costaccountingf2-chapter11

1、2021-10-211paper f2management accounting2021-10-212chapter 11 process costing 2021-10-21ji weili, jxufe3unit calculationwork in processchapter previewprocess costingsubsequent/previous processeswith/without scrap valueopening wip closing wipnormal lossabnormal loss/gainweighted averagefifo 2021-10-2

2、1ji weili, jxufe4l used for continuous production of identical, large volumes, low-cost items.l mass produced in automated continuous production process.l costs cannot be directly traced to each unit of product.introduction to process costing2021-10-21ji weili, jxufe5job order systemsv custom orders

3、v heterogeneous productsv low production volumev high product flexibilityv low to medium standardizationprocess systemsv repetitive operationsv homogeneous productsv high production volume v low product flexibilityv high standardizationjob order and process production2021-10-21ji weili, jxufe6direct

4、materialsfinishedgoodscost per unit for each jobdirectlaborproductionoverhead jobsthe work in process account consists of individual jobs in a job order system.job costing and process costingdirectmaterialsfinishedgoodsdirectlaborproductionoverhead jobsthe work in process account consists of individ

5、ual jobs in a job order system.2021-10-21ji weili, jxufe7directmaterialsfinishedgoodsdirectlaborproductionoverhead processesthe work in process account consists of specific processes in a process cost system.cost per unit processedjob costing and process costing2021-10-21ji weili, jxufe8 process 1la

6、bormaterialsindirectindirectproductionoverheaddirectdirectdeliveredtocustomersprocess 2finishedgoodsabsorbedoverheadtwo processes manufacturingtransferredlabormaterialsproductionoverhead process 1process 2labormaterialsproductionoverheadlabormaterialsproductionoverhead2021-10-21ji weili, jxufe9intro

7、ductory example a party a barrel holds 100 pints of beer and costs $100 how much should we charge per pint to cover our costs?$100100 pints=$1/pint2021-10-21ji weili, jxufe10howeverwill you get the full 100 pints from your barrel? normal loss = 5 pintsso what should we charge now per pint?we only ac

8、tually expect to get 95 pints $10095 pints=$1.05/pint2021-10-21ji weili, jxufe11normal loss eg barrel dregs!what could we do with our loss?a local gardener likes the dregs for his plants hell pay 20p per pint, we could use this to reduce our costs.so what should we charge now per pint?$100- scrap va

9、lue95 pints=$1.04/pint - (20 x 5 pints)2021-10-21ji weili, jxufe12cont.so how have we found the cost of a pint to charge our party goers?cost per unit = -input costs scrap value of normal lossinput units-normal loss units_learn this formula!2021-10-21ji weili, jxufe13butwhat about unexpected losses?

10、at the end of the party we realise that we didnt get the 95 pints we expected we only got 85.abnormal loss = 10 pintsits too late to charge more, we have already charged $1.04 per pint.its just our loss well have to cover the $1.04 for each pint we didnt sell2021-10-21ji weili, jxufe14finally.good n

11、ewswhat if losses werent as much as we expected?at the end of the party we realise that instead of the 95 pints we were expecting we actually got 98 pints from the barrel.abnormal gain = 3 pintswe expected to scrap them for 20 we actually sold them for $1.04 2021-10-21ji weili, jxufe15normal lossvno

12、rmal loss = expected lossprocess 1 inputsgood outputnormal loss2021-10-21ji weili, jxufe16abnormal loss or gainvabnormal loss = unexpected lossvabnormal gain = unexpected gaininputsprocess 1 good outputnormal lossabnormal loss / gain2021-10-21ji weili, jxufe17example: abnormal losses and gainsvinput

13、 vactual output & normal outputvactual loss=input actual outputv normal loss=input * rate of normal lossvnormal(expected) output=input normal lossvabnormal loss or gain=actual loss normal lossvcost per unit=total cost / normal output2021-10-21ji weili, jxufe18cost per unitvnote: normal loss is not g

14、iven a cost.cost per unit = input costs input units - normal loss units_ _2021-10-21ji weili, jxufe19scrap value of normal lossscrap value of abnormal lossreduce the material costs of the processreduce the cost of abnormal lossaccounting for scrap a reduction in costs2021-10-21ji weili, jxufe20cost

