...the best foods to people throughout their day. Throughout their lives, throughout the world. With our unique experience of anticipating consumers’ needs and creating solutions. Nestle contributes to your well-being and enhances your quality of life.” COST ACCOUBTING INFORMATION SYSTEM OF NESTLE INPUT MEASUREMENT BASIS STANDARD COSTING Nestle is using STANDARD COSTING as a base for input measurement Standard costs are usually associated with a company’s costs of direct material, direct labor, and manufacturing overhead. Rather than assigning the actual costs of direct material, direct labor, and manufacturing overhead to a product, nestle’ like many manufacturers assigns the expected or standard cost. This means that its inventories and cost of goods sold will began with amounts reflecting the standard costs, nor the actual costs, of a product Nestle’, of course still has to pay the actual costs. As a result there almost always differences between the actual costs and the standard costs, and those differences are known as variances, REASON FOR USING STANDARD COSTING Nestle is currently using Standard costing method because the related variances are valuable management tool. If a variance arises, management becomes aware that manufacturing costs have differed from the standard (planned. expected) costs. • If actual costs are greater than...
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...CHAPTER 17 Process Costing Overview This chapter explains how process-costing systems determine the cost of products or services. In the simplest case, a process has no beginning or ending work-in-process inventory. Considerable complexity is added when a process has both beginning and ending work-in-process inventory; this case necessitates selecting an inventory costflow method. The chapter illustrates two of these methods: the weighted-average method and the first-in, first-out (FIFO) method. Many detailed exhibits are included in the chapter because process costing is highly procedural. The chapter also explains how operation-costing systems determine the cost of products. The Appendix to the chapter describes the standard-costing method of process costing. Case 1 Case 2 Case 3 Beginning Inventory No No Yes Ending Inventory No Yes Yes 3. Case 1 is simple because there is no workin-process inventory in the Assembly Department. That is, all units of SG-40 are started and completed during the accounting period. The unit cost of the 400 units of SG-40 in this case is computed as follows: Direct material costs $32,000 ÷ 400 Conversion costs $24,000 ÷ 400 Cost per unit $ 80 60 $140 Highlights 1. In a process-costing system, the unit cost of a product (or service) is obtained by assigning total costs to many identical or similar units of output. A process-costing system separates costs into cost categories according...
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...CHAPTER 17 PROCESS COSTING 17-1 Industries using process costing in their manufacturing area include chemical processing, oil refining, pharmaceuticals, plastics, brick and tile manufacturing, semiconductor chips, beverages, and breakfast cereals. 17-2 Process costing systems separate costs into cost categories according to the timing of when costs are introduced into the process. Often, only two cost classifications, direct materials and conversion costs, are necessary. Direct materials are frequently added at one point in time, often the start or the end of the process. All conversion costs are added at about the same time, but in a pattern different from direct materials costs. Conversion costs are often added throughout the process, which can of any length of time, lasting from seconds to several months. 17-3 Equivalent units is a derived amount of output units that takes the quantity of each input (factor of production) in units completed or in incomplete units in work in process, and converts the quantity of input into the amount of completed output units that could be made with that quantity of input. Each equivalent unit is comprised of the physical quantities of direct materials or conversion costs inputs necessary to produce output of one fully completed unit. Equivalent unit measures are necessary since all physical units are not completed to the same extent at the same time. 17-4 The accuracy of the estimates of completion depends on the care and skill of the estimator...
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...keeping track of costs in a job order costing system is a Answer | a. | labor time card. | | b. | job order cost card. | | c. | process cost report. | | d. | materials requisition form. | 3.) The following information is available at the end of May: Balance in work in process on May 1 | $141,800 | Direct materials costs for May | 174,500 | Direct labor costs for May | 162,500 | Overhead applied at rate of 140% of direct labor dollars | | | Jobs completed during May: | | | | Job 84 | $198,780 | | Job 85 | 102,520 | | Job 86 | 119,450 | | Job 87 | 93,150 | | | | Job 88 was not complete at the end of May. | | | | If $72,400 of materials were charged to Job 88's job cost card, how much overhead was applied to Job 88? Answer | a. | $70,000 | | b. | $120,000 | | c. | $72,400 | | d. | $35,100 | 4.) Unit costs for each job are computed by dividing Answer | a. | estimated total costs by planned units to be produced. | | b. | actual costs by actual units sold. | | c. | cost of direct materials, direct labor, and overhead by number of units produced. | | d. | estimated total costs by actual units produced. | 5.) The _________ provide(s) the most direct means of calculating unit costs for a job. Answer | a. | job order cost card | | b. | general ledger | | c. | Finished Goods Inventory account | | d. | Overhead and Work in Process Inventory accounts | 6.) The following...
