Prepared by Diane Tanner University of North Florida

1. Chapter 17 Process Costing Prepared by Diane Tanner University of North Florida

2. Assigning Costs to Cost Objects • Direct materials –Traced • Direct labor – Traced • Manufacturing overhead - Allocated Job Costing Homogeneous Unique Process Costing • Direct materials – Allocated • Direct labor – Allocated • Manufacturing overhead - Allocated

3. Process Costing Methods • Weighted-average method • Averages current period production costs with beginning inventory costs • FIFO method • Segregates current period production costs from the production costs in beginning work-in-process

4. Equivalent Units • Estimates are made about the percentage of completion of unfinished units • How many full units could have been completed if all efforts had been put forth to only start and complete units rather than leaving some units partially finished?

5. Production Cost Report • A separate report is created for each department, usually monthly • Identifies the total cost transferred out of each WIP account into FG, and the cost of ending WIP • Contains 5 sections 1:Summarizes the flow of physical units of output 2: Computes equivalent units 3: Summarizes total costs to account for 4:Computes the cost per equivalent unit 5:Assigns total costs to units completed and to units in ending work-in-process

6. Cost Categories on Production Cost Report Costs are separately tracked in three categories: • Direct materials • Conversion costs • Assumes overhead is assigned at the same rate direct labor is incurred • Transferred-in costs • Costs associated with units completed in the previous department

7. The End