 --- 1,877
Labor (400 x $12.4534) 4,981 --- 4,981
Units Started and Completed
(8,500 x $14.8003) 125,803 --- 125,803
Units in EWIP
Materials (500 x $2.3469) --- $1,173 1,173
Conversion Costs (750 x $12.4534) --- 9,340 9,340
Total Costs accounted for $147,661 $10,513 $158,174
======= ====== =======
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PPT 6 -27
FIFO Costing (continued)
Step 5 - Cost Reconciliation:
Cost to account for:
BWIP $ 15,000
Cost added 143,000$158,175
======
Cost accounted for:Goods transferred out $147,661
EWIP 10,513
*$158,174
=======
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PPT 6 -28
End of Chapter 6