SOLUTION MANUAL OF MANAGERIAL ACCOUNTING 10TH CANADIAN EDITION BY GARRISON, LIBB

SOLUTION MANUAL OF MANAGERIAL ACCOUNTING 10TH CANADIAN EDITION BY GARRISON, LIBB

Chapter 6

Systems Design: Process Costing

Learning Objectives

LO1. Record the flow of materials, labour, and overhead through a process costing system.
LO2. Compute the equivalent units of production using the weighted-average method.
LO3. Compute the costs per equivalent unit using the weighted-average method.
LO4. Assign cost to units using the weighted-average method.
LO5. Prepare a cost reconciliation report accounting for the costs transferred out and the costs in work in process inventory at the end of the period using the weighted-average method.
LO6. (Appendix 6A) Compute the equivalent units of production using the FIFO method.
LO7. (Appendix 6A) Compute the cost per equivalent unit using the FIFO method.
LO8. (Appendix 6A) Prepare a cost reconciliation report accounting for the costs transferred out and the costs in work in process inventory at the end of the period using the FIFO method.

Chapter Overview

This chapter focuses on the use of process costing to track costs in organizations where homogeneous products or services are produced. The assignment of costs is performed by:

1. accumulating costs by department
2. computing unit costs in terms of equivalent units by department using one of the following two methods:
• Weighted-average method
• FIFO method (Appendix 6A)

Service-Related Examples

Company Type of Business Text Page

Assignment Topic Grid
Chapter 6
Problem Topic LO1: Cost flows LO2: WA equivalent units LO3: WA cost per EU LO4: WA assign cost to units L05: Cost reconciliation LO6: FIFO equivalent units (App 4A) LO7: FIFO cost per EU (App 4A) LO8: Cost reconciliation (App 4A) Ethical issues Service industry Writing component CMA/CPA/SMAC adapted
E6-1 Process Costing Journal Entries 
E6-2 Computation of Equivalent Units—WAC 
E6-3 Cost per Equivalent Unit—WAC 
E6-4 Applying Costs to Units—WAC 
E6-5 Process Costing journal Entries 
E6-6 Equivalent Units and Cost per Equivalent Unit—WAC  
E6-7 Equivalent Units—WAC 
E6-8 Equivalent Units and Cost per Equivalent Unit—WAC    
E6-9 Cost Reconciliation—WAC 
P6-10 Equivalent Units, Cost per Equivalent Unit, Applying Costs – WAC    
P6-11 Equivalent Units; Assigning Costs -WAC    
P6-12 Interpreting a Production Report—WAC    
P6-13 Analysis of Work-in-Process T-Account—WAC     
P6-14 Equivalent Units; Costing of Inventories; Journal Entries—WAC     CPA
P6-15 Comprehensive Process Costing Problem     
C6-16 Ethics & the Manager; Understanding the impact of % completion on profit—WAC 
   
C6-17 Effect of Incorrect Costing across Departments—WAC     
C618 Inventory Valuation under Process Costing—WAC     

E6A-1 (App 4A) Computation of EU – FIFO 
E6A-2 (App 4A) Cost per Equivalent Unit – FIFO 
E6A-3 (App 4A) Assigning Costs to Units – FIFO 
E6A-4 (App 4A) Equivalent Units and Cost per EU – FIFO  
E6A-5 (App 4A) Equivalent Units; Assigning Costs – FIFO  
E6A-6 (App 4A) Equivalent Units – FIFO 
P6A-7 (App 4A) Equivalent Units, Cost per Equivalent Unit, Assigning Costs – FIFO   
P6A-8 (App 4A) Equivalent Units; Applying Costs – FIFO   
P6A-9 (App 4A) Comprehensive Process Costing Problem using FIFO   
C6A-10 Effect of Incorrect Costing across Departments-FIFI Method    

Video Links

1. Recording the flow of materials, labour, and overhead through a process costing system.
LO#1

“Intro to Process Costing”
found on YouTube.com (11:37 min.) http://www.youtube.com/watch?v=W8vWMfEolZY

This video distinguishes job-order costing from process costing. It demonstrates how costs are assigned in the manufacturing process of a company that produces potato chips. T-accounts are used to demonstrate the flow of costs.

Discussion Question
Give an example of a company that could use a process costing system.
Compare and contrast the differences between job-order and process costing.