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...circling the letter of the best answer. 1. Which of the following is not a characteristic of a process costing system? a. Costs are accumulated by process rather than by job. b. Goods are relatively homogeneous. c. Only one work-in-process account is needed. d. There may be differences in the timing of the various inputs. e. Different cost flow assumptions are allowable. 2. Which of the following is not a step in the preparation of a cost of production report? a. Compute the unit costs. b. Measure the quality of the units transferred. c. Calculate the equivalent units. d. Analyze the flow of the physical units. e. Reconcile the costs. 3. A firm using a “just-in-time” philosophy: a. cannot utilize a process costing approach. b. cannot use either job-order or process costing since there are no inventories. c. has too varied of a product line to make process costing feasible. d. would not be concerned with unit costs. e. should have an insignificant level of inventories. 4. Equivalent units of output are necessary for process costing when: a. there are no beginning or ending inventories. b. a job-order costing system is used. c. ending inventories exist. d. the FIFO method is used, but not when the weighted average method is used. e. the weighted average method is used, but not when the FIFO method is used. 5. Weighted average and FIFO equivalent units would be the same in a period when: a. no beginning inventory exists. b. no...
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...Question 1 CCS manufactures pencils. All direct materials are added at the beginning of the production process. During January, the accounting department noted that there was no beginning inventory. Direct materials purchases totaled $30863 during the month. Work in process records revealed that 1047 units were started in January, 464 units were completed, and 36 units were spoiled as expected. Ending work in process units are complete with respect to direct materials costs. Spoilage is not detected until the process is complete. What is the direct material cost assigned to good units completed? Select one: a. $13678 b. $30863 c. $14739 d. $33258 e. None of the other options is correct Feedback Your answer is incorrect. The correct answer is: $14739 Question 2 Which of the following correctly reflects what units passed inspection this period? Assume beginning work in process was completed and ending work in process was started during the period Select one: a. | INSPECTION POINT | | 10% | 50% | 100% | BWIP (30% complete) | No | No | Yes | b. | INSPECTION POINT | | 10% | 50% | 100% | BWIP (5% completed) | Yes | Yes | Yes | c. | INSPECTION POINT | | 10% | 50% | 100% | Started and completed | No | Yes | Yes | d. | INSPECTION POINT | | 10% | 50% | 100% | EWIP ( 40% completed) | Yes | No | Yes | e. None of the other options is correct Feedback Your answer is incorrect. The correct answer is: | INSPECTION POINT...
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...Systems Design: Process Costing Similarities Between Job-Order and Process Costing • Both systems assign material, labor and overhead costs to products and they provide a mechanism for computing unit product cost. • Both systems use the same manufacturing accounts, including Manufacturing Overhead, Raw Materials, Work in Process, and Finished Goods. • The flow of costs through the manufacturing accounts is basically the same in both systems. Differences Between Job-Order and Process Costing • Process costing is used when a single product is produced on a continuing basis or for a long period of time. Job-order Jobcosting is used when many different jobs are worked on each period. • Process costing systems accumulate costs by department. JobJob-order costing systems accumulated costs by individual jobs. • Process costing systems use department production reports to accumulate costs. Job-order costing systems use job cost Jobsheets to accumulate costs. • Process costing systems compute unit costs by department. JobJob-order costing systems compute unit costs by job. Quick Check Process costing is used for products that are: a. Different and produced continuously. b. Similar and produced continuously. c. Individual units produced to customer specifications. d. Purchased from vendors. Quick Check Process costing is used for products that are: a. Different and produced continuously. b. Similar and produced continuously. c. Individual units produced...
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...information below: The Daltry Tractor Company manufactures small garden tractors on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each tractor must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Daltry Tractor uses weighted-average costing. Data for the Assembly Department for April 2012 are: Work in process, beginning inventory 400 units Direct materials (100% complete) Conversion costs (30% complete) Units started during April 1,200 units Work in process, ending inventory: 250 units Direct materials (100% complete) Conversion costs (50% complete) Costs for April 2012: Work in process, beginning inventory: Direct materials $230,000 Conversion costs $220,000 Direct materials costs added during April $700,000 Conversion costs added during April $1,175,000 What are the equivalent units for direct materials and conversion costs, respectively, for April? Select one: a. 1,600 units; 1,600 units b. 1,600 units; 1,475 units c. 250 units; 125 units d. 1,350 units; 1,350 units Question 2 Answer saved Marked out of 4 Question text A manufacturing company uses process costing with an average cost flow assumption in its two processing departments. On August 1, the subsequent department had zero units...
