Process Costing Manac Ppt
PROCESS COSTING
DR. ALOK DIXIT INDIAN INSTITUTE OF MANAGEMENT LUCKNOW
COSTING SYSTEMS USED TO DETERMINE PRODUCT COSTS
Costing Systems Process Costing
Job-order
Costing
Mass production of identical or similar products (at process-level). For example, Sugar, food, chemical industry. Many units of a single, homogeneous product flow evenly through continuous production process(s). One unit of product is indistinguishable (at process-level) from any other unit of product. Each unit average cost. of product is assigned the same
SOME EXAMPLES OF BUSINESSES USING PROCESS COSTING
Process Costing
Extraction In a process cost system,
Process costing accumulates costs by process or department and then assigns them to a large number of nearly identical products. Drilling/
SOME EXAMPLES
Costs are tracked through a series of connected manufacturing processes or departments; Used for large volume production of uniform products. Example:
Chemicals Oil refining Textiles Paints Paper Flour Rubber Steel Food processing Supply to Customer
http://www.bajajhindustan.com/sugarp rocess.html
Illustration 3-2
FLOW OF COST IN PROCESS COSTING SYSTEM
Process Costing
Materials Inventory Work in Process, Mixing Dept
Manufacturing Wages
Work in Process, Molding Dept
Finished Goods
Manufacturing Overhead
Work in Process, Packaging Dept
Cost of Goods Sold
IMPORTANT ASPECTS OF PROCESS COSTING
Flow
of Costs through various processes; of Normal Loss and Abnormal
Treatment
Loss/ Gain;
Concept
of Equivalent Units; of Joint Costs; of By-Products;
Allocation Treatment
FLOW OF COSTS THROUGH VARIOUS PROCESSES
• •
Product may be produced in single process. OR In case it utilizes more than one process, output of one process become input for the subsequent process.
Example
PROCESS ACCOUNTS
TREATMENT LOSS/ GAIN
OF
NORMAL LOSS
AND
ABNORMAL
Product X
DR. ALOK DIXIT INDIAN INSTITUTE OF MANAGEMENT LUCKNOW
COSTING SYSTEMS USED TO DETERMINE PRODUCT COSTS
Costing Systems Process Costing
Job-order
Costing
Mass production of identical or similar products (at process-level). For example, Sugar, food, chemical industry. Many units of a single, homogeneous product flow evenly through continuous production process(s). One unit of product is indistinguishable (at process-level) from any other unit of product. Each unit average cost. of product is assigned the same
SOME EXAMPLES OF BUSINESSES USING PROCESS COSTING
Process Costing
Extraction In a process cost system,
Process costing accumulates costs by process or department and then assigns them to a large number of nearly identical products. Drilling/
SOME EXAMPLES
Costs are tracked through a series of connected manufacturing processes or departments; Used for large volume production of uniform products. Example:
Chemicals Oil refining Textiles Paints Paper Flour Rubber Steel Food processing Supply to Customer
http://www.bajajhindustan.com/sugarp rocess.html
Illustration 3-2
FLOW OF COST IN PROCESS COSTING SYSTEM
Process Costing
Materials Inventory Work in Process, Mixing Dept
Manufacturing Wages
Work in Process, Molding Dept
Finished Goods
Manufacturing Overhead
Work in Process, Packaging Dept
Cost of Goods Sold
IMPORTANT ASPECTS OF PROCESS COSTING
Flow
of Costs through various processes; of Normal Loss and Abnormal
Treatment
Loss/ Gain;
Concept
of Equivalent Units; of Joint Costs; of By-Products;
Allocation Treatment
FLOW OF COSTS THROUGH VARIOUS PROCESSES
• •
Product may be produced in single process. OR In case it utilizes more than one process, output of one process become input for the subsequent process.
Example
PROCESS ACCOUNTS
TREATMENT LOSS/ GAIN
OF
NORMAL LOSS
AND
ABNORMAL
Product X