AFM102 Lecture Notes - Lecture 5: Finished Good, Subledger, Expense

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tealskunk19

27 Mar 2018

School

University of Waterloo

Department

Accounting & Financial Management

Course

AFM102

Professor

Bable

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Document Summary

System design: job order costing: absorption costing= all manufacturing costs- fixed and variable, are assigned to units of product also known as (cid:862)full costing(cid:863) Job order and process costing: different types of average cost systems to determine the cost of a product or a service, process costing, process costing= used where company produces many units of a single product. Job cost sheet: form prepared for each separate job that records the materials, labour, and overhead costs charged to the job, job cost sheet is a subsidiary ledger for the work in process account. Measuring direct labour cost: labour charges that cannot be easily traced to a job are treated as manufacturing overhead (indirect labour) Time ticket= source document used to record an employees hour by hour activities during a day. Estimated total units in the allocation base: computed before the period begins estimated, used to apply overhead cost to job throughout the period overhead application.

Related Questions

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.

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Process costing differs from job order costing in the way costsare accounted for. Share your thoughts about the accountingdifferences in process costing versus job order costing, andexplain how manufacturing costs are accounted for in processcosting. Further explain why the cost per equivalent unit aredetermined separately for direct materials and for conversion costsunder different methods of determining the cost of completed andtransferred out units and the cost of ending work in processinventory. Additionally, discuss the type of production mostsuitable to employ a process costing system by providing anexample.

amaranthworm158

Process Cost Accounting & Cost-Volume-Profit Analysis

This module focuses on measuring costs in process production companies. We explain process production, describe how to assign costs to processes, and compute and analyze cost per equivalent unit. Discuss two of the three topics:

What is meant by equivalent units of production, and why are they important when a process costing system is used?

What are the four steps in accounting for production activity in a period?

Job order costing and process costing are two major costing systems used in manufacturing. Briefly contrast the characteristics of these two systems.

AFM102 Lecture Notes - Lecture 5: Finished Good, Subledger, Expense

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