Managerial Accounting Chapter 18 Summary
OBJ 1. Pg. (834-837)
Describe process cost systems.
Process Cost systems: Is a system used to process manufactures.
Comparing Job Order and Process Cost Systems: Exhibit 1 is a great example for this
term. it shows the difference between comparing Job Order and Process Cost Systems.
Cost Flows for a Process Manufacture: When there is a process to manufacture direct
materials. Exhibit 3 is an example of the process.
OBJ 2. Pg. (838-849)
Prepare a cost of production report.
Cost of Production Report: Summarizes the cost of data and production for departments.
Step 1: Determine the Units to Be Assigned Costs: This term consists of units assigned to
costs. For example, a unit is a gallon of ice cream. Exhibit 4 is an example for this term.
Step 2: Compute Equivalent Units of Production: Is the portion of all units completed by
materials or conversion costs.
Step 3: Determine the Costs per Equivalent Unit: Is when you compute direct materials
and conversion costs.
Step 4: Allocate Costs to Units Transferred Out and Partially Completed Units: At the end
of the period all costs must be allocated to the units that are transferred out and partially
completed.
Preparing the Cost of Production Report: Determines each processing department at
periodic intervals. This report also summarizes production of quantity and cost of data.
Exhibit 7 is an example of preparing the cost and production report.
OBJ 3. Pg. (850-851)
Journalize entries for transactions using a process cost system.
Journalize Entries for Process Cost System: Determines all transactions made from
material purchased.Also shows the duration and cost for manufacturing products.
