Emm 501 Case Study
EM 501 Financial and Management Accounting Process Costing
˙smail Serdar Bakal I
Middle East Technical University
Fall 2012 (METU)
EM 501
Process Costing
1 / 31
Process Costing
Process Costing is a system where the unit cost of a product or service is obtained by assigning total costs to many identical or similar units Each unit receives the same or similar amounts of direct materials costs, direct labor costs, and manufacturing overhead Unit costs are computed by dividing total costs incurred by the number of units of output from the production process Key question in process costing
How to determine ‘number of units produced’ including the units in work-in-process?
Fall 2012 (METU)
EM 501
Process Costing
2 …show more content…
As the assembly process is completed, the units are immediately transferred to the Testing Department. Here, the units receive additional direct materials at the end of the process. Conversion costs are added evenly during the process. As units are completed in testing, they are transferred to Finished Goods
Fall 2012 (METU)
EM 501
Process Costing
24 / 31
Transferred in Costs
Physical Units for March Work in process, beginning inventory (March 1) Transferred in costs 100% complete, Direct materials 0%, conversion costs 62.5% complete Transferred in during March Completed during March Work in process, ending inventory, (March 31) Transferred in costs 100% complete, Direct materials 0%, conversion costs 80% complete 240 units
400 units 440 units 200 units
Total Costs of Testing Department for March Work in process, beginning inventory Transferred in costs (240×$140) Direct materials Conversion costs (150 equivalent units × $120) Transferred in costs during March Weighted average FIFO Direct material costs added during March Conversion costs added during March 33,600 0 18,000
51,600 52,000 52,480 $13,200 48,600
Fall 2012 (METU)
EM
˙smail Serdar Bakal I
Middle East Technical University
Fall 2012 (METU)
EM 501
Process Costing
1 / 31
Process Costing
Process Costing is a system where the unit cost of a product or service is obtained by assigning total costs to many identical or similar units Each unit receives the same or similar amounts of direct materials costs, direct labor costs, and manufacturing overhead Unit costs are computed by dividing total costs incurred by the number of units of output from the production process Key question in process costing
How to determine ‘number of units produced’ including the units in work-in-process?
Fall 2012 (METU)
EM 501
Process Costing
2 …show more content…
As the assembly process is completed, the units are immediately transferred to the Testing Department. Here, the units receive additional direct materials at the end of the process. Conversion costs are added evenly during the process. As units are completed in testing, they are transferred to Finished Goods
Fall 2012 (METU)
EM 501
Process Costing
24 / 31
Transferred in Costs
Physical Units for March Work in process, beginning inventory (March 1) Transferred in costs 100% complete, Direct materials 0%, conversion costs 62.5% complete Transferred in during March Completed during March Work in process, ending inventory, (March 31) Transferred in costs 100% complete, Direct materials 0%, conversion costs 80% complete 240 units
400 units 440 units 200 units
Total Costs of Testing Department for March Work in process, beginning inventory Transferred in costs (240×$140) Direct materials Conversion costs (150 equivalent units × $120) Transferred in costs during March Weighted average FIFO Direct material costs added during March Conversion costs added during March 33,600 0 18,000
51,600 52,000 52,480 $13,200 48,600
Fall 2012 (METU)
EM