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...Chapter 17 Process Costing ➢ Process Costing – the method of assigning total cost to many identical or similar units. Each unit receives the same or similar amounts of direct material costs, direct labor costs, and indirect manufacturing costs. Unit costs are computed by dividing total costs incurred by the number of units of output from the production process. The main difference between process costing and job costing is the extend of averaging used to compute unit costs of products or services. o Focus on individual units o Focus on cost components (Beginning WIP and Currently added. o Focus on when costs are introduced into the process. o Focus on beginning and ending inventories and percentage of completion. o This system in the assembly department has a single direct-cost category (DM), and a single indirect-cost category (conversion costs: DL and MOH). Assuming that we only use direct materials are added at one time and conversion costs are added evenly after that ➢ Equivalent Units of Production (EUP) – a derived amount of output units that (1) takes the quantity of each input (factor of production) in units completed and in incomplete units of work in process and (2) converts the quantity of input into the amount of completed output units that could be produced with that quantity of input. EUP is calculated separately for each input (DM, DL or MOH (CC). Ex: If 50 physical units were...
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...Review Notes (Chap 3 to Chap 6) 1. Important Concepts: Cost Drivers and Cost Pools. A cost driver is any factor that has the effect of changing the level of total cost. In cost leadership, managing cost drivers is essential. A firm incurs a cost when it uses a resource for some purpose. Often costs are collected into meaningful groups called cost pools. Since individual costs can be group in several different ways, cost pools can be defined in several different ways as well (by cost type, source, or responsibility). Cost Allocation: Direct and Indirect Costs. A direct cost can be conveniently and economically traced to a cost object or pool. In contrast, there is no convenient or economical way to trace indirect costs from cost or cost pool to the cost pool or cost object. Indirect costs are caused by two or more cost pools or objects, but cannot be directly traced to either one. Because of this difficulty, indirect costs are traced using cost drivers. The result is that indirect costs are assigned to the cost pool or object that caused the costs in the manner that is fairly representative of the way the cost was incurred. This assignment of indirect costs is known as cost allocation, which is a form of cost assignment used when direct tracing is not possible. The cost drivers used in the allocation are called allocation bases. Cost Drivers: activity-based and volume-based. Activity-based drivers are developed at a detailed level of operations and are associated...
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...Below: http://strtutorials.com/ACC-560-WK-3-Quiz-3-All-Possible-Questions-19.htm ACC 560 WK 3 Quiz 3 - All Possible Questions TRUE-FALSE STATEMENTS 1. Process cost accounting focuses on the process involved in mass-producing products that are very similar in nature. 2. Process cost systems are used to apply costs to a specific job, such as the manufacturing of a specialized machine. 3. A company that produces motion pictures would likely use a process cost system. 4. In a process cost system, costs are tracked through a series of connected manufacturing processes or departments, rather than by individual jobs. 5. In a process cost system, total costs are determined at the end of a month or year. 6. Separate work in process accounts are maintained for each production department or manufacturing process in a process cost system. 7. In a process cost system, materials, labor and overhead are only added in the first production department. 8. The assignment of the three manufacturing cost elements to Work in Process in a process cost system is the same as in a job order cost system. 9. Fewer materials requisitions are generally required in a process cost system than in a job order cost system. 10. In a process cost system, labor costs incurred may be captured on time tickets. 11. A primary driver of overhead costs in continuous manufacturing operations is machine...
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...Process Costing 分步成本制 成本管理會計講義 郭翠菱 老師 教科書 ：Cost Accounting-A Managerial Emphasis, 15th edition; Horngren, Datar, and Rajan; Pearson Education; 2015. © 2015 Pearson Prentice Hall. All rights reserved. 1 1. 2. 3. 4. 5. 6. Identify the situation in which process‐costing systems are appropriate. Understand the basic concept of process‐costing and compute average unit cost. Describe the five steps in process costing and calculate equivalent units. Use the weighted‐average method and FIFO method of process costing. Apply process‐costing method to situations with transferred‐in costs. Understand the need for hybrid‐costing systems such as operation‐costing. © 2015 Pearson Prentice Hall. All rights reserved. 2 LEARNING OBJECTIVES 1. Identify the situation in which process‐costing systems are appropriate. © 2015 Pearson Prentice Hall. All rights reserved. 3 Job‐Costing and Process Costing: Opposite Ends of a Continuum 分批成本制與分步成本制:一體兩面 Job-Costing Systems 分批成本制 Distinct, identifiable units of a product or service 截然不同,可個別辨認 的產品或服務 Examples: Custom-made machines, Houses 客製化機器,房屋 Process-Costing Systems 分步成本制 Masses of identical or similar units of a product or service 大批相同或類似的 產品或服務 Examples: Food, Chemical processing 食物,化學處理 © 2015 Pearson Prentice Hall. All rights reserved. 4 補充 分批成本制與分步成本制 的主要相異點： 1. 在分批成本制下，產品成本是按批次（或訂單）別來彙 總。 在分步成本制下，產品成本則定期依生產步序或部門 來累積。 2. 分批成本制以分批成本單(job-cost sheet)彙集及計算 生產批次之產品總成本及單位成本，每一生產批次有一 張分批成本單。 分步成本制採用生產成本報告單(production...
