How To Do Process Costing Easily?


Now I am indicating some points on how one can get a concept about process costing easily and in a technical way.

  1. The production cost report is the combination of the statement of cost and statement of evaluation. Just format is changed.

  1. If in question transfer includes than s separate column is required for transfer this transfer can be from different sources.

  1. For clean conception, the total amount of spoilage is determined at first then the total amount of spoilage distributed among the ratio by which they are distributed.

  1. If spoiled units are given in question than abnormal spoilage = Spoiled unit–Normal spoilage process costing.

  1. If total input of physical unit less equivalent unit after determining abnormal loss or spoilage than the missing figure would be considered lost in the unit this unit not entered into an equivalent unit of different cost.

  1. The total cost transferred out must be transferred to the next process or department if two or more departments or processes are given in the question. Here total cost transferred out =Completed unit + Cost of opening inventory + Normal spoilage.

  1. If spoilage occurs after inspection or end of the process then spoilage not needed to be distributed. Only shown in the production cost report normally. If spoilage is detected at the end of the year then we consider work 100% complete.

  1. If inspection occurred after 50 percent completion to the next process or department then normal spoilage units come to be transferred in cost unit, not materials unit.

  1. If the degree of completion is not segregated for ending inventory then units of ending inventory entered into transferred units and other units but not materials for the next process.

  1. If the unit completed and ending inventory given together in question then units of ending inventory entered into materials column 100%.

  1. If lost in the unit given in question then its considered normal spoilage and this unit entered each column of the equivalent unit.

  1. Production cost means conversion cost. If in question direct labor or labor and factory o/h given then its considered conversion cost or we consider and overhead separately.

  1. If the degree of completion is not given for ending inventory then we consider work completed 100%.

if you have any more pls let me know by reply option. thank you

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