RSM222H1 Lecture 4: Class 4
12 Feb 2017
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Job costing: industry that makes unique, identifiable product. Process costing: many units of homogenous, identical products. There can be a hybrid of both job and process costing. Process cost flows: direct materials go into work in process (debit side) Assume there are two processing departments, departments a and b. Indirect labour/materials still go to manufacturing overhead: apply the actual overhead in manufacturing overhead to work in process, transfer from wip dept a to wip dept b. Transfer-in costs on dept b side and transfer-out costs on dept a side: transfer cost of goods manufactured to finished goods, selling product, you debit cost of goods sold. Two half completed products are equivalent to one complete product. So, 10,000 units 70% complete are equivalent to 7,000 complete units. Reason we do this is to get by the accounting period. Equivalent units can be calculated two ways: the weighted-average method blends together units and costs from prior and current periods, fifo.
