PPT - Process Costing | Cost Accounting - B Com PDF Download

 Page 1


Process Costing 
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Process Costing 
Introduction 
? Process costing is a special BRANCH of costing used by 
the manufacturing industries.
? Who are involved in converting the RAW MATERIAL 
into the FINISHED PRODUCT.
? Such work of conversation is done step by step , each 
step called “a process” .
? Process costing is a method of allocating manufacturing 
cost to products to determine an average cost per unit.
Page 3


Process Costing 
Introduction 
? Process costing is a special BRANCH of costing used by 
the manufacturing industries.
? Who are involved in converting the RAW MATERIAL 
into the FINISHED PRODUCT.
? Such work of conversation is done step by step , each 
step called “a process” .
? Process costing is a method of allocating manufacturing 
cost to products to determine an average cost per unit.
Overview of Process Costing Systems
Page 4


Process Costing 
Introduction 
? Process costing is a special BRANCH of costing used by 
the manufacturing industries.
? Who are involved in converting the RAW MATERIAL 
into the FINISHED PRODUCT.
? Such work of conversation is done step by step , each 
step called “a process” .
? Process costing is a method of allocating manufacturing 
cost to products to determine an average cost per unit.
Overview of Process Costing Systems
Features of process costing
? A separate process account is prepared for each process.
? Where all Inputs and Expenses are recorded in the DEBIT 
SIDE and Losses and output are CREDITED.
? The output of one process becomes the input of the next 
process and so on until the finished product is obtained. 
? When the goods are sold, the amount will be transferred to 
the cost of goods sold account .
? When the goods are completed, they will be transferred to 
finished goods account.
Page 5


Process Costing 
Introduction 
? Process costing is a special BRANCH of costing used by 
the manufacturing industries.
? Who are involved in converting the RAW MATERIAL 
into the FINISHED PRODUCT.
? Such work of conversation is done step by step , each 
step called “a process” .
? Process costing is a method of allocating manufacturing 
cost to products to determine an average cost per unit.
Overview of Process Costing Systems
Features of process costing
? A separate process account is prepared for each process.
? Where all Inputs and Expenses are recorded in the DEBIT 
SIDE and Losses and output are CREDITED.
? The output of one process becomes the input of the next 
process and so on until the finished product is obtained. 
? When the goods are sold, the amount will be transferred to 
the cost of goods sold account .
? When the goods are completed, they will be transferred to 
finished goods account.
Accounting For Losses and Gains In Process 
Costing
?Nature of losses
? Normal loss
? Abnormal loss 
?Nature of Gain
? Abnormal Gain
Input units X
(-)Normal Loss X
Expected Output X
(-)Actual output X
Abnormal Loss + X
Input units X
(-)Normal Loss X
Expected Output X
(-)Actual output X
Abnormal Gain -X