1. Process Costing System
Cost Accounting
Process Costing System
Lecture-21
Main Ahmad Farhan

2. Elements of Cost of Production Report
Quantity schedule.
Cost accumulated in the department/ process.
Equivalent units produced.
Calculation of cost per unit.
Accounting treatment / apportionment of the accumulated cost.

3. Review of Last Lecture Example
Mini Soap Manufactures Co. at the end of the week transferred 600 soaps to department-11. In which soaps completed and transfer out. Units which are in process 100 (100% material, Conversion cost 60%).
Cost received from preceding department is Rs. 540
Following cost incurred by department-11:
Direct Material
Direct Labor
Factory overhead
970
Required: Prepare cost of production report

4. Cost Of Production Report
I-Quantity Schedule:
Units received previous dept
Unites completed and transfer out 500
Unites still in process
600
II-Cost Accumulated in the Dept / Process:
Cost received from preceding department is Rs. 540
Cost added by department-11:
Direct Material
Direct Labor
Factory overhead
970

5. Cost Of Production Report
III-Calculation of Equivalent Units Production:
(100% of completed units + % of units in process) + Previous department units
Direct Material : 500+(100x100%) = 600
Direct Labor : 500+(100x60%) = 560
F.O.H : 500+(100x60%) = 560
IV- Unite Cost:
Previous department = Total cost / # of units = 540 / 600 = 0.90
Direct Material : / 600 = 0.25
Direct Labor : / 560 = 0.20
F.O.H : / 900 = 0.15
1.65

6. Cost Of Production Report
V- Apportionment Of the Accumulated Cost to Finished Goods:
Cost of units transferred to the next department
No of completed units x Total cost per unit:
x = 825
Units in process:
Cost of preceding department 100 x 0.9 = 90
Direct Material 100 x 0.25 = 25
Direct Labor x 0.20 = 12
F.O.H 60 x 0.30 = 18
145
970