ADM 2341 Chapter Notes - Chapter 5: Deutsche Luft Hansa

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10 Oct 2017

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Absorption costing: all manufacturing costs, xed and variable, are assigned to units of product. The process of doing so is also known as full costing . Process costing system: used in situations where a company produces many units of a single product for long periods at a time: unit product cost (per liter, kg, bottle) = total manufacturing cost / total units. Bill of materials: a record that lists the type and quantity of each major item of the materials required to make a product. Materials requisition form: a detailed source document that speci es the type and quantity of materials that are to be drawn from the storeroom and identi es the job to which the costs of materials are to be charged. Direct materials: directly traced to the product or service. Raw materials: ingredients that are converted into a nished product.

Related Questions

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.

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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 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.

ADM 2341 Chapter Notes - Chapter 5: Deutsche Luft Hansa

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