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Process Costing System
Addition of Materials, Average and FIFO Costing

After studying this chapter you should be able to:

In numerous industries, all materials needed for the product are put in process in the first department. However, additional materials might be required in subsequent  departments in order to complete the units. The addition of materials has two possible effects on units and costs in process:

  1. The additional materials increase the unit cost, since these materials become a part of the product manufactured, but do not increase the number of final units. For example, in a finishing plant of textile company, the the material added is often a bleach; in a wire company, a plating mixture; in an automobile assembly plant, additional parts. Theses materials are needed to give the product certain specific quantities, characteristics, or completeness; or
  2. The added materials increase the number of units and also cause a change in unit cost. In processing a chemical, water is often added to a mixture, causing an increase in the number of units and a spreading of costs over a greater number.

 

  1. Increase in Unit Cost Due to Addition of Materials
  2. Addition of Materials - Increase in units and Change is Unit Cost
  3. Beginning Work in Process Inventories - Average Costing Method
  4. Cost of Production Report FIFO
  5. Average Costing Method Versus FIFO Costing Method - Process Costing
  6. Difficulties Encountered in Process Costing Procedure
  7. Discussion Questions and Answers

  8. Similarities and Differences between Job Order and Process Costing System

  9. Operation Costing /Hybrid Costing System

 

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Managerial Accounting
 
■ Introduction to Managerial Accounting
■ Business and Quality Improvement Programs
■ Cost Terms, Concepts and Classification
■ Job Order Costing system
■ Process Costing System
■ Process Costing System - Addition of Materials & Beginning Inventory
■ Controlling and Costing Materials
■ Materials and Inventory Cost Control
■ By Products and Joint Products Costing
■ Cost-Volume-Profit-Relationship
■ Variable Costing System
■ Activity Based Costing System
■ Budgeting and Planning
■ Standard Costing and Variance Analysis
■ Gross Profit Analysis
■ Linear Programming Technique
■ Segment Reporting and Transfer Pricing
■ Capital Budgeting Decisions
■ Service Department Costing
■ Cash Flow statement
■ Financial statement Analysis
■ Pricing Products and Services
■ Managerial Accounting Terms and Definitions
■ Managerial / Cost Accounting Formulas

Financial Accounting
 
■ Bookkeeping and Bookkeeping Terms
■ Accounting Principles and Accounting Equation
■ Journal
■ Ledger
■ Accounting For Bills of Exchange
■ Subdivision of Journal
■ Final Accounts
■ Capital and Revenue Items
■ Single Entry System/Accounting From Incomplete Records
■ Accounting For Non-Trading Concerns
■ Accounting for Consignment / Consignment Accounts
■ Accounting for Joint Ventures
■ Accounting for Depreciation

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