Process Costing
1. Under what conditions is
a process-costing system
used?
A process-costing system is used to determine cost of a product or service when masses of identical or similar units are produced. Industries using process costing systems include the food, textiles, and oil-refining industries.
2. How are average unit costs computed when no inventories are present?
Average unit costs are computed by dividing the total costs in a given accounting period by the total units produced in that period.
3. What are the five steps in a process-costing system, and how are equivalent units calculated?
The five steps in a process-costing system are (1) summarize the flow of physical units of output, (2) compute the output in terms of equivalent units, (3) summarize the total costs to account for, (4) compute the cost per equivalent unit, and (5) assign the total costs to units completed and to units in ending work-in process inventory. An equivalent unit is a derived measure of output that (a) takes the quantity of each input (factor of production) in units completed or in incomplete units in work in process and (b) converts the quantity of input into the amount of completed output units that could be made with that quantity of input.
4. What are the weighted average and first-in, first-out (FIFO) methods of process costing? Under what conditions will they yield different levels of operating income?
The weighted-average method computes unit costs by dividing total costs in the Work in Process account by total equivalent units completed to date and assigns this average cost to units completed and to units in ending work-in-process inventory. The first-in, first-out (FIFO) method computes unit costs based on costs incurred during the current period and equivalent units of work done in the current period. Operating income can differ materially between the two methods when (1) direct material or conversion cost per equivalent unit varies significantly from period to period and (2) physical-inventory levels of work in process are large in relation to the total number of units transferred out of the process.
5. How are the weighted average and FIFO process costing methods applied to transferred-in costs?
The weighted-average method computes transferred-in costs per unit by dividing the total transferred-in costs to date by the total equivalent transferred in units completed to date and assigns this average cost to units completed and to units in ending work-in-process inventory. The FIFO method computes the transferred-in costs per unit based on the costs transferred in during the current period and equivalent units of transferred-in costs of work done in the current period. The FIFO method assigns transferred-in costs in the beginning work-in process inventory to units completed and costs transferred in during the current period first to complete the beginning inventory, next to start and complete new units, and finally to units in ending work-in-process inventory.
6. What is an operation costing system, and when is it a better approach to product costing?
Operation costing is a hybrid-costing system that blends characteristics from both job-costing (for direct materials) and process-costing systems (for conversion costs). It is a better approach to product costing when production systems share some features of custom-order manufacturing and other features of mass production manufacturing.
Proses produksi yang kontinyu tidak akan mengizinkan perusahaan untuk secara akurat membebankan biaya produksi secara langsung kepada setiap item produk.
Apabila mekanisme ini dipaksakan untuk diberlakukan, maka biaya pencatatannya akan lebih besar daripada manfaat yang diperoleh.
Dengan demikian, diperlukan suatu mekanisme lain untuk pembebanan biaya bagi proses produksi yang kontinyu tersebut.
Process Costing merupakan metode yang tepat untuk diterapkan dalam suatu proses produksi berkelanjutan, dimana produk tidak didasarkan pada permintaan spesifik dari konsumen.
Metode pencatatan dan pembebanan biaya secara Process Costing memberikan alternatif lain penghitungan dan pembebanan biaya produksi. Namun demikian, prinsipnya tetap sama dengan metode Job Order Costing, yaitu bahwa semua biaya produksi harus dibebankan pada produk akhir yang dihasilkan.
Karakteristik Metode Process Costing
1. Proses produksi dilakukan secara terus-menerus (kontinyu).
2. Perusahaan berproduksi secara mass production.
3. Barang produksi yang dihasilkan memiliki sifat/karakteristik yang sama.
4. Pembebanan biaya secara tidak langsung melalui departemen.
Perusahaan mie instan seperti PT Indofood juga merupakan contoh perusahaan yang menerapkan metode process costing. Perusahaan ini akan memproduksi mie instan dalam kemasan untuk dijual kepada para konsumennya. Mie instan yang diproduksi memiliki bentuk dan karakteristik yang sama atau mirip antara satu dengan yang lainnya. Selain itu jumlah mie instan yang dihasilkan oleh perusahaan ini juga sangat banyak. Tidak mungkin perusahaan ini mampu untuk membebankan biaya produksinya secara khusus satu persatu untuk setiap bungkus mie instan.
Compute equivalent units under (1) the weighted-average method and (2) the FIFO method.
Jawaban
1. The weighted-average method uses equivalent units of work done to date to compute cost per equivalent unit. The calculations of equivalent units follow:
2. The FIFO method uses equivalent units of work done in the current period only to compute cost per equivalent unit. The calculations of equivalent units follow:
A process-costing system is used to determine cost of a product or service when masses of identical or similar units are produced. Industries using process costing systems include the food, textiles, and oil-refining industries.
