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    5 Process Costing

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    Ronn Robby Rosales
    This document discusses process costing and how it differs from job order costing. It explains the concepts of departmentalized vs nondepartmentalized production and work in process inventories. Equivalent units of production are defined as the number of whole units that could have been completed given the work performed. The steps for solving process costing problems are outlined.

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    5 Process Costing

    Uploaded by

    Ronn Robby Rosales
    17 views2 pages
    This document discusses process costing and how it differs from job order costing. It explains the concepts of departmentalized vs nondepartmentalized production and work in process inventories. Equivalent units of production are defined as the number of whole units that could have been completed given the work performed. The steps for solving process costing problems are outlined.

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    This document discusses process costing and how it differs from job order costing. It explains the concepts of departmentalized vs nondepartmentalized production and work in process inventories. Equivalent units of production are defined as the number of whole units that could have been completed given the work performed. The steps for solving process costing problems are outlined.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    17 views2 pages

    5 Process Costing

    Uploaded by

    Ronn Robby Rosales
    This document discusses process costing and how it differs from job order costing. It explains the concepts of departmentalized vs nondepartmentalized production and work in process inventories. Equivalent units of production are defined as the number of whole units that could have been completed given the work performed. The steps for solving process costing problems are outlined.

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    © All Rights Reserved
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    of 2

    UNIVERSITY OF SANTO TOMAS

    College of Commerce and Business Administration


    Acct 4 – Cost Accounting
    PROCESS COSTING
    I. Comparison with Job Order Costing

    II. Departmentalized vs Nondepartmentalized Factory

    - Non departmentalized – single department, one product,


    continuous output
    - departmentalized – a company has several production and service
    departments

    III. Work in process inventories – units in varying stages of


    completion:

    a. Units started from the period and completed in the current


    period
    b. Units started and finished in the current period
    c. Units started during the current period but not finished by the
    end of the period

    - primary task is to allocate total cost to units finished during the


    period and units still in process at the end of the period.

    IV. Equivalent Units of Production (EUP)

    - represents the number of whole units that could have been


    completed during a period, given the amount of work that was
    performed:

    Example:
    Beginning WIP = P0
    January 2016 = 19,000units started in production; 17,000 units
    completed by January 31; 2,000 units WIP, end (50%) complete

    Units finished during the period 17,000 units


    Equivalent units of work in process
    at the end of the period 1,000
    18,000 units
    Significance of EUP = to get the amount of cost per unit for a given
    period

    Steps to take in solving Process Costing problems

    1. Determine the EUP.


    2. Determine the unit cost per month based on the given cost data
    3. Determine the cost of goods finished during the period and the
    WIP at the end of the period

    No beginning inventory

    Example: Book pp. 253-254

    With beginning inventory – added cost of WIP at the beginning of


    the period

    Example: Book pp. 255-256

    Exercise P5-2, P5-3,P5-4

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