Textbook Notes (368,611)
Canada (162,009)
MGAC03H3 (13)
G.Quan Fun (10)
Chapter 17

Chapter 17 Notes

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Financial Accounting
G.Quan Fun

Chapter 17 Process Costing NotesProcessCosting Calculationsequivalent units EU measures physical input units not yet completely converted in terms of the hypothetical quantity required to equal a single completely converted physical output unitin process costing there is only one indirect cost pool consisting of both direct labour and all conversion coststhe logic of process costing is that the output consumes almost identical amounts of inputs therefore the goal of process costing is to calculate an average production cost for all units producedIllustrating Process Costingthe allocation goals areoestimate as accurately as possible the costs of products and services to assist in decisions such as pricing and product mixovalue inventory and cost of goods sold in compliance with external reporting requirementsthe weightedaverage processcosting method calculates the average EU cost of the work done to date regardless of the period in which it was done and assigns it to units completed and transferred out and to EU in ending WIPthe FIFO processcosting method assigns the cost of the prior accounting periods EU in beginning WIP inventory to the first units completed and transferred out and assigns the cost of EUs worked on during the current period first to complete beginning inventory then to start and complete new units and finally to units in ending WIPDecision Points1What is the weightedaverage method of process costingThe weightedaverage method computes unit costs by dividing the total costs to date by the total equivalent units completed to date and assigns this average cost to units completed and to any units in ending workinprocess inventory2How are costs assigned to units completed and units in ending WIP using the weightedaverage methodThe cost allocation base is equivalent units and all cost allocation rates are
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