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ACCT 2102, week 5 notes

by: Randi

ACCT 2102, week 5 notes ACCT 2102

Marketplace > University of Georgia > Accounting > ACCT 2102 > ACCT 2102 week 5 notes
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About this Document

These notes cover chapter 5 material
Principles of Accounting II
Class Notes
processcosting, efficiency, to, TI, WIP, Inventory, weighted, average
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This 2 page Class Notes was uploaded by Randi on Sunday September 18, 2016. The Class Notes belongs to ACCT 2102 at University of Georgia taught by Farmer in Fall 2016. Since its upload, it has received 11 views. For similar materials see Principles of Accounting II in Accounting at University of Georgia.


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Date Created: 09/18/16
Week  5  Notes     ACCT 2102 PROF.  FARMER   Chapter  5:  Process  Costing     • What  is  the  ultimate  goal  of  both  job  order  costing  and  process  costing?   o To  get  the  unit  cost     • Process  Costing:   o Used  for  efficiency   o Typically  used  in  environments  of  mass  production   § No  customization   § No  uniqueness  between  products   § Example:  Coca-­‐Cola,  M&Ms     o The  initial  cost  object  in  a  process  costing  environment  is  the   processing  department     TERMS:   • Transferred  Out  (TO):     o What  units  are  going  from  an  original  apartment  to  another   Example:  What  is  leaving  Department  1  for  Department  2   • Transferred  In  (TI):   o What  units  are  transferred  into  a  new  department       WIP  Inventory  –   WIP  Inventory  –   WIP  Inventory  –     RM  Inventory     Department  1   Department  2   Department  3     BB   Used     BB   TO   BB   TO   BB   COGS   Purchased   DM/DL/ TI/DM/ TI           MOH     DL/MOH       END     END   END   END             • The  figure  below  depicts  sequential  processing:   o The  units  we  make  go  through  a  sequence       • How  do  we  get  from  the  initial  cost  object  to  the  cost  of  a  unit?   o Cost  in  a  department  /  Output   *A  physical  unit  is  not  the  same  as  an  output!       Week  5  Notes     • Equivalent  Units:   o Equivalently,  how  many  units  could  we  have  finished,  given  the  cost   incurred  if  we  started  one  unit  at  a  time   o Example:  If  a  unit  is  only  half  way  completed,  it  should  only  get  half  of   the  cost   EU  =  (Physical  Units)  X  (Percent  Complete)       • Weighted  average  is  used  to  calculate  process  costing  in  the  first   department  (average  all  units  together  into  one)   1. Summarize  the  flow  of  physical  units   a. How  many  physical  units  did  we  work  on  during  the  month?   b. Where  di  they  come  from?   c. Where  di  they  go?   2. Compute  output  in  terms  of  equivalent  units   a. What  are  the  EUs  for  DM  and  Conversion?   b. What  do  these  EUs  mean?     3. Calculate  the  cot  per  equivalent  unit  (textbook  breaks  this   down  into  2  separate  steps)   a. How  much  did  it  cost  to  produce  one  finished  unit  in  this   department?   4. Assign  costs  to  the  units   a. What  is  the  Ending  WIP  balance?   b. How  much  cost  is  transferred  to  the  next  department?    


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