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Process Costing Example (Excel)

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					          WHITE CELLS ARE ADJUSTABLE                                                                                                 © Kristoffer Burnett - Certified Management Accountant, 2009-2011
                                                                                                                                           Small business solutions at http://www.imperoco.com
            Process Costing Example

Item:                              Item1

                               Beginning      Monthly       Cost      Ending
                                 Balance     Expenses    Transfers    Balance
Department A                   $    7,126    $ 29,393    $ (29,775) $ 6,745
Department B                       24,674       60,964      (95,165)   20,249
Department C                       43,921       37,823     (151,579)   25,330
Totals                         $ 75,722      $ 128,180   $ (151,579) $ 52,324

Total completed units                1,221
Total cost transferred to FG       151,579
Average cost per unit          $    124.14


        $70,000                                                                                              $70
                                                             Departmental Expense Breakdown


        $60,000                                                                                              $60




        $50,000                                                                                              $50



                                                                                                                   Overhead
        $40,000                                                                                              $40
                                                                                                                   Direct Labor


        $30,000                                                                                              $30   Direct Material

                                                                                                                   Per Unit Costs
                                                                                                                   Added
        $20,000                                                                                              $20




        $10,000                                                                                              $10




            $0                                                                                               $0
                               Department A                              Department B         Department C
               WHITE CELLS ARE ADJUSTABLE
                                                                                                                                                                       © Kristoffer Burnett - Certified Management Accountant, 2009-2011
                                                                                                                                                                             Small business solutions at http://www.imperoco.com
                    Process Costing Example


        Beginning WIP Units                 1
                                        Beginning     Beginning      Beginning
                 Item                   WIP Dept A    WIP Dept B     WIP Dept C
                Item1                         345            354            428
                Item2                         418            403            383
                Item3                         572            835            616
                Item4                         292            370            417
                Item5                         754          1,082          1,107

         Ending WIP Units
                                         Ending        Ending         Ending
                 Item                   WIP Dept A    WIP Dept B     WIP Dept C
                Item1                          525           448           356
                Item2                          328           385           365
                Item3                          556           682           659
                Item4                          389           305           394
                Item5                        1,074         1,040           811

    Units Started In Production
                                             2
                 Item                     Dept A
                Item1                        1,423
                Item2                        1,118
                Item3                        2,160
                Item4                          818
                Item5                        2,416

   Direct Material Cost Per Unit

                 Item                     Dept A         Dept B         Dept C
                Item1                         7.67          10.22           7.67
                Item2                        13.18          27.68          90.94
                Item3                        25.16           9.32          12.11
                Item4                        23.44          25.12          35.17
                Item5                        14.06           8.08           7.78

    Direct Labor Cost Per Unit

                 Item                     Dept A         Dept B         Dept C
                Item1                         5.66          19.39          15.35
                Item2                         6.87          10.08           5.95
                Item3                        10.99          12.82          12.82
                Item4                         9.19          20.81          18.39
                Item5                         5.84           9.18          12.79

      Overhead Cost Per Unit

                 Item                     Dept A         Dept B         Dept C
                Item1                         7.33          19.43           9.90
                Item2                         4.75          15.08           8.10
                Item3                        15.36          12.59           2.76
                Item4                         9.28           5.25          25.82
                Item5                        11.13          10.90           0.68



Notes:
1 WIP = Work in process. Finished goods that have been started but not yet completed.
2 Units Started In Production need only be entered for the first department. All of the subsequent departments will be calculated based on beginning and ending WIP.
        WHITE CELLS ARE ADJUSTABLE                                                                                                                                                       © Kristoffer Burnett - Certified Management Accountant, 2009-2011
                                                                                                                                                                                               Small business solutions at http://www.imperoco.com
          Process Costing Example
                                                              1


Item:                                   Item1

        Unit Reconciliation

Beginning work in process (WIP)             345
Started in production                     1,423
Total units into production               1,768
                                                     Direct Materials  Direct Labor Factory Overhead
Transferred to department B               1,243                 1,243         1,243              1,243          These are the completed units transferred to the next stage in production
WIP percentage complete                                            60%          50%                50%          For simplicity's sake overhead expenses are allocated by direct labor hours
Ending WIP                                  525                    315          263                263          Ending WIP * WIP percentage complete
Total units reconciled                    1,768                 1,558         1,506              1,506          Total units reconciled must equal Total units into production

    Cost Per Equivalent Unit
                                                      Direct Materials    Direct Labor    Factory Overhead
Beginning work in progress          $    7,126                  2,645            1,951                2,530 The costs associated with those units in beginning WIP.
Department A expenses                   29,393                 10,912            8,048              10,433 The total costs incurred this period for those units started in production
Total costs to be allocated         $   36,520                 13,557           10,000              12,963

Equivalent units                                                  1,558           1,506                 1,506 Total units reconciled from above
Cost per equivalent unit            $     23.95      $             8.70   $        6.64   $              8.61 Total cost to be allocated/ Equivalent units

         Cost Allocation                                                  Equivalent Units
                                    Total Cost        Direct Materials     Direct Labor Factory Overhead
Transferred to department B         $ 29,775                    1,243             1,243             1,243 The number of units and dollar value of inventory transferred to the next department

