Professional Documents
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Examples:
Made to order furniture, made to order draperies, specialty cars etc.
In-Class E2
Direct Materials are then move from Storeroom into the production process.
Direct Labor is accumulated in the Work in Process Account using the data of the time cards
Other Indirect Cost is charge to Manufacturing Overhead such as Electricity, Depreciation, and Insurance.
The Manufacturing Overhead Account is debited as costs are incurred. As the product is being finish an applied
overhead rate, previously calculated, is used to estimate Overhead. At the end of the year Actual manufacturing cost
and applied cost are reconciled and the differences are recorded in the Cost of Good Sold.
Chapter 17 1 Author: Anna Rovira Beavers
Needles 2008 8/6/07
In-Class E4
Job Order :
JOB ORDER COST CARD
Augusta, Inc.
Spring Hill, Floridia
Customer: ____Stock_________ Batch: ______X_________
Cost Charged for the Job Previous Months Current Month Cost Summary
Direct Materials $165 $1,035 $1,203
Direct Labor 127 1,320 1,447
Overhead 108 1,122 1,230
(85% of direct labor cost)
Totals $400 $3,480 $3,880
Units Completed 2
Product Unit Cost $1,920
In-Class E6
The process costing system is use by companies that produce large amounts of similar products or by companies that
have a continuous production flow. Such as water, soda, candy bar production, etc.
Department 1: Sterilization
Department 2: Fill
Chapter 17 2 Author: Anna Rovira Beavers
Needles 2008 8/6/07
Department 3: Cap and Label
The cost of sterilizing plastic bottles (labor, materials and overhead) will move into the Fill Department where the
additional labor and materials will be added and a portion of the manufacture overhead assigned to that department. As
the bottles are filled they move to the Cap ad Label department where additional labor, materials, and overhead will be
added. Once the process is complete the finished products moves to the shipping location and it is recorded in the
Finished Goods Inventory .
As we can see the cap and label department will contain the cost of all departments.
Equivalent Units:
The measure of the number of equivalent whole units produced in a period of time. Partially completed units are
restated in terms of equivalent whole units.
1. Units in the beginning inventory. (These are units that were not completed the previous month)
2. Units started and completed during the period
3. Units not completed the current month.
Chapter 17 3 Author: Anna Rovira Beavers
Needles 2008 8/6/07
C. The Process Cost Report
A process cost report consists of three parts:
Units started and completed - Ending inventory units started but not yet completed in the period.
Physical Units
Beginning Inventory 1.00
Units started this period 4.00
Units to be accounted for 5.00
See page 887 in your textbook for a complete Process Cost Report.