Analisa Biaya 8 Process Costing

8
Process-Costing
Systems
McGraw-Hill/Irwin The McGraw-Hill Companies, Inc. 2006

8-2
Process Costing
Production environment
 Homogenous units
 Mass produced
 Automated
 Continuous flow

8-3
Process Costing
Production environment Costing procedure

 Homogenous units Costs are recorded
 Mass produced for a department.
 Automated Department costs are
assigned equally to
 Continuous flow
units produced.

8-4
Process Costing
To help To evaluate
set prices products
How are unit

costs used?
To evaluate To determine
production balance sheet
efficiency inventory

8-5
Process Costing
Direct
Materials Direct labor costs
are usually small
Dollar Amount
Manufacturing in comparison to
Overhead
other product
costs in process
Direct
cost systems.
Labor
(high level of
automation)
Type of Product Cost

8-6
Process Costing
Direct
Materials Direct labor costs
are usually small
Dollar Amount
Conversion
in comparison to
other product
costs in process
cost systems.
(high level of
automation)
Type of Product Cost
So, direct labor and manufacturing overhead are often
combined into one product cost called conversion.
8-7
Comparing Job Costing

and Process Costing
Job costing Process costing
 Costs accumulated by the  Costs accumulated by
job. department or process.
 Work in process has a job  Work in process has a
cost record for each job. production report for each
batch of products.
 Many unique, high cost
jobs.  A few identical, low cost
products.
 Jobs built to customer
order.  Units continuously
produced for inventory in
automated process.

8-8

and Process Costing
Work in process
contains individual
Direct jobs in a
Materials job cost system.
Finished
Direct Labor Jobs
Goods
Manufacturing Cost of
Overhead Goods
Sold
8-9

and Process Costing
Work in process
contains homogenous
Direct products in a process
Materials cost system.
Direct Labor Finished

& Overhead
Products Goods
(Conversion)
Cost of
Goods
Sold
8-10

and Process Costing
Sameobjective:
Same objective: determine
determine
thecost
the costof
ofproducts
products
Same
Same Inventory
Inventory accounts:
accounts: rawraw materials,
materials,
work
work in
in process,
process, and
and finished
finished goods
goods
Same
Same overhead
overhead assignment
assignment method:
method:
predetermined
predetermined rate
rate times
times actual
actual activity
activity

8-11
Department With No Beginning or

Ending WIP Inventory
Same objective:ordetermine
No beginning ending
the
Work incost of products
Process Inventory
Same Common
Inventorywhen a company
accounts: is
raw materials,
successful at just-in-time
work in process, production
and finished goods
CostSame
per overhead assignment
Manufacturing method:
costs for a period
=
predetermined rate times actual activity
unit Units produced for the period

8-12
Department With No Beginning or

Spirit Beverages produces a sport drink. During October, the
Blending Department had the following manufacturing costs:
Direct materials $16,000

Conversion costs 5,600
Total costs to be assigned $21,600
Spirit started and completed 8,000 four-bottle packages during

October. Spirit had no beginning work in process inventory.
Compute the manufacturing unit costs for October.
Direct materials $16,000 ÷ 8,000 units = $ 2.00

Conversion costs 5,600 ÷ 8,000 units = $ 0.70
Mfg. cost per completed unit $21,600 ÷ 8,000 units = $ 2.70
8-13
Department With Ending WIP

Inventory
Same objective: determine
No beginning
theWork in products
cost of Process Inventory
Ending Work in Process

Same Inventory Inventory
accounts: consists
raw materials,
of incomplete units atand
work in process, the finished
end of the period.
goods
Same overhead
We must assignment
now deal method:
with the concept
predetermined rate times
of equivalent actual activity
units.

8-14

Inventory
Samenow
We must objective: determine
deal with the concept
theequivalent
of cost of products
units.
Equivalent
Same unitsaccounts:
Inventory is a concept
rawexpressing
materials,
partially complete units as a smaller number
work in process, and finished goods
of fully complete units.
CostSame
per overhead assignment
Manufacturing method:
costs for a period
equivalent =
predetermined rate times actual activity
Equivalent units for the period
unit
8-15
Equivalent Units Example
Two one-half filled cups are

equivalent to one full cup.
+ =
So, 10,000 units 70 percent complete
are equivalent to 7,000 complete units.