Ending WIP material                      2,741                     315                                        The quantity and total cost for those units in ending WIP
Ending WIP conversion                    4,004                                     263                    263 "
Total ending work in process             6,745                                                                The total value of ending WIP
Total cost allocation               $   36,520                                                                Transferred to department B + Total ending work in process. Must equal Total costs to be allocated




Notes:
1 There are two primary methods used in process costing. The weighted-average method, which is used in this example, and the first-in-first-out (FIFO) method.
        WHITE CELLS ARE ADJUSTABLE                                                                                                                                                        © Kristoffer Burnett - Certified Management Accountant, 2009-2011
                                                                                                                                                                                                Small business solutions at http://www.imperoco.com
          Process Costing Example
                                                              1


Item:                                   Item1

        Unit Reconciliation

Beginning work in process (WIP)             354
Transferred from department A             1,243
Total units into production               1,597
                                                     Direct Materials  Direct Labor Factory Overhead
Transferred to department C               1,149                 1,149         1,149              1,149          These are the completed units transferred to the next stage in production
WIP percentage complete                                            40%          60%                60%          For simplicity's sake overhead expenses are allocated by direct labor hours
Ending WIP                                  448                    179          269                269          Ending WIP * WIP percentage complete
Total units reconciled                    1,597                 1,328         1,418              1,418          Total units reconciled must equal Total units into production

    Cost Per Equivalent Unit
                                                      Direct Materials    Direct Labor    Factory Overhead
Beginning work in progress          $  24,674                   6,334            8,867                9,474 The costs associated with those units in beginning WIP.
Department B expenses                  60,964                  12,708           24,104              24,151 The total costs incurred this period for those units started in production
Transferred from department A          29,775                  10,816            8,256              10,703 The value of inventory transferred from the previous department
Total costs to be allocated         $ 115,413                  29,858           41,227              44,328

Equivalent units                                                  1,328           1,418                 1,418 Total units reconciled from above
Cost per equivalent unit            $     82.82      $            22.48   $       29.08   $             31.27 Total cost to be allocated/ Equivalent units

         Cost Allocation                                                  Equivalent Units
                                    Total Cost        Direct Materials     Direct Labor Factory Overhead
Transferred to department C         $ 95,165                    1,149             1,149             1,149 The number of units and dollar value of inventory transferred to the next department

Ending WIP material                     4,028                      179                                        The quantity and total cost for those units in ending WIP
Ending WIP conversion                  16,220                                      269                    269 "
Total ending work in process           20,249                                                                 The total value of ending WIP
Total cost allocation               $ 115,413                                                                 Transferred to department C + Total ending work in process. Must equal Total costs to be allocated




Notes:
1 There are two primary methods used in process costing. The weighted-average method, which is used in this example, and the first-in-first-out (FIFO) method.
        WHITE CELLS ARE ADJUSTABLE                                                                                                                                                            © Kristoffer Burnett - Certified Management Accountant, 2009-2011
                                                                                                                                                                                                    Small business solutions at http://www.imperoco.com
          Process Costing Example
                                                              1


Item:                                   Item1

        Unit Reconciliation

Beginning work in process (WIP)             428
Transferred from Dept B                   1,149
Total units into production               1,577
                                                     Direct Materials  Direct Labor Factory Overhead
Transferred to finished goods             1,221                 1,221         1,221              1,221          These are the completed units transferred to the next stage in production
WIP percentage complete                                            80%          50%                50%          For simplicity's sake overhead expenses are allocated by direct labor hours
Ending WIP                                  356                    285          178                178          Ending WIP * respective WIP percentage complete
Total units reconciled                    1,577                 1,506         1,399              1,399          Total units reconciled must equal Total units into production

    Cost Per Equivalent Unit
                                                      Direct Materials    Direct Labor    Factory Overhead
Beginning work in progress          $  43,921                  10,940           17,291              15,690 The costs associated with those units in beginning WIP.
Department C expenses                  37,823                   8,811           17,639              11,373 The total costs incurred this period for those units started in production
Transferred from department B          95,165                  25,830           33,411              35,924 The value of inventory transferred from the previous department
Total costs to be allocated         $ 176,909                  45,580           68,342              62,987

Equivalent units                                                  1,506           1,399                 1,399 Total units reconciled from above
Cost per equivalent unit            $   124.14       $            30.27   $       48.85   $             45.02 Total cost to be allocated/ Equivalent units

         Cost Allocation                                                  Equivalent Units
                                    Total Cost        Direct Materials     Direct Labor Factory Overhead
Transferred to finished goods       $ 151,579                   1,221             1,221             1,221 The number of units and dollar value of inventory transferred to the next department

Ending WIP material                     8,621                      285                                        The quantity and total cost for those units in ending WIP
Ending WIP conversion                  16,709                                      178                    178 "
Total ending work in process           25,330                                                                 The total value of ending WIP
Total cost allocation               $ 176,909                                                                 Transferred to finished goods + Total ending work in process. Must equal Total costs to be allocated




Notes:
1 There are two primary methods used in process costing. The weighted-average method, which is used in this example, and the first-in-first-out (FIFO) method.

				
DOCUMENT INFO
Description: Process costing is one of two primary methods for accumulating costs on goods and services. Direct materials, direct labor, and overhead costs are applied to items as they move through departments within the company.
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