Chapter 3 - Process costing. This chapter presents the following content: Difference between job-order and process costing systems, job-order costing system, process costing system, product flows through departments, cost flows through accounts,. | Prepared by Debby Bloom-Hill CMA, CFM 1 CHAPTER 3 Process Costing 2 Difference Between Job-Order and Process Costing Systems Job-Order Costing Each unique product or batch is considered a job for which cost information is needed Necessary to trace manufacturing costs to specific jobs When completed, cost of job is removed from Work in Process and included in Finished Goods Slide 3-3 Learning objective 1: Describe how products flow through departments and how costs flow through accounts. 3 Difference Between Job-Order and Process Costing Systems Process Costing Large quantities produced of homogeneous products Average cost = total costs divided by total number of items produced When completed, number of units completed times average cost determines cost to be moved from WIP to Finished Goods Slide 3-4 Learning objective 1: Describe how products flow through departments and how costs flow through accounts. 4 Which of the following characteristics are associated with a process costing . | Prepared by Debby Bloom-Hill CMA, CFM 1 CHAPTER 3 Process Costing 2 Difference Between Job-Order and Process Costing Systems Job-Order Costing Each unique product or batch is considered a job for which cost information is needed Necessary to trace manufacturing costs to specific jobs When completed, cost of job is removed from Work in Process and included in Finished Goods Slide 3-3 Learning objective 1: Describe how products flow through departments and how costs flow through accounts. 3 Difference Between Job-Order and Process Costing Systems Process Costing Large quantities produced of homogeneous products Average cost = total costs divided by total number of items produced When completed, number of units completed times average cost determines cost to be moved from WIP to Finished Goods Slide 3-4 Learning objective 1: Describe how products flow through departments and how costs flow through accounts. 4 Which of the following characteristics are associated with a process costing system? Heterogeneous products Homogeneous products Answer: b Heterogeneous products are unique Homogeneous products are identical Process costing is associated with identical products Slide 3-5 Test Your Knowledge 1 Learning objective 1: Describe how products flow through departments and how costs flow through accounts. 5 Which of the following characteristics are associated with a process costing system? Continuous production Discontinuous production Answer: a Job order costing is associated with discontinuous production Process costing is associated with continuous production Slide 3-6 Test Your Knowledge 2 Learning objective 1: Describe how products flow through departments and how costs flow through accounts. 6 Which of the following characteristics are associated with a process costing system? Costs are traced to jobs Costs are traced to processing departments Answer: b Job order costing requires tracing costs to jobs Process costing is associated with tracing costs to departments
