77777777

5.2Identify 4 steps of process costing.

5.3Review the 'Real life' scenario on page 174 and explain why process costing is likely to be suitablefor timber mills.

Class Activity 1

What are the similarities and differences between and job and process costing in terms of the flow of costs across accounting ledgers in a manufacturing firm?

Class Activity 2

Firm B has spent $25,000 on a process during a month and produced 1000 (fully complete) units, hence the average cost per unit is $25.

If 700 of these units are sold the cost of goods sold will be $25 x 700 = $17,500. This is relatively straightforward because of the absence of work-in-process inventory.

Instead assume firm B has spent $25,000 producing 850 fully complete units and has another 150 which are only 60% complete.

Again assuming 700 (fully complete) units are sold, what is the cost of goods sold now?

Class Activity 3

Imagine a bicycle factory, whose accounting period ends on the last day of the month. During the month, 1,000 completed bicycles were made.

There are 200 partially complete bicycles on the last day of the month.

However, all the materials are there in the factory, they just haven't been put together yet!The factory supervisor estimates that they are, on average, half complete.

How many equivalent units are there in terms of:

a)Direct Material costs

b)Conversion costs

Class Activity 4

In each case below, fill in the missing amount:

1 Work in process, 1 April 20 000 kg Units started during April ? Units completed during April 32 000 kg Work in process, 30 April 6000 kg 2 Work in process, 1 June 6000 m Units started in June 11 000 m Units complete during June 10 750 m Work in process, 30 June ? 3 Work in process, 1 January 100 000 L Units started during the year 134 000 L Units completed during the year ? Work in process, 31 December 90 000 L