About This Chapter
Process Cost System in Accounting - Chapter Summary
In most organizations, expenses and incoming cash move in and out of all departments, and accounting for all of these different flows of money can prove difficult without a proper system. This chapter discusses the process cost system in accounting, including a look at how that system works, which costs are inputted, and which methodologies prove most effective. Our well-organized lessons use easy-to-understand headers to indicate major topics within each lesson. All of the important terminology, definitions, and formulas are also distinguished through the use of bold and italicized lettering. Visual aids are also included in the lessons to further explain major topics. After you complete the chapter, you will be able to do the following:
- Assess how the process cost system can be used for processing expenses
- Summarize how to input journal entries for cost of goods sold
- Critique the main factors driving overhead costs in manufacturing
- Establish the formula for equivalent units and the weighted-average method
- Generalize how to find equivalent units using the FIFO inventory method
- Show the steps for prepping and analyzing a production cost report
1. Processing Expenses with the Process Cost System
This lesson will review the process costing system and discuss how manufacturing companies track the flow of expenses through departments involved with the manufacturing process.
2. Cost of Goods Sold Journal Entries
In this lesson, you'll learn more about cost of goods sold and how to properly write down your cost of goods sold and then transfer it into the right job order entry so your financial records are accurate.
3. Drivers of Manufacturing Overhead Costs
Cost drivers are those factors that cause costs to change. In this lesson, we look at various cost drivers for manufacturing overhead, both for firms that manufacture products and those that create services.
4. Equivalent Units & the Weighted-Average Method Formula
This lesson introduces the topic of equivalent units and demonstrates how to calculate this number. It also calculates per unit cost of production and illustrates a production cost report and the way in which the corresponding numbers are used by management.
5. FIFO Inventory Method of Finding Equivalent Units
In this lesson, you will be learning about the FIFO inventory method of finding equivalent units. You will learn how to find equivalent units using the FIFO inventory method and be able to use this measure to create a production cost report.
6. Preparing a Production Cost Report
A Production Cost Report, sometimes called a Cost of Production Report, allows accountants to follow the flow of raw materials through a company's departments. In this lesson, we will learn how to prepare one.
7. Analyzing a Production Cost Report
When you first see one, a production cost report can be a rather intimidating piece of work. Luckily, this lesson shows how to analyze the information in such a report to not only track inventory and costs, but also efficiency.
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Other chapters within the Accounting 303: Cost Accounting course
- Cost Classifications in Accounting
- Costing Methods & Techniques
- Formulas for Cost Accounting
- Standard Costs in Accounting
- Job Order Cost System in Accounting
- Activity-Based Costing Overview
- Product & Service Costing
- Budgetary Process
- Cost Behavior Analysis
- Cost-Volume-Profit Analysis Overview
- Cost Estimation
- Service Department & Joint Cost Allocation
- Cost Accounting for Decision Making
- Ethics in Cost Accounting
- Modern Trends in Accounting
- Required Assignments for Accounting 303
- Studying for Accounting 303