8-16
Assigning Costs to Products
Let’s look at the five-step

process for assigning costs
to units produced, followed
by an example using the five
steps.
8-17
Assigning Costs to Products –

The Five-step Process
 Summarize the flow of physical units (number of
units completed and number of units remaining in
process).
 Compute the number of equivalent units produced.
 Summarize the total costs to be accounted for
(costs in beginning work in process inventory and
the costs incurred in the current period).
 Compute costs per equivalent unit.
 Assign unit costs from  to units completed and to
units in ending work-in-process inventory.

8-18

Inventory
Spirit incurred the following manufacturing costs in October
(same data as before):
Direct materials $16,000

Conversion costs 5,600
Total costs to be assigned $21,600
Spirit started 8,000 units and completed 6,000 units in October.

Spirit had no beginning work in process inventory. All direct
materials had been added to each unit still in process, but only
20 percent of conversion costs had been incurred for the 2,000
units still in process.
Complete the five-step process to assign
costs to units produced in October.

8-19

Inventory – Equivalent Units
Step 1 Step 2
Physical Equivalent Units
Flow of Units in October Units Material Conversion
Units to account for
Beginning work in process inventory 0
Units started this period 8,000
Total units to account for 8,000
Units accounted for
Completed and transferred out 6,000 ? ?
Ending work in process inventory 2,000 ? ?
Total units accounted for 8,000 ? ?

8-20

Step 1 Step 2
Units accounted for
Completed and transferred out 6,000 6,000 6,000
Units completed and transferred are 100%

complete for both material and conversion.

8-21

Step 1 Step 2
Units accounted for
Ending work in process inventory 2,000 2,000 ?
Total units accounted for 8,000 8,000 ?
All material had been added to

units remaining in process.

8-22

Step 1 Step 2
Units accounted for
Ending work in process inventory 2,000 2,000 400
Total units accounted for 8,000 8,000 6,400
20% of 2,000 units

8-23

Inventory – Assigning Costs
Flow of Costs in October Material Conversion Total
Costs to account for (Step 3)
Costs in beginning work in process inventory $ 0 $ 0 $ 0
Current period costs 16,000 5,600 21,600
Total costs to account for $ 16,000 $ 5,600 $ 21,600
Equivalent Units 8,000 6,400

Costs per equivalent unit (Step 4) ? ? ?
Costs accounted for (Step 5)

Costs transferred ? ? ?
Cost of ending work in process inventory ? ? ?
Total costs accounted for ? ? ?

8-24


Costs per equivalent unit (Step 4) $ 2.00 $ 0.875 $ 2.875

Costs transferred ? ? ?
$16,000 ÷ 8,000 equivalent units

8-25



Costs transferred $ 12,000 $ 5,250 $ 17,250
6,000 equivalent units @ $2.00

8-26



Costs transferred $ 12,000 $ 5,250 $ 17,250
Cost of ending work in process inventory 4,000 350 4,350
Total costs accounted for $ 16,000 $ 5,600 $ 21,600
400 equivalent units @ $0.875

8-27
Department with Beginning &

When there is Beginning WIP, the

determination of equivalent units
becomes somewhat more complicated.
Primary question to be answered:

Which units were completed first
during the period?
(How you answer this question will
affect the Total EU for the period.)

8-28

Weighted Average vs. FIFO
Weighted-
Average FIFO
All units and costs Costs are accounted
are considered for by layer. Cost per
together to determine EU for this period is
average cost per EU, computed separately
regardless of from the Cost per EU
whether the costs for last period.
were incurred last
period or currently.

8-29

Weighted Average vs. FIFO
Weighted-
Average Weighted-
All units and costs Average is
are considered
together to determine the most
average cost per EU, commonly
regardless of
whether the costs used
were incurred last
period or currently.
method.

8-30
Assigning Costs Using

Weighted-Average Costing
The weighted average method . . .
 Makes no distinction between work done in the prior period
and work done in the current period.
 Blends together units and costs in beginning inventory with
units and costs in the current period.
The FIFO method is covered in Appendix A.
Let’s revisit Spirit in December

where we have a beginning
inventory from the previous month.

