MGM222H5 Lecture 4: 2018-01-29
MGM222- 2018-01-29
Overview:
- 3 steps to production report
o 1) Quantity schedule and Equivalent Units
o 2) Cost / EUP (Equivalent Units of Production)
o 3) Cost reconciliation
▪ Costs to be accounted for (beg):
• Beg. WIP
• Added/ started
▪ Costs to be accounted account for (end):
• Transferred Out
• End. WIP
Uses of process cost systems:
- Apply costs to similar products
o Ex) cereal, paint and soft drinks
- Large volume
- Not expensive
- Accumulate costs by departments
- Produced for inventory
- Each period
- SEVERAL POHRs can be used
o But there is only ONE POHR used in job order cost system
Review
- Company that would use process costing?
o Tire manufacturer
Ex) Tyler Company:
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Document Summary
3 steps to production report: 1) quantity schedule and equivalent units, 2) cost / eup (equivalent units of production, 3) cost reconciliation, costs to be accounted for (beg), beg. Wip: added/ started, costs to be accounted account for (end): Apply costs to similar products: ex) cereal, paint and soft drinks. Several pohrs can be used: but there is only one pohr used in job order cost system. Company that would use process costing: tire manufacturer. Manufacturing of automatic can openers consists of two processes: machining, assembly, materials, labor and manufacturing overhead added in both departments. Costs assigned to each department (ex wip machinging and wip assembly) Instead of making to fg, it goes to a different department: wip-assembly, wip-machining. This is how to record transfer of units to the assembly department: fg, wip- assembly, cogs. A measure of the work done during the period, expressed in fully complete units. Used to determine the cost per unit of the completed product.
