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Lecture 4 – Process Costing

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PROCESS COSTING SYSTEMS Study is limited to: • Actual, • Absorption, • Weighted Average Process costing, with no spoilage Flow of Production in Process Costing • When goods reach the end of Assembly they will be transferred out of Assembly and “transferred in” to Finishing. When goods reach the end of Finishing, they will move to the FG storeroom/warehouse • In this unit we do not consider accounting for spoiled units, therefore we will not consider the situation where goods are reworked. This means that in all the problems we cover, once goods have passed a point in the process they do not pass that point again. • As products move through the processes, DM, DL and OH costs are incurred. Because the costs should be viewed as being “attached” to the product, wherever the product is sitting in the manufacturing process, the costs are sitting at that point as well. • As goods move into the next process, costs “attached” or “already incurred” on those goods move into the next process. When the goods have passed through all manufacturing processes and are completed, all costs incurred in all processes are attached to the goods.

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Lecture 4 – Process Costing
Topics this document covers:
Management accounting Process costing WTEL Work in process Cost Job costing Backflush accounting
This is a Partial Set of Study Notes

Partial Study Notes typically cover only single topics of a unit of study or do not cover multiple topics in significant detail. They are generally less than 20 pages in length.

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Topics this document covers:
Management accounting Process costing WTEL Work in process Cost Job costing Backflush accounting
Sample Text:
When goods reach the end of Finishing, they will move to the FG storeroom/warehouse • In this unit we do not consider accounting for spoiled units, therefore we will not consider the situation where goods are reworked. This means that in all the problems we cover, once goods have passed a point in the process they do not pass that point again. • As products move through the processes, DM, DL and OH costs are incurred. Because the costs should be viewed as being “attached” to the product, wherever the product is sitting in the manufacturing process, the costs are sitting at that point as well. • As goods move into th...
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