8-31
Beginning and Ending Inventory

Spirit had the following cost and
unit data for December:
Percentage Complete Total Costs
Units Materials Conversion Materials Conversion
Beginning WIP inventory 2,000 40% 80% $ 2,000 $ 1,000
Costs incurred in Dec. 20,000 7,000
Units Started in Dec. 12,000
Units completed 10,000 100% 100%
Ending WIP inventory 4,000 25% 60%
Complete the five-step process to assign costs to units

completed and to units left in process for December.

8-32

First let’s look at a flow chart

showing the blending of units
in beginning work in process
inventory with units started
during the month.
8-33

Beginning
Inventory
2,000 units
10,000 units
14,000 units
completed
12,000 units
started
Ending
Inventory
4,000 units
Now let’s examine the five-step process.

8-34

Step 1 Step 2
Flow of Units in December Units Material Conversion
Beginning work in process inventory 2,000
Units accounted for

8-35

Step 1 Step 2
Units accounted for


8-36

Step 1 Step 2
Units accounted for
Ending work in process inventory 4,000 1,000 2,400
25% of 4,000 units 60% of 4,000 units

8-37

Flow of Costs in December Material Conversion Total
Costs in beginning work in process inventory $ 2,000 $ 1,000 $ 3,000
Equivalent units 11,000 12,400


Costs assigned to units transferred ? ? ?

8-38




8-39



Costs assigned to units transferred $ 20,000 $ 6,452 $ 26,452

8-40



Cost of ending work in process inventory 2,000 1,548 3,548

8-41
Costs Transferred in
from Prior Departments
 Multiple departments in a process result in units and
costs that are transferred from a prior department to
the current department.
 These transferred-in costs are treated exactly like a
direct material that is added at the beginning of a
production process.
 Let’s revisit Spirit. with the addition of transferred-in
units and costs. We will use the December
information and the weighted-average method.

8-42
Complete the five-step process for Spirit to assign costs to
units completed and to units left in process for December.
Percentage Complete
Flow of units in December Units Materials Conversion Trans-in
Beginning WIP inventory 2,000 40% 80% 100%
Transferred-in during Dec. 12,000
Units completed 10,000 100% 100% 100%
Ending WIP inventory 4,000 25% 60% 100%
Total Costs
Flow of costs in December Units Materials Conversion Trans-in
Costs incurred in Dec. $ 20,000 $ 7,000 $ 52,000
Beginning WIP inventory 2,000 2,000 1,000 5,000
Transferred-in during Dec. 12,000
Units completed 10,000
Ending WIP inventory 4,000
8-43
Step 1 Step 2
Flow of Units in December Units Material Conversion Trans-in
Beginning WIP inventory 2,000
Units transferred in during Dec. 12,000
Units accounted for
Completed and transferred out 10,000 ? ? ?
Ending WIP inventory 4,000 ? ? ?
Total units accounted for 14,000 ? ? ?

8-44
Step 1 Step 2
Units accounted for
Completed and transferred out 10,000 10,000 10,000 10,000
Ending WIP inventory 4,000 ? ? ?
Total units accounted for 14,000 ? ? ?
100% complete for material,

conversion, and transferred-in units.

8-45
Step 1 Step 2
Units accounted for
Completed and transferred out 10,000 10,000 10,000 10,000
Ending WIP inventory 4,000 1,000 2,400 4,000
Total units accounted for 14,000 11,000 12,400 14,000
60% of 4,000 units

25% of 4,000 units
Transferred-in units are 100% complete
8-46
Flow of Costs in December Material Conversion Trans-in Total
Costs in beginning WIP inventory $ 2,000 $ 1,000 $ 5,000 $ 8,000
Current period costs 20,000 7,000 52,000 79,000
Total costs to account for $ 22,000 $ 8,000 $ 57,000 $ 87,000
Equivalent units 11,000 12,400 14,000

Costs per equivalent unit (Step 4) ? ? ? ?