15、per unitvnote: the scrap value of normal loss is deducted from the cost of material.cost per unit = input costs input units - normal loss units_ _-scrap value of nl2021-10-21ji weili, jxufe21disposal cost of normal lossdisposal cost of abnormal lossincrease costs of the processincrease the cost of a

16、bnormal lossdisposal cost2021-10-21ji weili, jxufe22recap process costing1units calculationinput units = good output + nl +/(-) al/(ag)2set up the process account and complete as far as possible3calculate cost per unit: cpu = input cost - scrap proceeds from normal lossinput units normal loss units4

17、valuations & transfer to process account2021-10-21ji weili, jxufe23introduction to wipcost per unit = input costs - scrap value of normal lossinput units-normal loss units_but.what if units arent finished?may have.cost per unit = input costs input unitsnormal loss units_ _-scrap value of nl2021-10-2

18、1ji weili, jxufe24costs are accumulated for a period by process or department. at the end of a period, we must consider how to allocate the costs between finished output and partly completed closing stock. unit cost is computed by dividing the accumulated costs by the number of equivalent units prod

19、uced in the period.valuing closing wip(期末在产品）期末在产品）2021-10-21ji weili, jxufe25introduction to wipfinished unitwip unitswe cant give them the same value2021-10-21ji weili, jxufe26equivalent units cost per equivalent unit 2 equivalent whole unitoutput from process includes: unit unit1 whole unit+2021-

20、10-21ji weili, jxufe27 for the current period, pencilco started 15,000 units and completed 10,000 units, leaving 5,000 units in process 30 percent complete. how many equivalent units of production did pencilco have for the period?a. 10,000b. 11,500c. 1,500d. 15,000question2021-10-21ji weili, jxufe28

21、 for the current period, pencilco started 15,000 units and completed 10,000 units, leaving 5,000 units in process 30 percent complete. how many equivalent units of production did pencilco have for the period?a. 10,000b. 11,500c. 1,500d. 15,000 10,000 units + (5,000 units .30) = 11,500 equivalent uni

22、tsquestion2021-10-21ji weili, jxufe29cost perequivalent unit=cost incurred in the periodequivalent units for the periodcost per equivalent unit2021-10-21ji weili, jxufe30now assume that pencilco incurred $27,600 in production costs. what was pencilcos cost per unit for the period?a. $1.84b. $2.40c.

23、$2.76d. $2.90question2021-10-21ji weili, jxufe31now assume that pencilco incurred $27,600 in production costs. what was pencilcos cost per unit for the period?a. $1.84b. $2.40c. $2.76d. $2.90$27,600 11,500 equivalent units = $2.40 per equivalent unitquestion2021-10-21ji weili, jxufe32equivalent unit

24、s may be different for material and labor and overhead at a process.at completion of the process, materialis 100% complete, but labor and overhead are only 25% complete. process 1100% ofmaterial25% oflabor andoverheadequivalent units2021-10-21ji weili, jxufe33previous processesprocess iprocess iipro

25、cess 1 is another inputowip 100% complete for process 12021-10-21ji weili, jxufe34cost of opening stockcost incurred in the periodcost of finished goodscost of closing stockvaluing opening wip (期初在产品）期初在产品）2021-10-21ji weili, jxufe35divide finished goods into two parts: opening stock, completed firs

26、t & work started and finished in current period.opening stock equivalent units to complete work in current period+fully worked units (started and finished in current period)+closing stock equivalent units valuing opening wip: fifoequivalent units=2021-10-21ji weili, jxufe36cost per eu=cost incurred

27、equivalent unitsexample: wip and fifo p234-6.22021-10-21ji weili, jxufe37cost of finished goods=cost of opening wip + cost per equivalent unit e-units cost of closing wip=cost per equivalent unit e-units example: wip and fifo p234-6.22021-10-21ji weili, jxufe38there is no distinction made between units of opening stock and new units introduced to the process in current period.output to finished goods+closing stock equivalent units valuing opening wip: weighted average methodequivalent units=2021-10-21ji weili, jxufe39cost per equivalent unit=(cost of opening stock + cost incurred) equiv