ACC 202 Chapter Notes - Chapter 4: Finished Good, Financial Statement, Weighted Arithmetic Mean

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tanhyena210

16 Aug 2020

School

Ball State University

Department

Accounting

Course

ACC 202

Professor

Moudy

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Document Summary

Both systems assign material, labor, and overhead costs to products and they provide a mechanism for computing unit product costs. Both systems use the same manufacturing accounts, including manufacturing. Overhead, raw materials, work in process, and finished goods. The flow of costs through the manufacturing accounts is basically the same in both systems. Any unit in an organization where materials, labor, or overhead are added to the product. The activities performed in a processing department are performed uniformly on all units of production. Furthermore, the output of a processing department must be homogeneous. Products in a process costing environment typically flow in a sequence from one department to another. Direct materials, direct labor, and moh costs are traced and applied to departments in a process cost system (as opposed to jobs in a job order costing system) The key to deriving these two numbers is calculating unit costs within each department.

Related Questions

Which characteristic is the same in both job order costing systems and process costing systems?

a. Types of product cost

b. Flow of costs through the accounts

c. Number of Work-in-Process Inventory accounts

d. Method of record-keeping

ultramarineeagle335


Weighted Average Process Costing:
Minot Processing Company manufactures one product on acontinuous basis in two departments, Processing and Finishing. Allmaterials are added at the beginning of work on the product in theProcessing Department. During December 2009, the following eventsoccurred in the Processing Department:
Units started	16,000 units
Units completed and transferred to Finishing Department	15,000 units

Costs assigned to processing:Raw materials (one unit of rawmaterials for each unit of product started)	$142,900.00
Manufacturing supplies used	18,000
Direct labor costs incurred	51,000
Supervisors' salaries	12,000
Other production labor costs	14,000
Depreciation on equipment	6,000
Other production costs	18,000

Additional information follows:
Minot uses weighted average costing and applies manufacturingoverhead to Work-in-Process at the rate of 100 percent of directlabor cost.
Ending inventory in the Processing Department consists of 3,000units that are one-third converted.
Beginning inventory contained 2,000 units, one-half converted,with a cost of $34,500 ($24,500 for materials and $10,000 forconversion).
(a) Prepare a cost of production report for theProcessing Department for December.
Minot Processing Company: Processing Department Cost of Production Report For the Month Ending December 31, 2009
Summary of units in process:
Beginning
Units started
In process
Completed
Ending
Equivalent units in process:		Materials	Conversion	Total
Units completed
Plus equivalent units in ending inventory
Equivalent units in process
Total cost to be accounted for and cost per equivalent unit in process:
Beginning work-in-process		$	$	$
Current costs
Total cost in process		$	$	$
Equivalent units in process		+	+
Cost per equivalent unit in process		$	$	$
Accounting for total costs:
Transferred out				$
Ending work-in-process:
Materials			$
Conversion
Total cost accounted for				$
(b) Prepare an analysis of all changes inWork-in-Process.
Work-in-process:
Beginning			$
Current manufacturing costs:
Direct materials		$
Direct labor
Applied overhead
Total			$
Cost of goods manufactured
Ending			$

tealbuffalo667

Identify each statement as true or false. If false, indicate howto correct the statement.

1. Process cost systems are used to apply costs to similarproducts that are mass-produced in a continuous fashion.
2. A process cost system is used when each finished unit isindistinguishable from another.
3. Companies that produce soft drinks, motion pictures, andcomputers chips would all use process cost accounting.
4. In a process cost system, costs are tracked by individualjobs.
5. Job order costing and process costing track differentmanufacturing costs elements.
6. Both job order costing and process costing account for directmaterials, direct labor, and manufacturing overhead.
7. Costs flow through the accounts in the same basic way for bothjob order costing and process costing.
8. In a process cost system, only one work in process account isused.
9. In a process cost system, costs are summarized in a job costsheet.
10. In a process cost system, the unit cost is total manufacturingcosts for the period divided by the units produced during theperiod.

byzantiumpanda529

ACC 202 Chapter Notes - Chapter 4: Finished Good, Financial Statement, Weighted Arithmetic Mean

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