ADMS 2510 Lecture Notes - Lecture 4: Subledger, Weighted Arithmetic Mean

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January 26th, 2016
Process
- Means a series of actions/operations in manufacturing
- Products ow sequentially from department to department
- Work in process subsidiary ledger account maintained for each department
Costs of production
- Production costs in process costing
 direct materials
 direct labour
 overhead
- Direct labour costs often small in comparison to other product costs
 direct labour and overhead combined as conversion cost
- Instead of having all 3, materials is one and overhead/direct labour is
conversion
Cost accumulation
- For each department
 assign costs to department during period
 determine unit costs for each cost component
- Cost of completed unit
 sum of costs per unit for all departments unit passes through
- Production report to track process costs
Departmental processing
- At beginning of period
 incomplete work started last period to be completed this period
- During period
 work started
 work completed
- At the end of period
 incomplete work started this period to be completed next period
Quantity of production
- Production consists of both fully completed and partially completed units
- To account for quantity of production
 partially completed units to be expressed in equivalent whole units
 equivalent units of production (EUP) ( ½+ ½= 1)
Cost valuation
- End of period valuations
 value of ending work in process inventory
 value of units transferred to next department
- Valuation methods
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