What you will learn to do: account for costs assigned to each process
The actual accounting systems and procedures in place to accommodate process costing aren’t much different than those used to implement job costing. In fact, it would be possible for a company to run both processes at the same time. For instance, a boat builder may mass-produce a sailboat and may offer customized versions of that boat as well.
In short, you’ve seen the costs accumulate and flow from one department to another, culminating in a unit cost in finished goods that is then shifted to cost of goods sold when the items are sold:
In this section, you’ll take a closer look at the mechanisms that capture and record these costs as we recreate Dad’s Perfect Pies financial accounting records for the month of January and tie them back to the Production Cost Reports.
When you are done with this section, you will be able to:
- Prepare journal entries for a process costing system
- Use a production cost report for decision-making
Learning Activities
The learning activities for this section include the following:
- Reading: Journal Entries
- Self Check: Journal Entries
- Reading: Decision-making
- Self Check: Decision-making