process operations
is the mass production of products in a continuous flow of steps. meaning the products pass through a sequential processes. Rep orders, homo prodcts and services, high production volume, low product flexibilty, high standardization.
job order cost accounting system
assigns direct materials, direct labor, and overhead to jobs. total job cost is then divided by # of units to compute cost per unit for that job.
process cost accounting system
assigns direct materials, direct labor, and overhead to specific process (or departments). the total costs associated with each process are then divided by the number of units passing through that process determine the cost per equivalent unit for that pr
materials consumption report
summarizes the materials used by a department during a reporting period and replaces materials requisitions.
Entry to record materials for credit for factory
DR raw materials inventory
Cr accounts payable
entry to assign costs of direct materials used in productions
Dr goods in process GIP inventory
CR raw materials inventory REMEMBER TO ASSIGN TO PLANT A, B, C as moving through
record indirect materials used
Dr factory overhead
Cr raw materials overhead
Record factory wages
Dr factory payroll
CR Cash
Applied overhead
direct labor cost X Predetermined rate
record allocated overhead costs at 120%
DR goods in PROCESS INVENTORY
CR Factory overhead
EUP equivalent units of production
a phrase that refers to the number of units that could have been started and completed given the cost incurred during a period. this measure is then used to compute the cost per equivalent unit AND TO ASSIGN COSTS TO FINISHED GOODS AND GOODS IN PROCESS IN
account for goods in process if it has NO BEG AND NO ENDING GOODS IN PROCESS
total cost assigned to the process (DM, DL, OH)///////
TOTAL # of units started and finished in the period
Determine the WA method for inventory costs
1. determine the physical flow of units 2. compute equivalent units of production 3. compute the cost per equivalent unit 4. assign and reconcile costs
physical flow of reconciliation WA
is a report that reconciles 1. the physical units started in a period 2. th ephysical units completed in that period...WA does NOT hold you to track the units in beg from units started this period TREATED AS ONE!!!!
compute equivalent units production
for DM, DL, and OH, OH is applied using DL as the allocation base for company....100,000 at 100% 105,000 at 40%
compute the cost per equivalent unit
production for EACH PRODUCT is used to compute the AVERAGE COST per equivalent unit. TOTAL AMOUNT OF step 1 DM/EUP units from step 2 EX: $13,200/120,000 EUP = .11
weighted average method
the computation of EUP does not seperate the units in beginning invenotry from those started this period; similarly, this method combines the costs of beginning goods in process inventory with the costs incurred in the current period.
assign and reconcile costs.
1. units that production completed and transferred to finished goods 2. units that remain in process... SHEET ACCOUNTING FOR COSTS TWO PARTS: cost of units completed transferred and cost of units for ending goods in process.
process cost summary
production report that is an important managerial accounting report for a process cost accounting system
Process cost summary list of 3
1. lists the total costs charged to the department including dM, DL, OH costs incurred as well as the cost of the beg goods in process inventory 2. describes the equivalent units of production for the department, equivalent units for materials, labor, and
record transfer of completed units
DR FGI INventory
CR GIP inventory
Costs of goods manufactured
the cost of units transferred from goods in process invenotry to finished goods inventory is this.
fifo method
of process costing assign costs to units assuming a first in, first out flow of product. the objectives, concepts, and journal entries (NOT AMOUNTS) are the same as for the WA method, but computation of equivalent units of production and cost assignment a
steps of FIFO method
1. determine physical flow of units 2. compute equivalent units of production FIFO 3. compute cost per equivalent unit FIFO 4. assign and reconcile costs.