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...AN EXAMINATION OF INVENTORY COSTING CONVERGENCE UNDER GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND INTERNATIONAL FINANCIAL REPORTING STANDARDS Casey Reineking Department of Accounting Murray State University Murray, KY 42071-3314 E-mail: casey.reineking@hotmail.com Don H. Chamberlain Department of Accounting Murray State University Murray, KY 42071-3314 Holly R. Rudolph Department of Accounting Murray State University Murray, KY 42071-3314 L. Murphy Smith* Department of Accounting Murray State University 351 Business Building Murray, KY 42071-3314 Tel: 270-809-4297 Email: msmith93@murraystate.edu *Corresponding author Forthcoming in Journal of International Business Research AN EXAMINATION OF INVENTORY COSTING CONVERGENCE UNDER GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND INTERNATIONAL FINANCIAL REPORTING STANDARDS ABSTRACT Accounting principles in the United States are converging toward international standards. If convergence continues, and there are proponents and detractors, then the U.S. system of accounting, called Generally Accepted Accounting Principles (GAAP), will eventually be replaced by International Financial Reporting Standards (IFRS). Convergence has profound implications for publicly traded companies and their many stakeholders such as investors, lenders, government agencies, and employees. A key issue facing accounting standard-setters is the treatment of inventory costing, an area in which GAAP and IFRS differ. This study addresses three...
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...[pic]actual [pic]process [pic]job order 2. Process costing is used in companies that _______. (Points: 1) [pic]engage in road and bridge construction [pic]produce sailboats made to customer specifications [pic]produce bricks for sale to the public [pic]construct houses according to customer plans 3. A producer of ____ would not use a process costing system. (Points: 1) [pic]gasoline [pic]potato chips [pic]blank videotapes [pic]stained glass windows 4. Equivalent units of production are equal to the _______. (Points: 1) [pic]units completed by a production department in the period [pic]number of units worked on during the period by a production department [pic]number of whole units that could have been completed if all work of the period had been used to produce whole units [pic]identifiable units existing at the end of the period in a production department 5. In a process costing system using the weighted average method, cost per equivalent unit for a given cost component is found by dividing which of the following by EUP? (Points: 1) [pic]only current period cost [pic]current period cost plus the cost of beginning inventory [pic]current period cost less the cost of beginning inventory [pic]current period cost plus the cost of ending inventory 6. The difference between EUP calculated using FIFO and EUP calculated...
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...1. | Question : | (TCO A) Wages paid to an assembly line worker in a factory are a | | | Student Answer: | | Prime Cost YES.....Conversion Cost NO. | | | | Prime Cost YES.....Conversion Cost YES. | | | | Prime Cost NO....Conversion Cost NO. | | | | Prime Cost NO.....Conversion Cost YES. | | Instructor Explanation: | Chapter 2 | | | | Points Received: | 6 of 6 | | Comments: | | | | 2. | Question : | (TCO A) A cost incurred in the past that is not relevant to any current decision is classified as a(n) | | | Student Answer: | | period cost. | | | | incremental cost. | | | | opportunity cost. | | | | None of the above | | Instructor Explanation: | Chapter 2 | | | | Points Received: | 6 of 6 | | Comments: | | | | 3. | Question : | (TCO A) Property taxes on a company's factory building would be classified as a(n) | | | Student Answer: | | sunk cost. | | | | opportunity cost. | | | | period cost. | | | | variable cost. | | | | manufacturing cost. | | Instructor Explanation: | Chapter 2 | | | | Points Received: | 6 of 6 | | Comments: | | | | 4. | Question : | (TCO A) Within the relevant range, variable costs can be expected to | | | Student Answer: | | vary in total in direct proportion to changes in the activity level. | | | | remain constant in total as the activity level...
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