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PROCESS COSTING
FLOW
5 STEPS TO ACHIEVE A PROCESS COSTING
1.- Summarize the physical flow of the units to produce
2.- Calculate production in terms of equivalent units
3.- Calculate equivalent unit costs
4.- Summarize total costs to account for
5.- Assign total costs to the units already completed and to units in ending work in process inventory (WIP).
2.- Calculate production in terms of equivalent units
3.- Calculate equivalent unit costs
4.- Summarize total costs to account for
5.- Assign total costs to the units already completed and to units in ending work in process inventory (WIP).
PROCESS
COSTING EXAMPLE
Step 1. Physical units
| PRODUCTION FLOW |
|
| Work in process, Beggining Inventory |
0
units
|
| Units started in the current period |
35.000
units
|
| Total Units |
35.000
units
|
| Completed and transferred units in the current period |
30.000
units
|
| Work in process, Ending Inventory |
5.000
units
|
| Total Units |
35.000
units
|
Step 2. Equivalent units
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units |
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Step 3. Equivalent
unit cost
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TOTAL
PRODUCTION COSTS:
$146,050
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Step 4 and 5. SUMMARIZE AND ASSIGN TOTAL COSTS
| TOTAL PRODUCTION COSTS: $146,050 |
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| ASSIGNATION | ||
| Completed
and transferred units |
30,000
X $4.4014 |
$132,043 |
| Work
in process, Ending Inventory |
5,000
units |
|
| Direct
Materials |
5,000
X 2.4014 |
$12,007 |
| Conversion
costs |
1,000
X 2.0000 |
$2,000 |
| Total |
$146,050 |
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