THE COSTS
PROCESS COST SYSTEMS

• Financial Information
• Accounting Systems
• Introduction to Cost Accounting
• Cost definition
• Use of Costs
• Classification of Costs
• Inventory Valuation
• Costs Behavior
• Cost Accounting Systems
• Standard Costs and Variances
• Cost-Volume-Profit Analysis
• Break-Even Point
• Target Profit
• Budgeting
• Master Budget
• Activity Based Costing (ABC)
• Transfer Prices
• Accounting Profession & Ethics
• Accounting Equation
• Financial Statements
• Financial Statement Reporting
• Accounts, Debits & Credits
• The Journal
• The General Ledger
• The Trial Balance
• "T" Accounts
• Income Measurement

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PROCESS COSTING FLOW 5 STEPS TO ACHIEVE A PROCESS COSTING

1.- Summarize the physical flow of the units to produce
2.- Calculate production in terms of equivalent units
3.- Calculate equivalent unit costs
4.- Summarize total costs to account for
5.- Assign total costs to the units already completed and to units in ending work in process inventory (WIP).

PROCESS COSTING EXAMPLE

Step 1. Physical units

 PRODUCTION FLOW Work in process, Beggining Inventory 0 units Units started in the current period 35.000 units Total Units 35.000 units Completed and transferred units in the current period 30.000 units Work in process, Ending Inventory 5.000 units Total Units 35.000 units

Step 2. Equivalent units

 Production Flow Direct Materials Progress % Conversion Costs Progress % Completed and transferred units 30,000 100% 30,000 100% Work in Process, Ending Inventory 5,000 100% 1,000 20% Equivalent units 35,000 31,000

Step 3. Equivalent unit cost

 TOTAL PRODUCTION COSTS: \$146,050 Direct Materials Conversion Costs \$84,050 \$62,000 Equivalent Units 35,000 31,000 Cost per equivalent unit \$2.4014 \$2.0000

Step 4 and 5.  SUMMARIZE AND ASSIGN TOTAL COSTS

 TOTAL PRODUCTION COSTS: \$146,050 ASSIGNATION Completed and transferred units 30,000 X \$4.4014 \$132,043 Work in process, Ending Inventory 5,000 units Direct Materials 5,000 X 2.4014 \$12,007 Conversion costs 1,000 X 2.0000 \$2,000 Total \$146,050

ACCOUNTING FORUM

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