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1
Piocess Cosiing
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2
!obCosLlng and rocess CosLlng
CpposlLe Lnds of a ConLlnuum
Job-Costing Systems
Distinct, identifiable
units of a product
or service
Examples:
Custom-made
machines,
Houses
Process-Costing
Systems
Masses of identical
or similar units of a
product or service
Examples:
Food,
Chemical processing
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3
rocessCosLlng
O Piocess-cosiing is a sysiem wleie ile unii cosi of a
pioduci oi seivice is obiained by assigning ioial
cosis io many ideniical oi similai uniis
O Eacl unii ieceives ile same oi similai amounis of
diieci maieiials cosis, diieci laboi cosis, and
manufaciuiing oveilead
O Unii cosis aie compuied by dividing ioial cosis
incuiied by ile numbei of uniis of ouipui fiom ile
pioduciion piocess
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4
rocessCosLlng AssumpLlons
O iieci Maieiials aie added ai ile beginning of ile
pioduciion piocess, oi ai ile siaii of woil in a
subsequeni depaiimeni down ile assembly line
O Conveision Cosis aie added equally along ile
pioduciion piocess
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5
lveSLep rocessCosLlng AllocaLlon
# ummaiize ile flow of plysical uniis of ouipui
: Compuie ouipui in ieims of equivaleni uniis
Compuie cosi pei equivaleni unii
ummaiize ioial cosis io accouni foi
ssign ioial cosis io uniis compleied and io uniis in
ending Woil-in-Piocess
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6
LqulvalenL unlLs
O deiived amouni of ouipui uniis ilai:
# ales ile quaniiiy of eacl inpui in uniis compleied
and in unfinisled uniis of woil in piocess and
. converts ile quaniiiy of inpui inio ile amouni of
compleied ouipui uniis ilai coulJ be pioduced wiil
ilai quaniiiy of inpui
O ie calculaied sepaiaiely foi eacl inpui (diieci
maieiials and conveision cosi)
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7
SLeps 1 2 lllusLraLed
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8
SLeps 3 4 3 lllusLraLed
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JelghLedAverage
rocessCosLlng MeLhod
O Calculaies cosi pei equivaleni unii of all woil done io
daie (iegaidless of ile accouniing peiiod in wlicl ii
was done)
O ssigns ilis cosi io equivaleni uniis compleied 8
iiansfeiied oui of ile piocess, and io incompleie uniis
in siill in-piocess
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10
JelghLedAverage
rocessCosLlng MeLhod
O Weiglied-aveiage cosis is ile ioial of all cosis in ile
Woil-in-Piocess ccouni divided by ile ioial
equivaleni uniis of woil done io daie
O le beginning balance of ile Woil-in-Piocess accouni
(woil done in a piioi peiiod) is blenJeJ in wiil cuiieni
peiiod cosis
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11
SLeps 1 2 lllusLraLed
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12
SLeps 3 4 3 lllusLraLed
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13
lrsLln lrsLCuL
rocessCosLlng MeLhod
O ssigns ile cosi of ile pievious accouniing peiiod's
equivaleni uniis in beginning woil-in-piocess
invenioiy io ile fiisi uniis compleied and
iiansfeiied oui of ile piocess
O ssigns ile cosi of equivaleni uniis woiled on
duiing ile cuiieni peiiod fiisi io complee
heqnnnq nvenory, nex o sor onJ complee
new uns, onJ losly o uns n enJnq work-n-
process nvenory
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14
lrsLln lrsLCuL
rocessCosLlng MeLhod
O le beginning balance of ile Woil-in-Piocess accouni
(woil done in a piioi peiiod) is ept seporote from
cuiieni peiiod cosis
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15
SLeps 1 2 lllusLraLed
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16
SLeps 3 4 3 lllusLraLed
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17
@ransferredln CosLs
O ie cosis incuiied in pievious depaiimenis ilai aie
caiiied foiwaid as ile pioducis cosi wlen ii moves
io a subsequeni piocess in ile pioduciion cycle
O lso called Pievious epaiimeni Cosis
O }ouinal eniiies aie made io miiioi ile piogiess in
pioduciion fiom depaiimeni io depaiimeni
O iansfeiied-in cosis aie iieaied as if iley aie a
sepaiaie iype of Jirect moteriol oJJeJ ot tbe
beqinninq of tbe process
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18
brld CosLlng SsLems
O ybiid-Cosiing ysiem blends claiacieiisiics fiom
boil job-cosiing and piocess-cosiing sysiems
O Many aciual pioduciion sysiems aie in faci lybiids
O Examples include manufaciuieis of ielevisions,
dislwasleis and wasling maclines, as well as didas