Documente Academic
Documente Profesional
Documente Cultură
Objectives
1. Describe theAfter
basicstudying
characteristics
this and cost
flows associated with process
chapter, you should manufacturing.
2. Define equivalentbeunits
able and
to: explain their role
in process costing. Explain the differences
between the weighted average method and
the FIFO method of accounting for process
cost.
3. Prepare a departmental production report
using the weighted average method.
Continued
Objectives
4. Explain how process costing is affected by
nonuniform application of manufacturing
inputs and the existence of multiple
processing departments.
5. Appendix: Complete a departmental
production report using the FIFO method.
Healthblend Sequential
Nutritional
Supplements
Processing
Process 1 Process 2
Finished
Assembly Goods
Process 3 Process 4
Production and Testing of
assembly of write-head and
write-head and disk drive
Testing of
Production
disk driveof circuit board
circuit board
Flow of Manufacturing Costs Through the
Accounts of a Process-Costing Firm (Healthblend)
Department A
=
100 units completed = 100 equivalent units
=
200 units, 50% completed = 100 equivalent units
Continued
Equivalent Units of Production
Example:
1,000 units completed, 600 units, 25% complete
Production:
Units in process, July 1, 75% complete 20,000
Units completed and transferred out 50,000
Units in process, July 31, 25% complete 10,000
Costs:
Work in process, July 1 $ 3,525
Cost added during July 10,125
Weighted Average Method
Healthblend
Nutritional
Supplements
$3,525 $10,125
$13,650
+
EWIP, 25% Complete
2,500
52,500
Weighted Average Method
Cost Assignment:
Cost/Unit = $13.750 ÷ 52,500 = $0.26
Transferred Out ($0.26 x 50,000) $13,000
EWIP ($0.26 x 2,500) 650
Total Cost Assigned $13,650
Step 1: Physical Flow Schedule
Units to account for:
Units in beginning work in process (75% complete) 20,000
Units started during the period 40,000
Total units to account for 60,000
Units accounted for:
Unit completed and transferred out:
Started and completed 30,000
From beginning work in process 20,000 50,000
Units in ending work in process (25%
complete) 10,000
Total units accounted for 60,000
Step 2: Calculation of Equivalent Units
Weighted Average Method
Healthblend
Nutritional
Supplements
Step 3: Computation of Unit Cost
$13,650 =
52,500
$0.26 per equivalent
unit
Step 4: Valuation of Inventories
Cost of goods transferred to the encapsulating
department:
50,000 equivalent units x $0.26 $13,000
Ending inventory:
2,500 equivalent units x $0.26 650
Healthblend
Nutritional
Supplements
Step 5: Cost Reconciliation
Goods transferred out $13,000
Goods in ending work in process 650
Total costs accounted for $13,650
The
manufacturing
costs to
Healthblend account for are
Nutritional also $13,650.
Supplements
Production
Report
Healthblend Company
Weighted
Picking Department
average
Production Report for July 2004
UNIT INFORMATION
Physical Flow
Units to account for: Units accounted for:
Units in beginning Units completed 50,000
work in process 20,000 Units in ending
Units started 40,000 work in process 10,000
Total units to Total units
account for 60,000 accounted for 60,000
Equivalent Units
Units completed 50,000
Units in ending Continued
work in process 2,500
Total equivalent units 52,500
COST INFORMATION
Costs to account for:
Beginning work
in process $ 3,525
Incurred during
period 10,125
Total cost to
account for $13,650
Continued
Transferred Ending
Out WIP Total
Healthblend
Nutritional
Supplements
Equivalent Units
Healthblend Picking Department
Nutritional
Supplements
60,000
10,000 units equivalent units
Beginning
WIP inventory 50,000 units
of material and
Started and
conversion cost
completed transferred out
Materials, 100%
complete; conversion
100% complete as to
cost, 50% complete
both materials and
conversion cost
Equivalent Units
Healthblend Picking Department
Nutritional Conversion
Supplements
Materials Costs
10,000 units
Beginning
WIP inventory 50,000 units
Started and 60,000 60,000
completed
20,000 units
September Ending WIP
inventory
Continued
Equivalent Units
Materials Conversion Cost
Continued
COST INFORMATION
Conversion
Materials Cost Total
Costs to account for:
Beginning work in process $ 1,600 $ 200 $ 1,800
Incurred during the period 12,000 3,200 15,200
Total costs to account for $13,600 $3,400 $17,000
Cost per equivalent unit $ 0.17 $ 0.05 $ 0.22
Continued
Transferred Ending
Out WIP Total
$3,525 $10,125
BWIP Current-
Units Period Units
FIFO Method
Output for July
60,000 Total Physical Units Become 37,500
BWIP Equivalent Units
5,000
+
Units Started and Completed
30,000
+
EWIP, 25% complete
2,500
37,500
FIFO Method
Cost Assignment:
Unit Cost = $10,125 ÷ 37,500 = $0.27
Transferred Out:
From beginning work in process $ 3,525
Complete BWIP ($0.27 x 5,000) 1,350
Started and Completed in July
($0.27 x 30,000) 8,100
EWIP ($0.27 x 2,500) 675
Total Cost Assigned $13,640
Healthblend Company
FIFO Picking Department
Production Report for July 2004
UNIT INFORMATION
Units accounted for:
Units in beginning
work in process 20,000
Units started during
the period 40,000
Total units to
account for 60,000
Continued
Physical Equivalent
Flow Units
Continued
COST INFORMATION
Costs to account for:
Beginning work
in process $ 3,525
Incurred during
period 10,125
Total cost to
account for $13,650
Continued
Transferred Ending
Out WIP Total