Costs assigned to units transferred ? ? ? ?
Cost of ending WIP inventory ? ? ? ?
Total costs accounted for ? ? ? ?

8-47

Costs per equivalent unit (Step 4) $ 2.00 $ 0.6452 $ 4.0714 $ 6.7166

Costs assigned to units transferred ? ? ? ?
$22,000 ÷ 11,000 equivalent units $57,000 ÷ 14,000 equivalent units

8-48


Costs assigned to units transferred $ 20,000 $ 6,452 $ 40,714 $ 67,166
10,000 equivalent units @ $2.00 10,000 equivalent units @ $4.0714

8-49


Costs assigned to units transferred $ 20,000 $ 6,452 $ 40,714 $ 67,166
Cost of ending WIP inventory 2,000 1,548 16,286 19,834
Total costs accounted for $ 22,000 $ 8,000 $ 57,000 $ 87,000
1,000 equivalent units @ $2.00 4,000 equivalent units @ $4.0714

8-50
Accounting for Spoilage Costs

Spoilage represents the amount of resources that go
into the process, but DO NOT result in finished product.
Managers face key problems related to spoilage:
1. Identifying whether it exists.
2. Determining whether it can be eliminated.
3. Deciding whether eliminating it is worthwhile.
4. Determining the cost of spoilage.
The 5-step approach discussed earlier can
be modified by including spoilage

8-51
Normal spoilage occurs as a part of the regular operations

of an efficient process.
Abnormal spoilage is the result of unusual operating problems.

Abnormal spoilage is in addition to normal spoilage,
and is recorded as a loss of the period.
We will illustrate the spoilage using the December data for

Spirit Beverages, but without the transferred-in costs.

8-52
Percentage Complete Total Costs

Units Materials Conversion Materials Conversion
Beginning WIP inventory 2,000 40% 80% $ 2,000 $ 1,000
Costs incurred in Dec. 20,000 7,000
Units Started in Dec. 12,000
Units completed 10,000 100% 100%
Spoiled units 500 20% 50%
Ending WIP inventory 3,500 25% 60%
Spoilage is found at an inspection when 20% of the material

has been added and the conversion is 50% complete.

8-53
Beginning
Inventory
2,000 units
10,000 units
14,000 units
completed
12,000 units
started
Spoilage Ending
Inventory
500 units 3,500 units
Complete the five-step process to assign costs to units

completed and to units left in process for December.
8-54
Step 1 Step 2
Units accounted for
Spoiled units 500 ? ?

8-55
Step 1 Step 2
Units accounted for
Spoiled units 500 ? ?

8-56
Step 1 Step 2
Units accounted for
Spoiled units 500 100 250
20% of 500 units 50% of 500 units

8-57
Step 1 Step 2
Units accounted for
Ending work in process inventory 3,500 875 2,100
25% of 3,500 units 60% of 3,500 units

8-58



Spoiled units ? ? ?

8-59



Spoiled units ? ? ?

8-60



Spoiled units ? ? ?

8-61




8-62



Cost of ending work in process inventory 1,754 1,360 3,114

8-63
Process Cost Flows
Let’s conclude our discussion

of process costing by examining
the cost flows in a two-
department process, A and B.
We will use T-accounts and start
with materials.
8-64
Process Cost Flows
Materials Inventory WIP Dept. A

•Purchases •Direct •Direct
Materials Materials
WIP Dept. B
Factory Overhead
•Direct
•Other Materials
Overhead

8-65
Process Cost Flows
Materials Inventory WIP Dept. A

•Purchases •Direct •Direct
Materials Materials
•Indirect
Materials
WIP Dept. B
Factory Overhead
•Direct
•Other Materials
Overhead
•Indirect
Materials

8-66
Process Cost Flows
Next let’s add labor and

manufacturing overhead
to the process cost flows.
Are you with me?

8-67
Process Cost Flows
Wages Payable WIP Dept. A

•Indirect •Direct
Labor Materials
WIP Dept. B
Factory Overhead
•Direct
•Other Materials
Overhead
•Indirect
Materials
•Indirect
Labor
8-68
Process Cost Flows
Wages Payable WIP Dept. A

•Indirect •Direct
Labor Materials
•Direct •Conversion
Labor
WIP Dept. B
Factory Overhead
•Direct
•Other •Overhead
Materials
Overhead Applied to
Work in •Conversion
•Indirect
Materials Process
•Indirect
Labor
8-69
Process Cost Flows
Next let’s transfer work

from Department A to
Department B. Are you
ready?

