Process Costing - 820 Words

Process costing Process costing is a system which mostly practices by a company whereby the manager of the company wants to know the cash flow from one department to another. Process costing give a clarify information to managers, therefore this activities is very important. Process costing is consisting of three ingredients which are direct materials, direct labor and manufacturing overhead. Direct material is the raw material which needs to produce a product, for example rubber for shoes, plastics for straws and etc. direct labor is a person who work and complete the product before it is completely produce. And manufacturing over head is about the indirect materials, indirect labor, and some indirect related to the factory. For†¦show more content†¦In a weighted average method the equivalent units of production for a department are the number of units transferred to the next department of finished goods plus the equivalent units in the department’s ending work in process inventory. First-in-First-out (FIFO) Method The computation of equivalent units under FIFO method differs from weighted average method in two ways. First the units transferred out figure are divided into two parts. One part consists of the units from beginning inventory that were completed and transferred out, and the other part consists of the units that were both started and completed during the current period. Second full consideration is given to the amount of work expended during the current period on units in the beginning work in process inventory as well as units the ending inventory. Thus, under the FIFO method, it is necessary to convert both beginning and ending inventories to an equivalent unit basis. For the beginning inventory, the equivalent units represent the work done to complete the units; for the ending inventory, the equivalent units represent the work done to bring the units to a stage of partial completion at the end of the period (the same as with the weighted average method). The formula for computing equivalent units of production is more complex under FIFO method than under weighted averageShow MoreRelatedJob Order Costing And Process Costing Essay1234 Words   |  5 PagesJob-order costing and process costing are two basic types of accouting systems. Costing systems provide cost data to help managers plan, direct and motivate, control, and make decisions (Garrison). These cost systems differ from entity to entity but most are based on one of the two. The costing systems can be seen and are explained in more depth in the following companies which each have different ways in which they produce products. Biolea is a family-owned/operated company specializing in theRead MoreProcess Costing1436 Words   |  6 PagesPAPER On Process Costing Submitted in fulfillment of the requirements for the 3rd SEM MBA Management Accounting and Control Systems Submitted to: Submitted by: Prof. G V M Sharma Vandana Rajput Dept. of MBA 1PB11MBA60 INTRODUCTION: Process costing is a form of operations costing which is used where standardized homogeneous goods are produced. This costing method is usedRead MoreProcess Costing1282 Words   |  6 PagesI. Discuss Process Costing, clearly bringing out its advantages and disadvantages. DEFINITION Costs are accumulated in costing systems. According to Glautier and Underdown (2001), the development of costing systems reflects the manner in which accounting methods have been adapted to the needs of different forms of activity and technology, and also to the appearance of advanced manufacturing techniques that have been a feature of recent years. 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Competition Bikes is performing this analysis so management can determine the optimum sales units to breakeven from its San Diego plant based on the current sales mix of 9 Titanium bicycles for every 5 CarbonLite bicycles produced. Traditional costing is an easily implemented costing method that aligns with generallyRead MoreJob Order and Process Costing Systems - Quiz Essay1908 Words   |  8 Pages  1. | Question : | (TCO F) Assume there is no beginning work in process inventory and the ending work in process inventory is 100% complete with respect to materials costs. The number of equivalent units with respect to materials costs under the weighted-average method is: | |    | Student Answer: | x | the same as the number of units put into production. |    | | | less than the number of units put into production. |    | | | the same as the number of units completed. |    | | |Read MoreAc552 W3 Lecture Process Costing Quiz706 Words   |  3 PagesTop That manufactures baseball-style hats. Material is introduced at the beginning of the process in the Cutting Department. Conversion costs are incurred (and allocated) uniformly throughout the process. As the cutting of material is completed, the pieces are immediately transferred to the Sewing Department. Data for the Cutting Department for the month of February 2005 follow: Work in process, January 31-- 50,000 units 100% complete for direct materials, 40% completed for conversionRead MoreIntroduction. Muddled Is An Acfi2003 Student And As Many1398 Words   |  6 Pagesthe course including a fundamental principle, the differences in the costing systems and cost management systems. The purpose of this essay is help Muddled understand the fundamental costing principle that management systems should reflect the fact that different costs are relevant for different purposes, and how this principle affects the way that job costing and process costing systems are designed. Along the way several costing concepts will be explained and laid out for Muddled to understand in