BU467 Chapter 6: Chapter 6
Document Summary
Chapter 6: accounting for the cost of mass-produced goods. Process costing: assigning product costs to mass-produced products. Production costs are traced to cost pools that reflect the production process and then allocated to individual units. Costs are first assigned to departments, then assigned to the products. Conversion costs: direct labour and production overhead costs. Equivalent units: measures the resources used in partially completed units, relative to the resources needed to complete the units. Fifo vs weighted average methods: when no beginning inventories exist, both methods are the same. In process costing, separate wip accounts are maintained for each production department. Standard costs: a cost that managers expect to incur for the production of goods under operation plan assumptions. Accounting entries for direct materials, conversion costs, and transferred-in costs are recorded at a standard (or expected), rather than actual costs. At the end of the period, adjustments are made for the differences between actual costs and standard/expected costs.
