Judul: Managerial Accounting Resume
Penulis: Fayadri Fayadri
Chapter 4: Process Costing
Comparison of Job-Order and Process Costing
Similarities between Job-Order and Process Costing
The similarities between job-order and process costing can be summarized as follows:
1.Both systems have the same basic purposes—to assign material, labor, and manufacturing overhead costs to products and to provide a mechanism for computing unit product costs.
2.Both systems use the same basic manufacturing accounts, including Manufacturing Overhead, Raw Materials, Work in Process, and Finished Goods.
3.The flow of costs through the manufacturing accounts is basically the same in both systems.
As can be seen from this comparison, much of the knowledge that you have already acquired about costing is applicable to a process costing system.
Differences between Job-Order and Process Costing
There are three differences between job-order and process costing:
1.Process costing is used when a company produces a continuous flow of units that are indistinguishable from one another. Job-order costing is used when a company produces many different jobs that have unique production requirements.
2.Under process costing, it makes no sense to try to identify materials, labor, and overhead costs with a particular customer order (as we did with job-order costing) because each order is just one of many that are filled from a continuous flow of virtually identical units from the production line. Accordingly, process costing accumulates costs by department (rather than by order) and assigns these costs uniformly to all units that pass through the department during a period. Job cost sheets (which we used for job-order costing) are not used to accumulate. costs.
3.Process costing systems compute unit costs by department. This differs from job-order costing where unit costs are computed by job on the job cost sheet.
Cost Flows in Process Costing
Processing Departments
A processing department is an organizational unit where work is performed on a product and where materials, labor, or overhead costs are added to the product.
The Flow of Materials, Labor, and Overhead Costs
Cost accumulation is simpler in a process costing system than in a job-order costing system. In a process costing system, instead of having to trace costs to hundreds of different jobs, costs are traced to only a few processing departments. Materials, labor, and overhead costs can be added in any processing department—not just the first.
Materials Costs
As in job-order costing, materials are drawn from the storeroom using a materials requisition form. Materials can be added in any processing department, although it is not unusual for materials to be added only in the first processing department, with subsequent departments adding only labor and overhead costs.
Labor Costs
In process costing, labor costs are traced to departments—not to individual jobs.
Overhead Costs
In process costing, as in job-order costing, predetermined overhead rates are usually used. Manufacturing overhead cost is applied according to the amount of the allocation base that is incurred in the department.
Completing the Cost Flows
Once processing has been completed in a department, the units are transferred to the next department for further processing. The cost flows between accounts are basically the same in a process costing system as they are in a job-order costing system. The only difference at this point is
that in a process costing system each department has a separate Work in Process account.
Equivalent Units of Production
After materials, labor, and overhead costs have been accumulated in a department, the department's output must be determined so that unit product costs can be computed. The difficulty is that a department usually has some partially completed units in its ending inventory. It does not seem reasonable to count these partially completed units as equivalent to fully completed units when counting the department's output. Therefore, these partially completed units are translated into an equivalent number of fully completed units. In process costing, this translation is done using the following formula:
Equivalent units = Number of partially completed units × Percentage completion
Weighted-Average Method
Under the weighted-average method, a department's equivalent units are computed as follows:
Equivalent units = Units transferred to the next + Equivalent units in ending
of production department or to finished goods work in process inventory
Compute and Apply Costs
Cost per Equivalent Unit—Weighted-Average Method
In the weighted-average method, the cost per equivalent unit is computed as follows:
Weighted-Average Method
(a separate calculation is made for each cost category in each processing department)
Cost of beginning + Cost added
Cost per equivalent unit = work in process inventory during the period
Equivalent units of production
The numerator is the sum of the cost of beginning work in process inventory and of the cost added during the period. Thus, the weighted-average method blends together costs from the prior and current periods. That is why it is called the weighted-average method; it averages together units and costs from both the prior and current periods.
Applying Costs—Weighted-Average Method
The costs per equivalent unit are used to value units in ending inventory and units that are transferred to the next department. The equivalent units are multiplied by the cost per equivalent unit to determine the cost assigned to the units. This is done for each cost category—in this case, materials and conversion. The equivalent units for the units completed and transferred out are simply the number of units transferred to the next department because they would not have been transferred unless they were complete.
Cost Reconciliation Report
The costs assigned to ending work in process inventory and to the units transferred out reconcile with the costs we started. The cost of the units transferred to the next department will be accounted for in that department as "costs transferred in." It will be treated in the process costing system as just another category of costs like materials or conversion costs. The only difference is that the costs transferred in will always be 100% complete with respect to the work done. Costs are passed on from one department to the next in this fashion, until they reach the last processing department, Finishing and Pairing. When the products are completed in this last department, their costs are transferred to finished goods.
Operation Costing
Between job-order costing and process costing, there are many hybrid systems that include characteristics of both job-order and process costing. One of these hybrids is called operation costing.
Operation costing is used in situations where products have some common characteristics and some individual characteristics. Shoes, for example, have common characteristics in that all styles involve cutting and sewing that can be done on a repetitive basis, using the same equipment and following the same basic procedures. Shoes also have individual characteristics—some are made of expensive leathers and others may be made using inexpensive synthetic materials. In a situation such as this, where products have some common characteristics but also must be processed individually, operation costing may be used to determine product costs.
Examples of other products for which operation costing may be used include electronic equipment (such as semiconductors), textiles, clothing, and jewelry (such as rings, bracelets, and medallions). Products of this type are typically produced in batches, but they can vary considerably from model to model or from style to style in terms of the cost of materials.
Terimakasih telah membaca Managerial Accounting Resume. Gunakan kotak pencarian untuk mencari artikel yang ingin anda cari.
Semoga bermanfaat
0 komentar: