Matakuliah
Tahun
: COST ACCOUNTING
: 2009
Chapter 7
THE COST OF QUALITY AND
ACCOUNTING FOR PRODUCTION LOSSES
Learning 11, 12
Process Costing with a Fifo Cost Flow
Assumption
The first step in assigning costs is to determine the number
of equivalent units for each cost element and the cost of
each equivalent unit.
Because FIFO costing is used, the cost in beginning
inventory is assigned to the first units transferred out, and
the cost of each equivalent unit contains only cost added
during the current period
Bina Nusantara University
3
To assign some cost to spoilage, the number of equivalent
units for each element of cost in the spoiled units must be
determined and added to the denominator before the cost
per equivalent unit is computed.
Bina Nusantara University
4
Normal Production Shrinkage
If the cost of lost unit is assigned to the good units that
remain, as in the case of losses resulting from evaporation
or some other natural shrinkage, then the loss is normally
treated as if it arose only from current production and not
from beginning inventory.
Bina Nusantara University
5