Lecture Fundamental accounting principles - Chapter 21: Cost-volume-profit analysis. This chapter distinguish between direct and indirect expenses and identify bases for allocating indirect expenses to departments; explain controllable costs and responsibility accounting; analyze investment centers using return on assets, residual income, and balanced scorecard; analyze investment centers using profit margin and investment turnover. | Process Costing Chapter 20 PowerPoint Editor: Beth Kane, MBA, CPA Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Chapter 20: Process Costing 20-C1: Process Operations 2 Used for production of small, identical, low-cost items. Mass produced in automated continuous production process. Costs cannot be directly traced to each unit of product. Process Operations C 1 3 Process operations involve the mass production of similar products in a continuous flow of sequential processes. A key feature of process operations is the high level of standardization needed if the system is to produce large volumes of products. Thus, process operations use a standardized process to make similar products; job order operations use a customized process to make unique products. 20-A1: Comparing Process and Job Order Costing Systems 4 Comparing Job Order and Process Operations Job Order Systems Custom orders Heterogeneous products Low production volume High product flexibility Low to medium standardization Process Systems Repetitive operations Homogeneous products High production volume Low product flexibility High standardization A 1 5 Both job order costing systems and process costing systems track direct materials, direct labor, and overhead costs. The measurement focus in a job order costing system is on the individual job or batch, whereas in a process costing system, it is on the individual process. Regardless of the measurement focus, we are ultimately interested in determining the cost per unit of product (or service) resulting from either system. While both measure costs per unit, these two accounting systems differ in terms of how they do so. A job order system measures cost per unit upon completion of a job, by dividing the total cost for that job by the number of units in that job. As we showed in the previous chapter, job cost sheets accumulate the costs for | Process Costing Chapter 20 PowerPoint Editor: Beth Kane, MBA, CPA Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Chapter 20: Process Costing 20-C1: Process Operations 2 Used for production of small, identical, low-cost items. Mass produced in automated continuous production process. Costs cannot be directly traced to each unit of product. Process Operations C 1 3 Process operations involve the mass production of similar products in a continuous flow of sequential processes. A key feature of process operations is the high level of standardization needed if the system is to produce large volumes of products. Thus, process operations use a standardized process to make similar products; job order operations use a customized process to make unique products. 20-A1: Comparing Process and Job Order Costing Systems 4 Comparing Job Order and Process Operations Job Order .
