1. Managerial Accounting Second Edition Weygandt / Kieso / Kimmel
Prepared by:
Ellen L. Sweatt
Georgia Perimeter College
ELS

2. Process Cost Accounting

3. Job Order Cost System
Cost are assigned to each job; used where finished products can be individually identified

4. An accounting system used to apply costs: To similar products
Illustration 3-1
Process Cost Systems
An accounting system used to apply costs:
To similar products
That are mass-produced
In a continuous fashion

5. Illustration 3-2

6. Illustration 3-2

7. In a process cost system, costs are tracked through a series of connected manufacturing processes or departments; used for large volume production of uniform products

8. Illustration 3-3

9. Job Order versus Process Cost System
Illustration 3-4
Job Order versus Process Cost System

10. Job Order versus Process Cost System
Illustration 3-5
Job Order versus Process Cost System

11. Accumulating Manufacturing Costs- Same As In Job Order
Date
Account Titles and Explanation
Debit
Credit
(3)
Jan. 31
Manufacturing Overhead
Utilities Payable
Prepaid Insurance
Accounts Payable - for repairs
Accumulated Depreciation
Property Taxes Payable
(To record overhead costs)
13,800
4,800 2,000 2,600 3,000 1,400
(2)
Factory Labor
Factory Wages Payable
Employer Payroll Taxes Payable
(To record factory labor costs)
32,000
27,000
5,000
(1)
Jan. 4
Raw Materials Inventory
Accounts Payable
(Purchase of raw materials on account)
42,000
From Chapter 2

12. Assigning Material Costs
Fewer requisition slips than in job order since materials are for a process rather than specific job.
Materials usually added at beginning of first process - but sometimes added at other times.

13. Assigning Direct Labor
Labor cost per process obtained from payroll register or departmental payroll summaries.

14. Assigning Manufacturing Overhead
Objective in assigning manufacturing overhead to departments is to allocate on objective and equitable basis.

15. Assigning Manufacturing Costs
Date
Account Titles and Explanation
Debit
Credit
Jan. 31
xxxx
Work in Process -Machining
Work In Process - Assembly
xxxx
Raw Materials Inventory
xxxx
(To record materials used)
Date
Account Titles and Explanation
Debit
Credit
Jan. 31
Work in Process -Machining
Work in Process-Assembling
xxxx xxxx
Factory Labor
xxxx
(To assign factory labor to job)
Date
Account Titles and Explanation
Debit
Credit
xxxx
Jan. 31
Work in Process-Assembly
Work in Process -Machining
xxxx
Manufacturing Overhead
(To assign overhead to production)

16. Transfer to Next Department
At the end of period an entry is needed to record the cost of goods transferred out of the department.

17. Transfer to Next Department
Date
Account Titles and Explanation
Debit
Credit
Work in Process -Assembly
Work In Process - Machining
(To record transfer of units to Assembly Department)
xxxx
Transfer to Finished Goods
Date
Account Titles and Explanation
Debit
Credit
Finished Goods Inventory
Work In Process - Assembling
(To record transfer of units to Finished Goods)
xxxx
Transfer to Cost of Goods Sold
Date
Account Titles and Explanation
Debit
Credit
Cost of Goods Sold
Finished Goods Inventory
(To record cost of units sold )
xxxx

18. Equivalent Units of Production
Illustration 3-7
Equivalent Units of Production
A measure of the work done during the period, expressed in fully completed units.

19. Weighted-average Method
Method used to compute equivalent units of production which considers the degree of completion (weighting) of the units completed and transferred out and the ending work in process.

20. Conversion Costs
The sum of labor costs and overhead costs.

21. Production Cost Report
An internal report for management that shows both production quantity and cost data for a production department.

22. Production Cost Report
Illustration 3-12
Production Cost Report

23. Physical Units
Actual units to be accounted for during a period, irrespective of any work performed.

24. Total Units (Costs) to Be Accounted for
The sum of the units (costs) started (or transferred) into production during the period plus the units (costs) in process at the beginning of the period.

25. Total Units (costs) Accounted for
The sum of the units (costs) transferred out during the period plus the units (costs) in process at the end of the period.

26. Unit Production Costs
Costs expressed in terms of equivalent units of production.

27. Unit Materials Cost Computation

28. Cost Reconciliation Schedule
A schedule that shows that the total costs accounted for equal the total costs to be accounted for.

29. Cost Reconciliation Schedule
Illustration 3-22
Mixing Department
Cost Reconciliation Schedule
June 30,19xx
Cost Accounted for
Transferred Out(700,000 x .75) $ 525,000
Work in process June 30
Materials (200,000 x .50) $100,000
Conversion costs(120,000 x .25) , ,000
Total Costs $655,000

30. Production Cost Report For the Month Ended June 30, 2002
Mixing Department
Production Cost Report
For the Month Ended June 30, 2002
Illustration 3-23

31. Operations Costing
A combination of a process cost and a job order cost system, in which products are manufactured primarily by standardized methods, with some customization.