Process Costing made EASY | CA ACCA CMA CPA CIA candidates

Name: Process Costing made EASY | CA ACCA CMA CPA CIA candidates
Rating: 4.4 (6 reviews)

Understand the logic behind process costing and the easiest way to solve exam questions right first time

Created byShaikh Emad Gohar, ACCA CGAP CIA CMA CFE CRMA

Last updated 8/2021

English

What you'll learn

Process Costing Fundamentals
How to account for Normal Loss, Abnormal Loss & Abnormal Gain
Using Equivalent Production Units (EPU) method
Calculations involving FIFO and AVCO methods
How to solve MCQs on process costing
4 MCQ practice questions

Course content

1 section • 10 lectures • 1h 59m total length

Example 1 - Normal Loss14:21
Study process costing in process industries, covering work in progress, normal loss, and unit cost calculations using total cost incurred over expected output (input minus normal loss) to finished goods.
Example 2 - Abnormal Loss6:59
Learn how to identify abnormal loss in process costing, distinguish it from normal loss, and calculate unit cost using total cost incurred divided by expected output (input minus normal losses).
Example 3 - Abnormal Gain6:25
Explore abnormal gain in process costing by distinguishing it from abnormal loss and normal loss, apply unit cost calculations, and note abnormal gains are not charged to customers.
Lecture 4 - EPU (without OWIP)14:54
Apply the EPU method to compute equivalent production units, unit costs, and closing work in progress in a process costing scenario with material, labor, and overhead considerations.
Lecture 5 - EPU (OWIP AVCO)14:16
Master process costing with opening work in progress, weighted average and FIFO methods, calculating equivalent production units for materials, labor, overhead to cost finished goods and closing work in progress.
Lecture 6 - EPU (OWIP FIFO)24:02
learn epu (owip fifo) in process costing by calculating current-month unit costs, accounting for opening and closing work in progress, and valuing finished goods.
MCQ Practice # 114:20
Practice MCQ on process costing, exploring opening and closing work in progress, weighted average vs FIFO, and calculating equivalent units of production for material.
MCQ Practice # 26:45
Practice mcq on process costing analyzes abnormal loss by comparing finished goods with expected production, using opening and closing stock, normal loss, and units started and completed.
MCQ Practice # 39:19
Explains calculating equivalent units for material B in a weighted average process costing system, with 40% material at 20% completion and 60% at 80% completion, for 22,000 units at 50%.
MCQ Practice # 48:34
Practice mcq problems on process costing using fifo to calculate equivalent units of production, units started and completed, and opening, closing inventories with materials percentages.

Requirements

Basic Knowledge of Costing

Description

Process costing is used by organizations that can't identify the customer before building the product or service. Instead, these organizations build inventory now that is sold later when customers purchase completed products. Determining the cost of producing a product or service basically involves summing up the costs going into the production process and dividing by the number of units that complete the process. Since organizations using process costing can't track production costs and production output to a particular job or customer, the costs and outputs are tracked to a period of time (a day, a week, a month, etc.).

The challenge with using a period of time to track costs is the problem of partially complete units of work. Organizations with process costing systems need to solve this problem before production costs can be divided by output in order to create cost-per-unit measures needed in accounting and management processes. The challenge of partially complete units of work is handled by using “equivalent units” of production.

Process costing is used by organizations with production processes that make it impractical to identify the customer's product or cost as a “job” during the process. Without a potential customer to target costs moving through the accounting system, the process costing method uses a production period of time to group together costs and output until they are eventually transferred to the finished goods inventory. The challenge in this approach is that there tends to be partially complete products or services at the beginning and/or end of a production period. Dealing with this challenge requires the computation of equivalent units of production.

Cost are then tracked on these equivalent units as they move through the production process. This lesson worked through a series of computations to track costs of goods manufactured and transferred forward, and computations to measure the value of the ending balance in the work-in-process inventory account. Both the first-in-first-out (FIFO) and weighted-average (W/A) methods of process costing were demonstrated.

Who this course is for:

ACCA, CMA, CIA, CPA students, Costing Engineers, Cost Accountants, Management Accountants