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by: Rachel Moore

264

6

3

Chapter 5 ACCT 2102

Rachel Moore
UGA
GPA 3.33

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These notes cover Chapter 5, which was discussed in class February 8th through February 12th.
COURSE
Principles of Accounting II
PROF.
Farmer
TYPE
Class Notes
PAGES
3
WORDS
CONCEPTS
ACCT 2102, uga, Farmer, Chapter 5, Process Costing
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This 3 page Class Notes was uploaded by Rachel Moore on Sunday February 14, 2016. The Class Notes belongs to ACCT 2102 at University of Georgia taught by Farmer in Spring 2016. Since its upload, it has received 264 views. For similar materials see Principles of Accounting II in Accounting at University of Georgia.

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Date Created: 02/14/16
ACCT 2102 February 8, 2016 – February 12, 2016 Chapter 5 Notes Process Costing What is the ultimate goal of both job order costing and process costing? To get the cost of a unit. What type of manufacturing environment necessitates using process costing? Mass producing. What is the initial cost object in a process costing environment? Processing department. RM Inventory WIP Inventory – D1 WIP Inventory – D2 FG Inventory Beg Use Beg TO* Beg TO Beg COGS Purchase DM+DL+MOH TI+DM+DL+ TI** MOH End End End End *TO – Transferred Out **TI – Transferred In How would we get form the initial cost object to the cost of a unit? Cost ÷ # of units completed = Cost per unit Equivalent Unit Calculation • Physical units x % Complete = EU • Used to fairly assign cost. • EU is how many units I could have completed given the resources that I used. What is moved to Department 2? TO: # of units complete x 100% x cost per unit = D1 TO EI: # of units in process x % complete x cost per completed unit = D1 EI Process Costing Template: • Step 1 – Summarize flow of physical units o Takes a look at where units come from and where they go; BI or S (started) ▯ EI or C&TO • Step 2 – Equivalent unit calculation o DM column includes direct material; conversion column includes DL and MOH • Step 3* - Calculate cost per equivalent unit • Step 4 – Assign costs *Most important for managers. Production Cost Report (Department 1) Step 1 (Physical Units) Step 2 (EU) Beginning Inventory 35,000 DM C Started 385,000 Total units to acct for 420,000 EI 20,000 12,800 Ending Inventory 20,000 C&TO 400,000 400,000 C&TO 400,000 Total units accted for 420,000 Total EU 420,000 412,000 Step 3 (Cost per EU) Step 4 (Assign Costs) DM C Completed & \$3.50(400,000) Transferred Out + Costs in BI \$122,500 \$14,000 \$0.80(400,000) Costs added \$1,347,500 \$25,000 = \$290,600 \$1,720,000 Total costs \$1,470,000 \$329,600 Ending \$3.50(20,000) Total EU 420,000 412,000 Inventory + \$0.80(12,000) Cost per EU \$3.50 \$0.80 = \$79,600 How many physical units did we work on during the month? 420,000 Where did they come from? 35,000 BI; 385,000 Started Where did they go? 20,000 EI; 400,000 C&TO What are the EUs for DM and Conversion? What do these EUs mean? 420,000 DM (how many units I could have completed with respect to all of the DM costs in the period); 412,000 C (how many units I could have completed with respect to all of the C costs in the period) How much did it cost to produce one finished unit in this department? \$4.30 What is the Ending WIP balance (beginning WIP balance next period)? \$79,600 How much cost is transferred to the next department? \$1,720,000 Units started in department 2 during the period are transferred in from department 1. A unit in department 2 is 100% completed in department 1. Beg WIP Department 2 (units) 100,000 units Units Transferred in from the previous 400,000 department Units Completed and Transferred Out 450,000 units Beg WIP Department 2 Transferred in cost in beginning balance \$ 430,000 DM cost in beginning balance \$10,000 Conversion cost in beginning balance \$25,000 Manufacturing costs incurred (added) during the period: Transferred in from the previous \$1,720,000 department Direct materials used \$895,000 Conversion costs (DL and MOH) \$217,500 Production Cost Report (Department 2) Step 1 (Physical Units) Step 2 (EU) Beginning Inventory 100,000 TI DM C Started 400,000 Total units to acct for 500,000 EI 50,000 2,500 35,000 Ending Inventory 50,000 C&TO 450,000 450,000 450,000 C&TO 450,000 Total units accted for 500,000 Total 500,000 452,500 485,000 EU Step 3 (Cost per EU) Step 4 (Assign Costs) TI DM C Completed & \$6.80(450,000) Transferred Out = Costs \$430,000 \$10,000 \$25,000 \$3,060,000 BI Costs \$1,720,000 \$895,000 \$217,500 Added Total \$2,150,000 \$905,000 \$242,500 Ending Inventory \$3.50(20,000) 500,000 452,500 485,000 + Cost \$4.30 \$2 \$0.50 \$0.80(12,000) per = \$79,600 EU

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