金陵科技学院-管理会计（双语）Lecture 8.pptVIP

LECTURE 8 Process Costing Revision-Costing systems (Job Costing) * Revision-Comparision of JC and PC JC PC * 1.Process Costing systems DEFINITIONS ?Process costing (or “average costing”) : Product costs are obtained by allocating total costs to masses of like units that proceed in continuous fashion through a series of uniform production steps. (It is common in industries such as chemicals, oil, paper, textiles, plastics, glass, food processing and canning ) ?Operation Costing * 1.Process Costing systems CHARACTERISTICS OF PROCESS COSTING Output of process 1 is the input of process 2 PC aims at determining the cost of each operation/process and applying the costs accumulated at the end of each process to the product Each process of the production produces the intermediate product The total cost of a product = Total cost of all the process Number of products produced (quantity of final product produced) * 1.Process Costing systems CHARACTERISTICS OF PROCESS COSTING Costs always accumulated for a period; Direct Indirect costs are accumulated for clearly defined process as a whole, so the cost centre is the process or operation; Costs accumulated into processed but not directly to product; * 1.Process Costing systems CHARACTERISTICS OF PROCESS COSTING Certain loss units is normal, NO SPOILAGE Any WIP at the end of the period? Equivalent FG The cost of process 1 is transferred and added to the cost of process 2,because the output of process 1 is treated as the input of process 2 * 1.Process Costing systems FLOW OF PRODUCTION IN PROCESS COSTING SYSTEMS Begining End Assembly Finishing Cost (DM/DL/OH) attached when product is manufactured Cost (DM/DL/OH) attached when product is manufactured We do not consider accounting for spoiled units, therefore we will not consider the situation where goods are reworked. (once goods have passed a point in the process they do not pass that point again. ) * 2. MANUFACTURING COSTS IN PROCESS COSTING SYSTEMS WHICH C