TAILIEUCHUNG - Lecture Advanced management accounting - Chapter 5
This chapter presents the following content: Process costing, process costing with work in process inventory, calculation of equivalent units, the effects of beginning and ending work in process inventories, process costing using the weighted average method, process costing using the first-in, first-out (FIFO) method, comparison of weighted average and FIFO, process costing and spoilage, operation costing, other issues in process costing. | Lecture 5: Cost Accounting Systems Reference Book : Managerial Accounting By Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso Managerial Accounting 12th edition by Garrison, Noreen, Brewer Cost Accounting Systems Costing Systems Job-Costing: system accounting for distinct cost objects called Jobs. Each job may be different from the next, and consumes different resources Wedding announcements, aircraft, advertising Process-Costing: system accounting for mass production of identical or similar products Oil refining, orange juice, soda pop Costing Systems Illustrated Costing Approaches Summarized Seven-step Job Costing Identify the Job that is the Chosen Cost Object Identify the Direct Costs of the Job Select the Cost-Allocation base(s) to use for allocating Indirect Costs to the Job Match Indirect Costs to their respective Cost-Allocation base(s) Seven-step Job Costing (continued) Calculate an Overhead Allocation Rate: Actual OH Costs ÷ Actual OH Allocation Base Allocate Overhead Costs to the Job: OH Allocation Rate x Actual Base Activity For the Job Compute Total Job Costs by adding all direct and indirect costs together Job Costing Overview Journal Entries Journal entries are made at each step of the production process The purpose is to have the accounting system closely reflect the actual state of the business, its inventories and its production processes. Journal Entries, continued All Product Costs are accumulated in the Work-in-Process Control Account Direct Materials used Direct Labor incurred Factory Overhead allocated or applied Actual Indirect Costs (overhead) are accumulated in the Manufacturing Overhead Control account Journal Entries, continued Purchase of Materials on credit: Materials Control XX Accounts Payable Control XX Requisition of Direct and Indirect Materials (OH) into production: Work-in-Process Control X Manufacturing Overhead Control Y Materials Control Z Journal Entries, continued Incurred Direct and Indirect (OH) Labor Wages .
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