Professional Documents
Culture Documents
Determine Arrange
Decision
data/information
the costs for control and
guidance making
COST
Estimation of Ascertainment of
costs costs Cost control
Facilitating
Cost of Determining Selling preparation of
Reduction Price financial and
other statement
Raw materials
Work in process
Finished goods
Raw Materials
The cost assigned to goods and
materials on hand but not yet placed
into production is reported as raw
materials inventory.
Work in Process
Some units are not completely processed at any
point in a continuous process. The cost of the raw
material on which production has been started
but not completed, plus the direct labor
cost applied specifically to this material and a ratable
share of manufacturing overhead costs, constitute
the work in process inventory.
Finished Goods Inventory
The costs identified with
the completed but
unsold units on hand at
the end of the fiscal
period are reported
as finished goods
inventory.
Merchandising Companies
custom-designed
Job Order Form
Job Order Costing in Service Companies
Job-order Costing
PROCESS COSTING
Work in
Process #2
Work in
Process #3
Physical Units
Actual number of units the company works on, regardless if the
units are finished at the end of month or not
Equivalent Units
Number of full units that could have been completed if all efforts had
been put forth to only start and complete units rather than
leaving some units partially finished
Process Costing Method
Weighted-
FI-FO
average
Segregates current period
No separation between
production work from work
current and prior work
effort in the beginning WIP
period
units
Direct Materials
Conversion costs
Transferred-in costs
Steps in Process Costing
Step 1: Summarizes the physical units
Food for the Grads started this month with 1,200 units on
hand and started on new 2,100 units. There were 800 units
in ending inventory that are 40% complete. Materials are
added at the beginning of the production process. How
many equivalent units were produced in June?
Using Weighted-average method
Direct Materials Conversion Costs
Unit in beginning WIP inventory 1,200
Unit Started in June 2,100
Units to be accounted for 3,300
Determine CC rate =