Professional Documents
Culture Documents
Learning Objective
To distinguish production
procedures that match
with process costing from
those that correspond
with job order costing.
LO1
Production of Goods and Services
and Costing Systems
LO2
Tracking the Physical Flow and
Related Production Costs
Direct Finished
Jobs
Labor Goods
Finished
Processes
Goods
Direct Labor
and Factory Cost per
Overhead unit
(Conversion) processed
Tracking the Physical Flow and
Related Production Costs
Work in
Indirect Process
Assembly
Work in
Finished
Process
Goods
Packaging
Conversion
Costs
Delivered
to
Labor Factory Customers
Overhead
Understanding Cost Flows
To demonstrate how to
calculate equivalent units.
LO3
Process Costing and
Equivalent Units
Equivalent units is a concept expressing a
number of partially completed units as a
smaller number of fully completed units.
+ = 1
Process Costing and
Equivalent Units
LO4
Cost per Equivalent Unit
Stage 1 Stage 2
25% of 25% of
Conversion + Conversion = 50%
Process Costing and
Equivalent Units
40% of 60% of
Material Material
Fabrication Department
Direct Material Equivalent Units of Production - April
Fabrication Department
Direct Material Equivalent Units of Production - April
Fabrication Department
Conversion Equivalent Units of Production - April
Fabrication Department
Conversion Equivalent Units of Production - April
Direct
Activities during April Material Conversion
Units from beginning inventory
processed in current period 0 18,000
Units started and completed
in current period 70,000 70,000
Units in ending inventory at
end of current period 20,000 5,000
Fabrication Department
April Work in Process Costs
Beginning work in process $ 22,380
Costs added in April:
Direct material 45,000
Conversion 55,800
Total costs to account for $ 123,180
Cost per Equivalent Unit
Fabrication Department
Cost Per Equivalent Unit - April
Direct
Materials Conversion
Total cost of resource for
April $ 45,000 $ 55,800
LO5
Cost of Completed Units
LO6
Tracking Costs Using a Process
Costing Production Report