Kế toán, kiểm toán - Chapter 28: Process cost accounting

1-*McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.Process Cost Accounting Section 1: Process Cost Accounting SystemChapter28Section ObjectivesCompute equivalent units of production with no beginning work in process inventory.Prepare a cost of production report with no beginning work in process inventory.Compute the unit cost of manufacturing under the process cost accounting system.Record costs incurred and the flow of costs as products move through the manufacturing process and are sold.This system is used in operations when a single product is manufactured and production is continuous.Companies like oil refineries, cement producers, and paint manufacturers use this system.Costs are accumulated for each process or department and then transferred on to the next process or department.Process Cost Accounting SystemAll products begin in the Assembly Department.Assembly DepartmentFinished Goods InventoryFinishingDepartmentRome Manufacturing Company (manufacturer of trays)Trays to be sold in an unpainted state are transferred to the finished goods storeroom.Trays to be painted are transferred to the Finishing Department.Flow of Goods in a Factory OperationDepartmental Cost DataAll costs are recorded by departmentEquivalent production is the estimated number of units that could have been started and completed with the same effort and costs incurred in the department during the month.ANSWER:QUESTION:What is equivalent production in a process cost system?Separate equivalent unit computations are made for materials and for labor and overhead.In computing equivalent production, accountants frequently consider labor and overhead to be at the same stage of production.Calculating Equivalent Units Summarizes all costs charged to each  department. Shows costs assigned to: Goods transferred out of the department Goods still in process Has separate sections for: Quantities Costs Reconciles the total to be accounted for with the  total accounted for.Cost of Production ReportCost ScheduleQuantity ScheduleCost of Production Report by DepartmentShows units to be accounted for and what happened to those units.Shows total and unit cost of each element and cumulative cost total.Shows cost of units transferred out.Materials cost per unit = $24,000 / 6,000 units =$4.00/per unitCost Schedule: Unit CostCharging Direct Materials Costs to Work in ProcessCharging Direct Labor to Work in ProcessManufacturing Overhead Costs in the Process Cost Accounting SystemWhen incurred, overhead costs are debited to the Manufacturing Overhead account.At month-end, overhead costs are allocated to the producing departments: Debit Work-in-Process—Assembly Department Debit Work-in-Process—Finishing Department Credit Manufacturing OverheadRecording Transfers of Products out of DepartmentsAssembly DepartmentFinishing DepartmentFinished Goods InventoryAssembly DepartmentFinishing Department$51,950$69,678$5,195The final step is to record the sale of finished goodsRecording Sale of Finished GoodsRecord sales2. Record cost of  goods sold**In a perpetual inventory system, two journal entries are required to record a saleProcess Cost Accounting Section 2: Work in Process InventoryChapter28Section ObjectivesCompute equivalent production and prepare a cost of production report with a beginning work in process inventory.The company discussed in the previous section did not have any beginning work in process. However, beginning work in process inventories are a normal part of business operations. Beginning Work in Process InventoryThe average method of process costing combines the cost of beginning inventory for each cost element with the costs of the current period.ANSWER:QUESTION:What is the average method of process costing?Departmental Data with Beginning InventoryBeginning inventory costsBeginning inventory quantitiesUnit Costs Using the Average Method of Process CostingUnit Cost = (Beginning work in process inventory +  Current period costs) ÷ Equivalent unitsThe beginning work in process inventory is shown on the cost of production report under the appropriate department.Unit costs are calculated by adding the beginning inventory to the current period costs for each cost element, then dividing by equivalent units. The ending work in process of one period  becomes the beginning work in process of  the following period. Journal entries are made as shown earlier in  Section 1 to record the transfer of costs.Recording Cost Flows