8-70
Process Cost Flows
WIP Dept. A
•Direct •Transferred
Materials to Dept. B
•Conversion
WIP Dept. B
•Direct
Materials
•Conversion
•Transferred
from Dept. A

8-71
Process Cost Flows
Now let’s complete the

goods in Department B and
sell them. Still with me?

8-72
Process Cost Flows
WIP Dept. B Finished Goods

•Direct •Cost of •Cost of
Materials Goods Goods
•Conversion Mfd. Mfd.
•Transferred
from Dept. A
Cost of Goods Sold

8-73
Process Cost Flows
WIP Dept. B Finished Goods

•Direct •Cost of •Cost of •Cost of
Materials Goods Goods Goods
•Conversion Mfd. Mfd. Sold
•Transferred
from Dept. A
Cost of Goods Sold

•Cost of
Goods
Sold

8-74
End of Chapter 8

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8

McGraw-Hill/Irwin The McGraw-Hill Companies, Inc. 2006

McGraw-Hill/Irwin The McGraw-Hill Companies, Inc. 2006

Production environment Costing procedure

McGraw-Hill/Irwin The McGraw-Hill Companies, Inc. 2006

How are unit

McGraw-Hill/Irwin The McGraw-Hill Companies, Inc. 2006

McGraw-Hill/Irwin The McGraw-Hill Companies, Inc. 2006

Comparing Job Costing

McGraw-Hill/Irwin The McGraw-Hill Companies, Inc. 2006

Comparing Job Costing

Comparing Job Costing

Direct Labor Finished

Comparing Job Costing

McGraw-Hill/Irwin The McGraw-Hill Companies, Inc. 2006

Department With No Beginning or

McGraw-Hill/Irwin The McGraw-Hill Companies, Inc. 2006

Department With No Beginning or

Direct materials $16,000

Spirit started and completed 8,000 four-bottle packages during

Direct materials $16,000 ÷ 8,000 units = $ 2.00

Department With Ending WIP

Ending Work in Process

McGraw-Hill/Irwin The McGraw-Hill Companies, Inc. 2006

Department With Ending WIP

Equivalent Units Example

Two one-half filled cups are

McGraw-Hill/Irwin The McGraw-Hill Companies, Inc. 2006

Assigning Costs to Products

Let’s look at the five-step

Assigning Costs to Products –

McGraw-Hill/Irwin The McGraw-Hill Companies, Inc. 2006

Department With Ending WIP

Direct materials $16,000

Spirit started 8,000 units and completed 6,000 units in October.

McGraw-Hill/Irwin The McGraw-Hill Companies, Inc. 2006

Department With Ending WIP

McGraw-Hill/Irwin The McGraw-Hill Companies, Inc. 2006

Department With Ending WIP

Units completed and transferred are 100%

McGraw-Hill/Irwin The McGraw-Hill Companies, Inc. 2006

Department With Ending WIP

All material had been added to

McGraw-Hill/Irwin The McGraw-Hill Companies, Inc. 2006

Department With Ending WIP

20% of 2,000 units

McGraw-Hill/Irwin The McGraw-Hill Companies, Inc. 2006

Department With Ending WIP

Equivalent Units 8,000 6,400

Costs accounted for (Step 5)

McGraw-Hill/Irwin The McGraw-Hill Companies, Inc. 2006

Department With Ending WIP

Equivalent Units 8,000 6,400

Costs accounted for (Step 5)

$16,000 ÷ 8,000 equivalent units

$5,600 ÷ 6,400 equivalent units

Department With Ending WIP

Equivalent Units 8,000 6,400

Costs accounted for (Step 5)

6,000 equivalent units @ $2.00

6,000 equivalent units @ $0.875

Department With Ending WIP

Equivalent Units 8,000 6,400

Costs accounted for (Step 5)