2. How are average unit costs computed when no inventories are present?
Average unit costs are computed by dividing the total costs in a given accounting period by the total units produced in that period.
3. What are the five steps in a process-costing system, and how are equivalent units calculated?
The five steps in a process-costing system are (1) summarize the flow of physical units of output, (2) compute the output in terms of equivalent units, (3) summarize the total costs to account for, (4) compute the cost per equivalent unit, and (5) assign the total costs to units completed and to units in ending work-in process inventory. An equivalent unit is a derived measure of output that (a) takes the quantity of each input (factor of production) in units completed or in incomplete units in work in process and (b) converts the quantity of input into the amount of completed output units that could be made with that quantity of input.
4. What are the weighted average and first-in, first-out (FIFO) methods of process costing? Under what conditions will they yield different levels of operating income?
The weighted-average method computes unit costs by dividing total costs in the Work in Process account by total equivalent units completed to date and assigns this average cost to units completed and to units in ending work-in-process inventory. The first-in, first-out (FIFO) method computes unit costs based on costs incurred during the current period and equivalent units of work done in the current period. Operating income can differ materially between the two methods when (1) direct material or conversion cost per equivalent unit varies significantly from period to period and (2) physical-inventory levels of work in process are large in relation to the total number of units transferred out of the process.
5. How are the weighted average and FIFO process costing methods applied to transferred-in costs?
The weighted-average method computes transferred-in costs per unit by dividing the total transferred-in costs to date by the total equivalent transferred in units completed to date and assigns this average cost to units completed and to units in ending work-in-process inventory. The FIFO method computes the transferred-in costs per unit based on the costs transferred in during the current period and equivalent units of transferred-in costs of work done in the current period. The FIFO method assigns transferred-in costs in the beginning work-in process inventory to units completed and costs transferred in during the current period first to complete the beginning inventory, next to start and complete new units, and finally to units in ending work-in-process inventory.
6. What is an operation costing system, and when is it a better approach to product costing?
Operation costing is a hybrid-costing system that blends characteristics from both job-costing (for direct materials) and process-costing systems (for conversion costs). It is a better approach to product costing when production systems share some features of custom-order manufacturing and other features of mass production manufacturing.
Proses produksi yang kontinyu tidak akan mengizinkan perusahaan untuk secara akurat membebankan biaya produksi secara langsung kepada setiap item produk.
Apabila mekanisme ini dipaksakan untuk diberlakukan, maka biaya pencatatannya akan lebih besar daripada manfaat yang diperoleh.
Dengan demikian, diperlukan suatu mekanisme lain untuk pembebanan biaya bagi proses produksi yang kontinyu tersebut.
Process Costing merupakan metode yang tepat untuk diterapkan dalam suatu proses produksi berkelanjutan, dimana produk tidak didasarkan pada permintaan spesifik dari konsumen.
Metode pencatatan dan pembebanan biaya secara Process Costing memberikan alternatif lain penghitungan dan pembebanan biaya produksi. Namun demikian, prinsipnya tetap sama dengan metode Job Order Costing, yaitu bahwa semua biaya produksi harus dibebankan pada produk akhir yang dihasilkan.
Karakteristik Metode Process Costing
1. Proses produksi dilakukan secara terus-menerus (kontinyu).
2. Perusahaan berproduksi secara mass production.
3. Barang produksi yang dihasilkan memiliki sifat/karakteristik yang sama.
4. Pembebanan biaya secara tidak langsung melalui departemen.
Perusahaan mie instan seperti PT Indofood juga merupakan contoh perusahaan yang menerapkan metode process costing. Perusahaan ini akan memproduksi mie instan dalam kemasan untuk dijual kepada para konsumennya. Mie instan yang diproduksi memiliki bentuk dan karakteristik yang sama atau mirip antara satu dengan yang lainnya. Selain itu jumlah mie instan yang dihasilkan oleh perusahaan ini juga sangat banyak. Tidak mungkin perusahaan ini mampu untuk membebankan biaya produksinya secara khusus satu persatu untuk setiap bungkus mie instan.
Contoh Soal
Allied Chemicals operates a thermo-assembly process as the second of three processes at its plastics plant. Direct materials in thermo-assembly are added at the end of the process. Conversion costs are added evenly during the process. The following data pertain to the thermo-assembly department for June 2014:Compute equivalent units under (1) the weighted-average method and (2) the FIFO method.
Jawaban
1. The weighted-average method uses equivalent units of work done to date to compute cost per equivalent unit. The calculations of equivalent units follow:
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