1 / 24

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. Week 6. Process Costing (Part II). Outline.

livana
Download Presentation

Reminder

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Reminder • Mid-semester exam (25%) • 26 August 2007 - Sunday • Starts at 10:00 am • Group 1 at DKEP 1 • Group 2 at DKEP 10

  2. Week 6 Process Costing (Part II)

  3. 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.

  4. Healthblend Nutritional Supplements Nonuniform Application of Manufacturing Inputs

  5. 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

  6. 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 60,000 60,000 Materials, 100% complete; conversion cost, 40% complete

  7. 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 60,000 60,000 20,000 8,000

  8. 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 60,000 60,000 September 20,000 8,000 Equivalent units 80,000 68,000

  9. Materials $12,000 Conversion cost $3,200 Materials $1,600 Conversion cost $200 Healthblend Nutritional Supplements Materials $13,600 EU 80,000 Conver. Cost $3,400 EU 68,000 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

  10. 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 completed 60,000 work in process 10,000 Units in ending Units started 70,000 work in process 20,000 Total units to Total units account for 80,000 accounted for 80,000 Continued

  11. Equivalent Units Materials Conversion Cost Units completed 60,000 60,000 Units in ending work in process 20,000 8,000 Total equivalent units 80,000 68,000 Continued

  12. COST INFORMATION Conversion Materials Cost 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

  13. 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) --- $3,400 3,400 Conversion ($0.05 x 8,000) --- 400 400 Total cost accounted for $13,200 $3,800 $17,000

  14. Units to account for: Units in beginning work in process 15,000 Units transferred in during September 60,000 Total units to account for 75,000 Multiple Departments Units accounted for: Units completed and transferred out: Started and completed 55,000 From beginning work in process 15,000 Units in ending work in process 5,000 Total units accounted for 75,000

  15. Multiple Departments Transferred in: Units completed 70,000 Add: Units in ending work in process X Fraction complete (5,000 x 100%) 5,000 Equivalent units of output 75,000 Unit cost (transferred-in category) = ($13,200 + $3,000/75,000) = $16,200/75,000 = $0.216

  16. Production Report—FIFO Costing

  17. $3,525 $10,125 FIFO Method BWIP Cost July Cost Current- Period Units BWIP Units

  18. 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

  19. 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

  20. Healthblend Company Picking Department Production Report for July 2004 FIFO UNIT INFORMATION Units accounted for: Units in beginning work in process 20,000 Units started during the period 40,000 Total units to account for 60,000 Continued

  21. Physical Equivalent Flow Units • Units accounted for: • Units started and completed 30,000 30,000 • Units completed from beginning work • in process 20,000 5,000 • Units in ending work in process 10,000 2,500 • Total units accounted for 60,000 37,500 Continued

  22. 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

  23. 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

  24. 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

More Related